Buying a 'TAX NOT PAID' yacht via a broker

[CalmSkipper]

Buying a \'TAX NOT PAID\' yacht via a broker

Horrible of me to open up another VAT related thread I know, but needs must!!

One of the boats I'm interetsed in via a large reputable south coast broker is 'tax not paid'. Aparently its ex charter so I'm assuming VAT is recoverable for a business and thats why the tax has not been paid.

The boat in question is slightly over my budget so

1. Is there any way of conjouring a deal that committed the boat to the broker for say 6 weeks a year such that it was chartered and still therefore a business asset with VAT recoverable, to avoid paying the VAT

2. I'm sure this is a silly Q but I am new to all of this...I'm assuming the boating world is no different to any other market with the price stated be an expectation of the seller and the actual proce settled on being a negotiation with the buyer. Assuming this is so is this like the housing market where you would come in with an offer a just a little below the asking proce or can one afford to be 'outrageous' with the opening bid!!!

 

[tcm]

Re: Buying a \'TAX NOT PAID\' yacht via a broker

others are more expert at both these than me - but re issue 2 - you can be failry daft with the first offer: the fact that you make any offer at all marks you out as quite special. You can always go up with offers too. Try 30% off, see what happens.

 

[andy_wilson]

Re: Buying a \'TAX NOT PAID\' yacht via a broker

If it is Tax not paid you could take it out of the EU and not pay VAT, or buy it and pay the VAT.

Even a VAT registered business has to pay the VAT, but they can claim it back at the end of the VAT quarter. When it is sold again VAT has to be accounted for once more.

If you register for VAT to re-claim it, you will probably find that your accountant will recommend disallowing 90% of the VAT claim, if you only intend to charter it for 10% of the time! Of course if you are already a VAT registered individual (sole trader, or partnership if you have the blessing of other partners), or control a VAT registered company that could buy it, it could be purchased and placed in a charter program and VAT could be legitimately reclaimed. Again you would have to be prepared to justify the % VAT and capital allowances claimed vs. the amount of charter use, come the day the Revenue and Customs question the level of personal use.

In short, it would only be a fully recoverable business asset in the event that it's sole purpose was for charter work.

Q2. Bid what it is worth to you. Bear in mind that if it is ex-charter it might have already had some 'stick'. Also bear in mind that if it has reached the end of it's useful charter life, you should be considering the price including VAT anyway as it is unlikely to be purchased by anyone with a view to further commercial purpose. In this instance the VAT status is the problem of the vendor in that they will end up selling it for it's VAT inclusive price to a private user, but of course will have to hand over the VAT element to HMR&C.

 

[Appleyard]

Re: Buying a \'TAX NOT PAID\' yacht via a broker

Tell the broker to reduce the price .Also...what is the inventory..add up what is included in this..eg dinghy,liferaft,tools,fenders outboard, and all other bits & pieces. Get a price and buy these seperately there will be no VAT payable on these..this will further reduce the price of the boat. Now buy the boat and pay the VAT on the boat..that way you keep the VAT element as low as possible and end up with a legit VAT paid boat.

 

[Danny Jo]

Re: Buying a \'TAX NOT PAID\' yacht via a broker

Hmmm. "Tax not paid" strikes me as a weasel-worded euphemism for "VAT not included in price". I'm no authority on VAT, but unless the charter company has a non-EU base, wouldn't it have paid VAT on the boat and all its equipment? And wouldn't it also be entitled to reclaim any VAT it paid on purchasing the assets that is covered by the VAT it collects on the sale of those assets (Revenue and Customs keeping the balance if the sale price exceeds the purchase price). If so, it would have no burning desire to account separately for removable items like the liferaft.

 

[Appleyard]

Re: Buying a \'TAX NOT PAID\' yacht via a broker

Not Really..when it(the company) bought the boat,it would have paid VAT at the time of purchase,and ,assuming it was registered for VAT at that point,would have reclaimed the VAT back from the "Vatman" This would include any vat paid on the equipment.,thus it woult effectively have bought everything Vat free.This os ok until it comes to sell the boat ,if it sold to another VAT registered organisation,it would have to give them an invoice consisting of the purchase price+VAT,the new organisation could then claim back this VAT .However a Private Individual obviously is not able to do this.The P I only needs an invoice to show that he has paid the purchase price+VAT on the boat,not the extras,so by doing a deal seperately he can artificially reduce the price of the boat,which will save him ???
EG asking price of the lot (boat+inventory) ....£50,000+VAT
=£58750 Say Boat=40K and gear is 10 K
Therefore he now pays 40 +VAT =£47K +10K =£57K.

 

[rogerthebodger]

Re: Buying a \'TAX NOT PAID\' yacht via a broker

You are generally correct if the boat is in the UK but if it is not in the UK this changes ahd also depends where the boat is to be located and/or registered.

The location of the broker is not relevent.

If the VAT registered company sells the equipment seperate it still must account for the VAT on the sale of the equipment.

If the boat is outside the UK no vat on sale but VAT and possibly duty must be paid on import.

 

[masterofnone]

Re: Buying a \'TAX NOT PAID\' yacht via a broker

I did a few deliveries for very large charter co. New boats from La Rochelle, paperwork always shows detination as BVI,No VAT payable as been exported from EU. took the majority to Palma, Majorca. /forums/images/graemlins/cool.gif

 

[CalmSkipper]

Re: Buying a \'TAX NOT PAID\' yacht via a broker

in this case the bopat is in UK and I want to use it in UK

 

[rogerthebodger]

Re: Buying a \'TAX NOT PAID\' yacht via a broker

In that case if it is sold to you by a UK registered company they will add VAT to your invoice at 17.5% of the invoiced price plus VAT on the broker fees if you have to pay that.

As said before offer much lower price and negotiate

 

[gecko]

Re: Buying a \'TAX NOT PAID\' yacht via a broker

Note also that if you use the yacht for commercial purposes the yacht would have to be coded and inspected by or on behalf of MCA . Existing coding expires on change of ownership
So it goes to price. Do not forget to have surveyed.
Having a VAT paper trail also terribly important if sailing to EU.
gecko

 

[jwilson]

Re: Buying a \'TAX NOT PAID\' yacht via a broker

Two probable cases:

a) The most common situation of a 'tax not paid' boat is simply a that it was registered in the Channel Islands, or somewhere else outside the EEA VAT area. In that case it can come into the UK for up to 18 months before paying VAT, but VAT will have to be paid at the end of that period if it is to stay in EEA waters. This case may apply to both privately owned and commercially chartered boats.

b) The other case is a boat that was bought new, and VAT paid for use in the UK, but the VAT was then reclaimed by the charter company. In this case the company can charge the buyer VAT, and then pay this to HMCE. You wll then have a VAT paid boat with purchase documentation proving VAT is paid.

As the boat is offered 'tax not paid' I assume however that the situation is as a). You want a VAT paid boat, and you can achieve that either by factoring in the 17.5% of the purchase price you'll have to pay the HMCE shortly after buying the boat, or getting the seller to pay it in advance of the sale, and giving you the VAT receipt with the boat (important). If the seller pays the VAT before sale there is some latitude for him to get it paid on a brokers or surveyors valuation, instead of the actual Bill of Sale price, which is all you can use if you buy it VAT-unpaid.