Can my business by a boat?

[Tim Good]

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.

 

[[70521]]

Your business can buy anything it wants, how creative is your accountant?

 

[Sailfree]

Your business can buy anything it wants, how creative is your accountant?

HMRC would consider it a benefit in kind and tax use as such unless a boat is an integral part of your business. With electronic connections you could use boat as your office and then offset part of the cost.

Funny as tax laws do have blind spots eg a car is heavily taxed but if you need a motorcycle its treated as plant & machinery!!

 

[lw395]

I think HMRC have published guidance on this, generally, the boat must be a genuine business purchase with a view to making a profit.
Otherwise it will be taxed as a benefit in kind, and subject to NI.

I think there were a lot of people being creative in this area, so a firm line has been taken.

If the company did buy the boat, what happens when you sell the company?

A mate of mine sold a share in his company to fund his boat, using up a years CGT allowance.
I don't know the details.

 

[Tim Good]

but if you need a motorcycle its treated as plant & machinery!!

Ooo I always fancied a bike!

 

[maby]

Our accountant said she could swing almost anything through as a business expense apart from horses and boats! If you charter it out, you'll be fine, but the cost of coding, additional safety equipment and insurance that covers you for commercial use will probably wipe out any savings.

 

[Swanrad2]

There was a scheme a few years ago under which as long as you took staff out once a year it avoided the BIK charges. No idea if it still works.

It's the VAT that'd worry me.

You could also do a company separation to your Mrs and liquidate the bit that she gets (less than £25k - mini entrepreneurs relief might be possible, I'd have to check).

 

[Tempus]

When asking my accountant this question he replied.

There are 3 ways to arrange an HMRC visit.

By phone
By post
Buy a boat!

 

[Ripster]

When asking my accountant this question he replied.

There are 3 ways to arrange an HMRC visit.

By phone
By post
Buy a boat!

Or a fleet of "pool" cars!!

 

[sarabande]

I used my boat in 2006 when I was working in London for nearly a year. Moved her to the Thames just inside the M25, and then spent weekdays using her as a hotel ( ), then going away at weekends and holidays. The umbrella company which looked after my contract were happy for me to charge £75 a night, plus living ex's. It was passed by HMRC because I was not able to use the boat as a recreational personal possession at weekends and holidays.

That's a different way of treating the boat as an office and flat.

 

[Lakesailor]

When Humbrol Paints (in Hull) was sold to a large corporate buyer they found they had a rather nice motor yacht included in the sale. As they had some sample panels of paint on deck it had been a justifiable expense for testing the paint durability in a marine environment.

 

[Plyn]

I remember a solicitor friend telling me of an engineering company having a 'Gaff Cutter' on their expenses!

 

[JumbleDuck]

I remember a solicitor friend telling me of an engineering company having a 'Gaff Cutter' on their expenses!

I hope the cucumber slicer was sacked as well.

 

[KellysEye]

A friend of ours started a company in Malta bought a boat through the company and registered the boat with a Maltese flag. Reason obviously to avoid tax. We have also seen mega yachts with Isle of Man flags for tax avoidance.

 

[maby]

A friend of ours started a company in Malta bought a boat through the company and registered the boat with a Maltese flag. Reason obviously to avoid tax. We have also seen mega yachts with Isle of Man flags for tax avoidance.

quite possibly, but those are both far more open minded tas regimes.

 

[Talulah]

Just a note on the VAT side.
You can no longer purchase the boat and claim the VAT back in one go. VAT reclaim has to be proportioned over 5 years. If in addition you use the boat privately you have to proportion that in to the VAT reclaim. (See HMRC Capital goods scheme.)

 

[Tranona]

A friend of ours started a company in Malta bought a boat through the company and registered the boat with a Maltese flag. Reason obviously to avoid tax. We have also seen mega yachts with Isle of Man flags for tax avoidance.

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.

 

[Swanrad2]

OK so here goes (no idea if this would work, but If I really fancied a tax punt I would have a go personally!) - open a BVI company (IOM might do). This will cost you about £2,500 a year. Sell shares in your business to the BVI company thus transferring the value of the assets within your business to the BVIs. The management and control function would also need to be located to the BVI (but check out the Cayman Isles business register to see what this really means).

The BVI company then buys the boat.

You would then have loaned the BVI company the money to buy your shares.

This sale to the BVI New Co would attract tax (assuming you qualified for entrepreneurs relief) at 10%, but as the BVI company earned cash, this would be paid to you at zero tax in order to settle the loan....

If you have significant Intellectual Property within your UK business you might even be able to lease that back to the UK company for a fee (rather than paying profits to the BVI net of Corporation Tax).

Or you could just pay yourself a dividend and buy the thing yourself.....

 

[Resolution]

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

 

[Blueboatman]

Here a legitimate one: Raymarine had a mororboat in Port Solent with more radar sets and aerials than I have ever seen mounted on one boat.