Generating income to help fund hobby

[Guest]

Hi,

I am quite keen to buy a 42ftish power boat and have it based in SoF or Balearics. But in order to pull it off I would have to make a little money back on it through the summer months.

Is this possible ?
What are my options ? e.g. agent, self marketing ?
What kind of fee could I charge for e.g. 1997 fairline/sunseeker a week (bare boat) in SoF/Balearics
What costs might I have overlooked?

Thanks in advance for the help

 

[jfm]

Re: Charter rates

There are lots of rules for charter boats but the fee to end user is about 4to 4.5 sterling in summer. See any charter website eg put "vitesse yacht charter mallorca" into yahoo or www.menorcacharters.com who do many sunseekers.

They ask you to bring cash and hand it over on the first day. Makes you keep a sharp eye on your handbag at the airport. But, like builders, I wonder if this is somehow connected with...er...VAT? I'd go careful, don't fancy a Spanish jail

JFM

 

[Guest]

Re: spain charter

I have rented and been rented to, in balearics. 4k-4.5 seems right for what you'll get thru an agency in august, butthey'll chargee nearer 6k a week. There's some charter registration forms for the boat , of which the agencies have the application forms, which they fill out a bit so that they've applied, so that's ok. I imagine some of the boats eventually get inspected or whatever. I'm not a fan cos the renter donked it a tiny bit, and managed 52 engine hours in 3 weeks and lost a fender, but I was a bit precious and could've spent some of the money fixing it, and I know people who have a good time and cheaper boat. Mallorca is the place for it. Keep crap/washable towel cushion covers for when it's being chartering cos they'll lie on it covered with sin tan lotion, and empty absolutley all your personal stuff off before leaving it - an agency will help you and look after your gear. Med Charter is one of the bigger ones, and they did pay, partly before and the rest at the time of charter. It can be all in cash, but if you show charter income as a company you can get vat back if paid separately. Whether you market it yerself or thru agency you still need an agency to hand over the boat. They are all happy moneygrubbers and no problem them telling you what they'd charge and so on, ringem up and partly self market, partly use them, as they all do. Don't be cheaop in August, but you'll do well to get charter income outside july/aug.

 

[Guest]

Re: spain charter

Thanks for the great post.

Have you any advice on which boats do best :
Make, Model, Age ?

I guess you have to pay for the diesel, cleaning, security and moorings out of that 4-4.5K

Does 10 weeks a year sound about tops then ?

Cheers,

Karl

 

[jfm]

Re: VAT and stuff

Diesel is paid by the user, not the owner. Cleaning and berthing will be paid by the owner, except if it's taken by the hirer to an "away" port when of course they have to pay.

If you're worried you can buy a gps benefon and hide it in the boat, then call it and it will sms you back with the boat's lat/long. But I'll try to stay off electronics in this post.

Matt, what's the deal with VAT, in practice. I mean can you buy a million quid boat (praps thru a company) and reclaim all the VAT on basis it is for charter. Then charter it 3, 4,? but not much more weeks a year and charge VAT on the rental income, then use it yerself the rest of the time. Would have thought not own it in a company else you get benefit in kind for the personal use of it. Sorry if I've hit a complex subject here, don't bother it it's too hard, but is there a simple VAT fix here somewhere.

JFM

 

[Guest]

Re: easy VAT and stuff

Yes, of course, it's a business, so of course you get the vat back, and if you're going to put yourself out doing continuous wretched sea trials before each charter, then the charter company obviously pays the flights, and your expenses at the very least. I understand that some more progressive companies actually set up employye benfit schemes, which are all very good for morale and so quite reasonbly are tax deductable. The cost of the whatever, a few sqaush rackets, or, say, use of large boat is very good or indeed essential to keep decent staff. They can use these if they want, provided that they have reasonable experience of using squash racket or driving massive powerboat. So £1m boat plus vat wd cost 1.175, actually costs around £2m of earned income, but only £1m as above.

 

[Guest]

Re: spain charter

I'd say under 96 or later, 35-45 foot probly best return as bigger ones are a bit too ooer for many people, smaller not big enuf. Sunseeker princess failrine all fine imho, but experts surely the bods themselves - If not bort yet, I wd talk to (say) med charter who -mite- even kno of boats already out there, and certaingly wd be happy to talk to potential owner.

