Greg01
Active Member
Has any body had problems with HMR&C over VAT reclaimed on a new boat purchase for a charter operation or leasing. If so I would like to hear from you. Anonymity assured should you wish it. This is research for MBY.
Chartering, has any body had problems with HMR&C over VAT.
- Thread starter Greg01
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Nautical
Well-Known Member
Obviously not ! or no one is saying so 
FWIW, More often than not on larger yacht sales there is invariably a discussion during the sale process of 'how do I avoid the VAT' type question. The answer is you can't !. Unless you are a bone fide charter operation or operating the vessel in some commercial sense the easiest and safest way to avoid a pile of trouble down the line is pay the VAT.
If you are genuinely going operate the yacht as a charter vessel (taking your granny for a sail around the Solent for a few quid each year is not going to cut it) then the best advice is .... 'get the best advice'!. There are, or certainly have been a lot of schemes around, cross border leasing comes to mind which are at the best a bit grey round the edges and at worst a road to impounded yacht and some serious questions from men with lots of gold braid.
Talk to a specialist marine tax advisor along with your accountant, study the proposal and then clear it with HM customs. I have found HM C&E actually very helpful and a good starting point for info.
Always, always make sure you have squeaky clean paperwork otherwise come resale time or being boarded by the customs later on in some foreign jurisdiction is going to be a painful and expensive experience. These days they rarely take any prisioners if they are not completely happy with what they see.
FWIW, More often than not on larger yacht sales there is invariably a discussion during the sale process of 'how do I avoid the VAT' type question. The answer is you can't !. Unless you are a bone fide charter operation or operating the vessel in some commercial sense the easiest and safest way to avoid a pile of trouble down the line is pay the VAT.
If you are genuinely going operate the yacht as a charter vessel (taking your granny for a sail around the Solent for a few quid each year is not going to cut it) then the best advice is .... 'get the best advice'!. There are, or certainly have been a lot of schemes around, cross border leasing comes to mind which are at the best a bit grey round the edges and at worst a road to impounded yacht and some serious questions from men with lots of gold braid.
Talk to a specialist marine tax advisor along with your accountant, study the proposal and then clear it with HM customs. I have found HM C&E actually very helpful and a good starting point for info.
Always, always make sure you have squeaky clean paperwork otherwise come resale time or being boarded by the customs later on in some foreign jurisdiction is going to be a painful and expensive experience. These days they rarely take any prisioners if they are not completely happy with what they see.
jfm
Well-Known Member
Hang on! you need to define which country you're talking about. Trev, your reply reads very UK-ish. You meant UK, right?
Do you have any actual knowledge of "painful experiences" when boarded by foreign customs folks? Cos it is important to distinguish between actual facts and urban myths on this one. And FWIW I'd respectfully disagree with the advice to talk to HMRC about any tax planning, but you knew I'd say that
Do you have any actual knowledge of "painful experiences" when boarded by foreign customs folks? Cos it is important to distinguish between actual facts and urban myths on this one. And FWIW I'd respectfully disagree with the advice to talk to HMRC about any tax planning, but you knew I'd say that
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N/A
The only way you can not pay Vat on a uk built new vessel...is to pay it,and be registered for Vat..thus you then reclaim it...the vessel has to be certified under the 'code of practice for small commercial vessels',and needs to be certified and equipped to carry 10 ...or more persons...
If it is certified for less than 10 persons...then you would have to charge Vat on your paying charter trips...but certified for 10 or more comes under passenger transport...even if only 2 or 3 are carried on any given trip..and is zero rated,so you don't have to charge it....also you can get all your fuel at 100% of the lower rate...and reclaim about another 10 p / litre extra..
If it is certified for less than 10 persons...then you would have to charge Vat on your paying charter trips...but certified for 10 or more comes under passenger transport...even if only 2 or 3 are carried on any given trip..and is zero rated,so you don't have to charge it....also you can get all your fuel at 100% of the lower rate...and reclaim about another 10 p / litre extra..
MapisM
Well-Known Member
[ QUOTE ]
More often than not on larger yacht sales there is invariably a discussion during the sale process of 'how do I avoid the VAT' type question.
The answer is you can't !
[/ QUOTE ]Well said Trev, worth quoting in bold.
The boating industry would need more dealers capable and willing to make a clear statement like this one. Which is actually obvious, when you think about it, but I'd say it's as obvious as it's rare.
More often than not on larger yacht sales there is invariably a discussion during the sale process of 'how do I avoid the VAT' type question.
The answer is you can't !
[/ QUOTE ]Well said Trev, worth quoting in bold.
The boating industry would need more dealers capable and willing to make a clear statement like this one. Which is actually obvious, when you think about it, but I'd say it's as obvious as it's rare.
jfm
Well-Known Member
You're kidding Mapis? /forums/images/graemlins/grin.gif Walk into any (say) Ferretti dealer in France (especially) and ask that question and they'll deliver you a menu of solutions. They'd think you nuts if you intended to pay the VAT. Virtually nothing over 25m in the Med is VAT paid, and plenty in the 16-25m bracket isn't. All utterly legal without any shadow of doubt. Or did you mean strictly UK only?
splosh
Well-Known Member
Before everyone starts stretching a piece of elastic, can you be a bit more precise as to wether you are asking re: U/K, Europe, Med or all areas experience.
MapisM
Well-Known Member
I know, I know. Sad, innit?
In the so-called developed Countries, paying taxes is just a matter of economics.
