Buying an ex vat paid boat in the uk.

[volvopaul]

I have seen an ex vat paid boat for sale here in the uk.
According to the agent it's ex vat because it's done some charter, now I know if I bought it and kept it for private use I'd have to pay the vat as soon as I bought it.

I have thought about buying it and using a skipper to do some occasional chartering to pay for it's upkeep. So do I.

Have to create a charter company and register the company, obviously it would have to be limited, obviously show accounts to hm revenue etc, be fully insured and coded.

The questions I'm not sure on is, would I have to pay the hm for private use which would be more time than chartering?. What other tax implications would I come across?.

Would I just be better to buy the boat at the right price and pay the vat, then forget the charter company as it's probably just a way of avoiding the day I'd have to pay the hm.

If say I bought the boat for example 220k and pay the 20% vat, or could I legally buy it, not pay the vat, do the chartering for a couple of years then sell the boat at it's Market value say 180k and then pay the vat on the 180k? Is that legal?

Or am I just better to buy a uk boat that's vat paid.

 

[RobWales]

I have seen an ex vat paid boat for sale here in the uk.
According to the agent it's ex vat because it's done some charter, now I know if I bought it and kept it for private use I'd have to pay the vat as soon as I bought it.

I have thought about buying it and using a skipper to do some occasional chartering to pay for it's upkeep. So do I.

Have to create a charter company and register the company, obviously it would have to be limited, obviously show accounts to hm revenue etc, be fully insured and coded.

The questions I'm not sure on is, would I have to pay the hm for private use which would be more time than chartering?. What other tax implications would I come across?.

Would I just be better to buy the boat at the right price and pay the vat, then forget the charter company as it's probably just a way of avoiding the day I'd have to pay the hm.

If say I bought the boat for example 220k and pay the 20% vat, or could I legally buy it, not pay the vat, do the chartering for a couple of years then sell the boat at it's Market value say 180k and then pay the vat on the 180k? Is that legal?

Or am I just better to buy a uk boat that's vat paid.

Expect this to be another long long thread Paul....I can offer no advice other than to sit back over the next few days and enjoy the thread...;-)

 

[volvopaul]

Expect this to be another long long thread Paul....I can offer no advice other than to sit back over the next few days and enjoy the thread...;-)

Thanks rob, I just need a straight answer from someone like jfm, but no dought he won't be sat in the rain like we are, more like the sun and I don't blame him, probably having wine poured to him by jimmy the builder no doubt!

 

[RobWales]

Thanks rob, I just need a straight answer from someone like jfm, but no dought he won't be sat in the rain like we are, more like the sun and I don't blame him, probably having wine poured to him by jimmy the builder no doubt!

Can see it now....bar stuards lol

Anyway off over the road myself for a couple of pints of the amber necter, catch up on the replies later.

 

[andy59]

Why not just choose the amount you are happy to pay in your head and then make an offer less 20% and then pay the spare 20% to the vat man if the offer is accepted .

 

[yesod]

Why not just choose the amount you are happy to pay in your head and then make an offer less 20% and then pay the spare 20% to the vat man if the offer is accepted .

surely its the seller who has to account for vat? if they're currently running it in a business, the business should charge vat on the sale and provide the vat invoice, shouldn't it?

 

[Tranona]

If you are buying from a VAT registered company and it is a business asset, you will get an invoice for the value of the boat plus VAT - the two together will be comparable with a similar VAT paid boat. So, if boats of that type are going for £120k - you should look to pay £100k plus VAT, so total price is the same. Obviously the actual value of a charter boat may well be lower than a private boat, but the principle is the same.

If you want to avoid paying the VAT by using it as a business asset, you would have to set up the charter business in advance and register for VAT. You would have to convince HMRC that it is indeed a business and not a dodge. You need to talk to your VAT man as to what would be acceptable - but expect to be able to demonstrate that you have customers, you have the infrastructure to operate and your turnover is likely to be significant. You will of course have to then charge your clients VAT. You then buy the boat in the business name and reclaim the VAT as your input tax - you will get it back from the VAT man when you do your first return.

If you use the boat yourself, it will be a benefit in kind and you will be taxed on it through your personal tax return. The benefit will be valued in relation to the commercial value of your use. So a weeks use by you privately will be taxed on the commercial value of a charter - at your marginal rate.

While you operate the busines you will, of course account for input and output VAT in the normal way as well as offset your costs against your income. When you sell the boat your business will sell it for whatever you can get and you will have to account for the VAT - and give a VAT invoice to the buyer.

When you have thought all that lot through you will probably drop the idea!

 

[andy59]

Yes you are correct , i was thinking about the cost to Paul rather than who to pay

 

[jonic]

You could possibly get a part VAT reclaim or scheme set up on this one as it already has a scheme in place, but it has to be a real bonafide operation and be ok'd by HMRC.

Its coded and has a new engine too.







....... its got sails as well

 

[jfm]

If you are buying from a VAT registered company and it is a business asset, you will get an invoice for the value of the boat plus VAT - the two together will be comparable with a similar VAT paid boat. So, if boats of that type are going for £120k - you should look to pay £100k plus VAT, so total price is the same. Obviously the actual value of a charter boat may well be lower than a private boat, but the principle is the same.

