Chartering your own boat

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Simon391088

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Hi,
I was speaking to a guy yesterday who runs a charter company.
Essentially you buy a new yacht, give it to them and say when you want to use it. Then for the rest of the time, they charter it out and pay you (the owner of the yacht) 60% of the revenue. (They take 40% commission).
This seems like a realy good idea, mainly as this way I could buy a yacht through my company and reclaim the VAT, as essentially it would be a business.
Does anyone else have any experience of this? Does the taxman get funny about this?
Thanks
Simon
 
You end up with a worn out boat that needs a lot of work done for it. If you have claimed VAT on it, you will have to pay VAT on a price when you transfer ownership to yourself (at a proper price or IR will have you) and you will also have to pay tax on all this (probably at 40%)
 
Speak to your accountant.

You cannot buy a boat in a limited co if it has nothing to do with the normal business of the ltd co. With depreciation you will make a loss - if you made money charter cos would all have their own boats instead of yours! You cannot offset a loss in one area of business against another. I believe too many people started motor racing companies and tried to offset the cost to their business.

What you can do is buy the boat as an individual and run it as a sole trader but the IR are being difficult about VAT registration. You must invoice yourself for your own use. The boat does get extra wear and tear.

You end up owning (like a company pool car) a pool boat and offsetting some of the normal running costs but when you look at a new boat imagine it with a scratch across a wooden top - We got one large one within 2 months! Whats your reaction, if its not accept it ,put hand in pocket and get a french polisher on board then forget about chartering - its not for you. Remember its like hiring your car/house out to strangers.
 
If you are Limited, check your Mem & Arts to ensure it says something like 'buy any item to sell or use in anyway in the course of the business'. If sole trader you are home and dry, as for any business activity you enter into you are BOUND to account for VAT correctly. I did this (some years ago) rang the VAT for advice and that is exactly what they told me to do.

I used it for entrtaining business clients too. Sometimes I had to drive all the way to the boat to do some essential maintenance or replenishments.

Occasionally I used it for my own private use and we (me and my accountant) agreed a % to disallow for personal use. This is the area that HMRC will be interested in.
 
You have been lucky.

Now on 3rd charter boat. VAT normally round after 6 months of registration and again if a negative amount (winter fit out and berthing caharges etc).

Currently subjected to a IR investigation and aware of one other owner being investigated. My accountant and I are fairly confident I have done everything right.

I am advised that IR think yachts are expensive - ergo only rich people can own them - ergo must be able to find some more things to tax.

In the grand scheme of things the car has become public enemy No 1 and the government keep finding new ways to fine/penalise owners. Trusts to minimise inheritance tax are No2 and yachts seem a disproportionally (in terms of government revenue) high No 3!

If the IR get round to looking closely at you I suspect there will be a benifit in kind amount levied as additional income! Keep your head below the parapet.
 
There have been other threads on this - the consensus seems to be that if you do it legitimately (i.e. not just a "theoretical" charter as a tax dodge), it can be interesting, depending on what you want to achieve.

If you are doing it as an investment, either for income or as a cheap way to finance a boat, most folks believe you will be disappointed. On the other hand, if you were planning on chartering a boat yoyurself for several weeks a year anyway (maybe 6-14 weeks per year) then this might be a cheaper and more attractive way of going sailing. With Sunsail and Moorings, for example, you can charter similar boats all over the world as part of your allotment of X number of weeks. However, you will not feel like a real owner when you are on your boat because it has to be prepared primarily for the charter market (e.g. you will not bea able to leave stores of medicinal whisky on board).

Or, if you are going to buy a boat anyway and want to use this as a way to offset some of the cost, or buy a slightly bigger boat than you might otherwise be able to afford - again it might be for you.

But if you are looking at this as an investment, the consensus is to think again. There are much better ways to invest your money than putting it into a charter boat.
 
Agree with everything you say.

The real disappointment of charter ownership against private I find is having to unload everthing after just a weekend. We have got packing our gear into bags as a fine art but its amazing how much gear you need or tend to accumulate say in a 2 week trip to France.
 
Thanks for the replies.
The main reason I am considering this option is to try and make back the berthing and maintenance costs. They showed me round a couple of boats which have been used for chartering for a few years and tbh they looked fine to me.
It also seems a good idea that the boat will be looked after all year round, which seems like a security advantage to me.
Thanks
Simon
 
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