When the hassle and costs to arrange something legal to avoid paying them are more than compensated by the tax savings, there are peeps delivering a menu of solutions, as you say.
I don't think those who purchased a 20' bowrider would be happy to know that's the only reason why they paid VAT on their pride and joy, whilst 25m+ boat owners didn't.
In the so-called developed Countries, paying taxes is just a matter of economics.
When the hassle and costs to arrange something legal to avoid paying them are more than compensated by the tax savings, there are peeps delivering a menu of solutions, as you say.
I don't think those who purchased a 20' bowrider would be happy to know that's the only reason why they paid VAT on their pride and joy, whilst 25m+ boat owners didn't.
BartW
Well-Known Member
FWIW
One year ago I purchased a new boat from a company in Austria (loa 29ft).
She was invoiced to my Belgium company without VAT.
She is completely legally registrated in Belgium, and I have an official Belgium "Vlaggenbrief" this is an official document like a passport of the boat.
I produce and invoice some "marine services" every now and then to myself (as a private person), to other private persons, or to other company's,
ofcause VAT is charged on these invoices.
The total value of these invoices is only a tiny part of the total cost of the boat, but the company has other sources of income.
Haven't had any problem until now.
One year ago I purchased a new boat from a company in Austria (loa 29ft).
She was invoiced to my Belgium company without VAT.
She is completely legally registrated in Belgium, and I have an official Belgium "Vlaggenbrief" this is an official document like a passport of the boat.
I produce and invoice some "marine services" every now and then to myself (as a private person), to other private persons, or to other company's,
ofcause VAT is charged on these invoices.
The total value of these invoices is only a tiny part of the total cost of the boat, but the company has other sources of income.
Haven't had any problem until now.
jfm
Well-Known Member
yup, that's but another example of how to acquire a boat without physically paying the VAT at all, as opposed to paying then recovering the VAT. Just buy it from a dealer in another EU country or import it from outside the EU. And, it'll have VAT paid paperwork. Perfectly do-able in UK (contrary to other posts above, ahem, Nautical!)
Not the only way to crack that particular not, but a perfectly good one
Not the only way to crack that particular not, but a perfectly good one
rogerthebodger
Well-Known Member
In a discussion a little while ago you came up with the temporary import of a boat from outside the EU as a way to not pay VAT.
If the boat was built in the UK and exported, it could then be brought back into the EU as a temporary import and not pay VAT. For how long that could continue I don't know but it is possible. I also don't know if you could do this in the UK
If this is possible and legal why does anyone in the EU pay VAT on their boat kepted "temporary" in the EU.
If the boat was built in the UK and exported, it could then be brought back into the EU as a temporary import and not pay VAT. For how long that could continue I don't know but it is possible. I also don't know if you could do this in the UK
If this is possible and legal why does anyone in the EU pay VAT on their boat kepted "temporary" in the EU.
jfm
Well-Known Member
Yes, it's entirely possible. The max stay is 18mths, after which boat must leave the EU, then it can return. In the Med that means a quick trip to Gib or Tunisia; in the UK it means quick trip to CI
BUT there is a big catch: temporary import (TI) like this is only to non EU residents (in strict UK law, it is people not "belonging in" the EU). So if you live in UK you just can't do this legally. But if say you live in Switzerland you can have a boat in the Med on this basis, and many do
This can be developed further: the owner of the boat must not belong in the EU. So a UK person could forma a non EU company (Guernsey, say) and the co could own the boat and do the TI. That works so far as VAT is concerned but I wouldn't recoemmend it for a bunch of other reasons
Tis a complex topic, and I've omitted lots of detail
BUT there is a big catch: temporary import (TI) like this is only to non EU residents (in strict UK law, it is people not "belonging in" the EU). So if you live in UK you just can't do this legally. But if say you live in Switzerland you can have a boat in the Med on this basis, and many do
This can be developed further: the owner of the boat must not belong in the EU. So a UK person could forma a non EU company (Guernsey, say) and the co could own the boat and do the TI. That works so far as VAT is concerned but I wouldn't recoemmend it for a bunch of other reasons
Tis a complex topic, and I've omitted lots of detail
Nautical
Well-Known Member
yes I was refering to UK as I assume that was Greg's intention but I stand corrected if it was inclusive of a wider audienace. I agree that 24m+ many will not be paying VAT through either combination of ownership structure, charter vessel or indeed as you describe further down. However, smaller vessels which I would guess would be the vast majority of yachts on here do seem to attract more attention when it comes to VAT status especially when it comes to resale time. Uk seller to UK buyer particularly if through a reputable broker will have issues regarding the VAT status. You will know how HM C&E are very touchy about so called charter vessels. You will probably get away with it for a while but if you are unlucky to attract attention from them at some point you better have some solid evidence that you are chartering, plus eviedence that you have been chartering the vessel yourself or have been planning for a liability for benefit in kind.
I know of one broker South Coast that has had inspection from HMC&E checking VAT status on boats on the hard and I believe two yachts are under investigation just from that one visit. I also know of an owner of an ABS 45 who against advice reg'd for VAT as a charter Co, boat went to SoF and as expected no real charters took place. Uk Vat inspection on one of his other company's alerted them to his so called charter company, £65k later he can now sleep again .
each to their own I guess and J you have a vast experience and knowledge of these things but unfortunately many people do not so my advice to my clients which are 90% UK buyers is unless you are very sure of what you are doing and have a water tight structure that will stand close scrutiny it is best to pay the VAT and then forget about it and enjoy your boat.