In august they/you can rent anything anything out. I think 10 weeks is a bit optimisitic, and you won't get top rate at all times. Budget 6 aim for 8/10, but no summer holidays for you, mind you it's nicer in sept/oct anyway.

 

[jfm]

Re: smart stuff

Thanks. Hmmm...interesting. I need to think about this for next boat and also I promised to help mr 34m (not on the VAT, he's doing the obvious but on the benefit in kind). Staff morale gizmo very clever. I can just imagine, LV plc no doubts gets loadsa job applications from programmers and suchlike and I bet you check 'em all to make sure.....as in "much experience programing this and that - tick, reliable worker never off sick - tick, nice legs - tick, only wants 20grand - tick, ooooeer has ICC, yachtmaster or prior career skippering a Pershing - nope dont want that one, NEXT!!" LOL!!

JFM

 

[Deleted User YDKXO]

Re: VAT and stuff

I tried this wheeze in the UK a few years back. Bought a boat thru' the company with a view to chartering it for a few weeks a year, putting the purchase costs and all the expenses thru' the books and reclaiming the VAT. No problem convincing the auditors that this was 'a major business oppurtunity' but the Revenue got wise to it a couple of years later and asked some very awkward questions; the problem is that, once they think you are upto something, they assume that everything else you do is dodgy. Luckily, I was able to prove some charter income but I ended up buying the boat back out of the company because of the hassle.
I think the only way you'll get away with this is to be able to prove it's a genuine business but you'll still have to come to some arrangement with the Revenue on the benefit in kind for personal use. I know somebody who has done this successfully for some years.
The other possibility is to prove that the boat is a tool of the business and that might be as a promotional vehicle ie. seminars for customers (not just entertainment) or a test bed for equipment or a means of transport/accomodation (maybe you've got shedloads of customers on the S.Coast). I know somebody else who runs a light aircraft thru' his company because he uses it for business meetings
If you're buying a new boat, apparently there's some leasing company in Belgium who take advantage of Belgian tax law to lease the boat back to you ex VAT but they charge an arrangement fee of about 7% and I think they're only interested in boats worth more than £0.5m or so. One or two of the UK dealers seem to be aware of this scheme.
You can certainly buy a boat ex VAT in the Channel Islands but you'd be liable for VAT the first time you visited EC waters unless you could prove CI residency. I think you can still register a boat in the CI through a CI company (eg Sarnia?) but what this costs and what benefit you get I dont know

 

[Guest]

Re: but

This doesn't emp, ben won't wash unless the boat is sensible" and unless you do actually rent it out. But if you do rent out, and started the company, and show a website and brochures and eventually some income, then you'll get the vat back and quite right too, but not immediately.

 

[duncan]

Re: spain charter

So there are lots of boats and little demand outside July and August..........

If you buy and rent out you don't use July August

So why not just offer someone a reasonable rate to use their boat when you want outside July August and get nice boating at a reasonable price..........or do ALL the owners use their boats then?

 

[Guest]

Re: spain charter

No, they don't, and I agree with your general thrust. I don't think it's a very good idea to charter out powerboats "bareboat" as a means of subsidising the cost, and my experinece hasn't been good.

The deposit on a boat is usulay (say) only one weeks charter (2-6grand) which isn't a huge lot, and if they comprehensively bust it (or put water in the fuel tanks, or fuel in the ater tanks etc etc ) then that can be the end of the season. This isn't at all the same as hiring out purpose-charter sailboats (where the renter has lots of similar basic and unloved boats) or crewed charter when the charter group are supervised and don't drive.

The owner is gambing that the charterer "knows what he's doing". Bit he doesn't know the boat, and either knows boating cos has boat elsewhere but mebbe not stern berthing in megacrowded unfamiliar marna in stiff onshore breeze.... or...doens't know boating much and hasn't got a boat or .... this is first shot at a 42 whereas normally had a 26..and so on. There must be a few super-knowledgeable boaties who do a lot of boating in their home port and just charter occassionally in the med, but not many, and they're obviously clever enuf (praps like you) not tho take their own boat out there and charter it out.