Can my business by a boat?

[BlueSkyNick]

Just because a boat is registered in the IOM does not mean "tax avoidance". There are all sorts of reasons why boats are registered in such places, and equally no reason why a company cannot own a boat and have it registered on the main UK part 1 register.

Private boats are subject to tax - VAT when new. Business owned boats may be able to claim VAT as an input tax and may also if the boat is run as a legitimate business offset the costs of running it against the business.

What is not possible (in the UK) is to do this with a company owned boat that is for private use - irrespective of where it is registered, as registration has nothing to do with tax.

It can be registered outside of the EU, eg the CI, and temporarily imported for several months at a time (cant recall the number off the top of my head). When the period is up, go back outside the EU and come back again to restart the clock.

 

[Retired in Crete]

I knew a solicitor whose ride-on "typewriter" made a jolly good job of mowing his lawn.

My ride on lawnmower went in my engineering co's books as a cutting machine. VAT was reclaimed and I claimed depreciation allowance on it. Never was queried by revenue or VAT inspectors.

John

 

[cryan]

I'm not sure ablut the tax situation but I can't see why it would be a problem. One problem I do see though is that the boat could now be classed as a commercial vessel which might require it to undergo MCA surveys every year and the vessels master and crew might need to be commercially licenced for the area of operation including medically? Of course that would also allow you to use untaxed fuel.

 

[Tranona]

It can be registered outside of the EU, eg the CI, and temporarily imported for several months at a time (cant recall the number off the top of my head). When the period is up, go back outside the EU and come back again to restart the clock.

No good though if you are EU resident - temporary importation is only available to non-residents. However, UK residents can keep a non VAT boat outside the EU, and it can be registered in the UK, but as soon as it enters the EU VAT is potentially payable. A UK resident can also keep a boat registered outside the EU in the UK, but if it is for private use VAT must be paid.

Think the OP was more interested in setting the costs of running his boat against the profits from his personal business. Definitely a no-no.

 

[Tranona]

I'm not sure ablut the tax situation but I can't see why it would be a problem. One problem I do see though is that the boat could now be classed as a commercial vessel which might require it to undergo MCA surveys every year and the vessels master and crew might need to be commercially licenced for the area of operation including medically? Of course that would also allow you to use untaxed fuel.

Wrong on all counts. The boat has to be a business asset - that is used as a business or in pursuit of the business. So a charter or sailing school boat can be a business so VAT can be reclaimed and running costs offset against charter income. However if the owner uses it privately he is potentially liable to income tax on benefit in kind. A workboat owned by a boatyard can also be a business asset in just the same way as the yard crane, for example. If the business is VAT registered it can reclaim VAT on the fuel.

Whether it has to be coded or surveyed will depend on how it is used, and skipper/crew qualifications will again depend on the type of usage.

 

[charles_reed]

Ok I just thought I'd put this out there before asking the financial adviser in case anyone has done similar.

Most of my money is locked into my business and I always intended to benefit from entrepreneurs relief when I came to sell. However, I don't want to sell at the moment but I do want to buy a boat. Would HMRC have a fit if by business bought a boat as an asset for me to live and work?

Just for the record I'm the only shareholder and there is enough cash excess to requirement to make the purchase.

Keith Hancock tried it with "Mezzanine" in the early 80's and was taken to the cleaners by IRS, despite his accountants having sworn they'd made it as fireproof
as possible
After he'd taken it to the Commissioners he managed to offset about 20% of the running costs but none of the capital.
I wasn't quite as greedy and just offset costs when I had a client aboard.
Essentially you have to prove you're in the charter business and be prepared to be taxed for Benefits in Kind when you use the boat.

I think Tranona and I are as one on this and may have bitter experience to back our opinion.