If you want to avoid paying the VAT by using it as a business asset, you would have to set up the charter business in advance and register for VAT. You would have to convince HMRC that it is indeed a business and not a dodge. You need to talk to your VAT man as to what would be acceptable - but expect to be able to demonstrate that you have customers, you have the infrastructure to operate and your turnover is likely to be significant. You will of course have to then charge your clients VAT. You then buy the boat in the business name and reclaim the VAT as your input tax - you will get it back from the VAT man when you do your first return.

If you use the boat yourself, it will be a benefit in kind and you will be taxed on it through your personal tax return. The benefit will be valued in relation to the commercial value of your use. So a weeks use by you privately will be taxed on the commercial value of a charter - at your marginal rate.

While you operate the busines you will, of course account for input and output VAT in the normal way as well as offset your costs against your income. When you sell the boat your business will sell it for whatever you can get and you will have to account for the VAT - and give a VAT invoice to the buyer.

When you have thought all that lot through you will probably drop the idea!

Paul
The above is basically correct except (a) you wont get the vat back in your first return; it will take ages these days in UK and (b) you wont necessarily be taxed on a benefit in kind becuase that only applies where you set up a company to own the boat

But Tranona's piece is necessary general and when you get into the specifics of a boat there is more. Devil in detail again. I have sent PM

 

[Jim@sea]

is it really worth the hassle. what happens if you buy it at £220K and want to pay the VAT and the VAT people say that they think its worth £300K and they want VAT on that.

 

[oldgit]

Not allowed to go fishing ...but !

"Or am I just better to buy a uk boat that's vat paid."



You will then not have to get involved in the pain of making up a VAT return every quarter or whenever you choose to do it with the added frisson as to if and when a visit from the VAT inspector will ruin an otherwise perfectly good day.
They may also wish to have a quick look at any other related business activities while they are at it.

 

[Tranona]

is it really worth the hassle. what happens if you buy it at £220K and want to pay the VAT and the VAT people say that they think its worth £300K and they want VAT on that.

That won't happen, because the vendor will account for the VAT on the sales price. The risk of valuation will only arise if the boat is imported and VAT comes due on valuation - however, if it has just been purchased, that would be the purchse price.

 

[henryf]

Obviously the actual value of a charter boat may well be lower than a private boat, but the principle is the same.

I'm not sure I agree with that. Given the cost of coding (properly) is significant and it is a bit of hassle to sort out a coded boat could well be worth more.

It means someone can supplement ownership costs and potentially save The VAT element from a cash flow perspective. Funding may not have to come from an income taxed source either. So a coded boat may well become affordable in a way a non coded boat isn't.

Yes, if you pile on 12 or 14 drunkards every time and target stag / hen partys then your boat may get trashed (although there is an argument you might keep on top of maintenance more than a private owner) but not all charter boats operate to that model.

Henry

Just to add: A VAT qualifying second hand boat also has massive appeal to foreign buyers wishing to export.

 

[alteredoutlook]

vat amount

I was always told that the VAT amount due was based upon the value that the Inland revenue assessed it at. And that certain items (possibly sails?) were not included in the valuation. Perhaps it might be an idea to contact hmrc to get their view on it?

Also, you could always 'remove' non essential items e.g. outboards, dinghies, etc. prior to it being assessed......

 

[Crabman]

To register for VAT you would have to go over the threshhold to be considered for vat. Is it £22k earnings from a business? The asset ,boat is different. Unless you are sure ,they will nab you. Dont forget they can inspect the boat at any time they like.I would pay the vat ,that way the boat becomes more valuble and easy to sell on.

 

[jfm]

I was always told that the VAT amount due was based upon the value that the Inland revenue assessed it at. And that certain items (possibly sails?) were not included in the valuation. Perhaps it might be an idea to contact hmrc to get their view on it?

Also, you could always 'remove' non essential items e.g. outboards, dinghies, etc. prior to it being assessed......

It is truly astonishing what utter bollox is written about VAT on here

You'll never guess, but I bought a telly from Currys last week. Massive plasma job. Cost £600. Next day HMRC came around and assessed it and said I got it too cheap. They charged me an extra £75 VAT which I had to pay personally or they threatened to seize the TV. Would you imagine that eh?

 

[benjenbav]

It is truly astonishing what utter bollox is written about VAT on here

You'll never guess, but I bought a telly from Currys last week. Massive plasma job. Cost £600. Next day HMRC came around and assessed it and said I got it too cheap. They charged me an extra £75 VAT which I had to pay personally or they threatened to seize the TV. Would you imagine that eh?

Nevermind. There's nothing much on. And you can watch it on the lappie, anyway.

 

[DougH]

It is truly astonishing what utter bollox is written about VAT on here

Now,now John calm down, remember that summer is nearly here and concentrate on that.

It was very funny though and the thought of you swearing and cursing as you wrote the message is still making me chuckle.

 

[DougH]

Nevermind. There's nothing much on. And you can watch it on the lappie, anyway.

Now thats what I call a sense of humour.