Hypothetical VAT question

[EME]

I know we've done this subject a few times but I'm confused as to some of the outcomes:-

If a company based in the CI purchases a boat (ex-VAT) and 'locates' the boat in the Med what are the tax implications? I am assuming that any charter fees ( even for the company employees/beneficial owners) are payable in CI and therefore not VAT-able as would all other charter fees. Would it be possible to set up a French company as the charter arm of the business to reclaim VAt etc., whilst paying that company notional charter fees?


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[longjohnsilver]

Learner starts Med canoe hire!

Is it a one or two man canoe you're looking at buying? If it's a two man just make sure TB is in front where you can keep an eye on her.. If she insists on sitting in the back just make sure she doesn't have a knife. As the other TB admitted earlier this week, backstabbing is on the increase!

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[EME]

Me !! _ You know better than that !

Now why would I be considering buying a boat? It is purely a hypothetical question, and anyway I can't afford any more debts even in the sum of a shilling !!

However , TB is reading a sailing manual on basic stuff ( another story entirely) at the moment and was covering the 'necessarry equipment'...

She e-mailed me the answers to her self test questionnaire which included :

'Large very sharp knife - goodie' ... honest!....enough said my days are numbered...

Would not buy canoe due to physical effort required .

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[Deleted User YDKXO]

As I understand it, there are agents in the CI who will arrange to set up CI companies to own boats but this can cost £'000's and is therefore only suitable for larger boats. If your intention is to conceal ownership of the boat, then I'm not sure the CI are suitable any more as they have come under huge pressure from the EC recently to disclose financial information on demand
If you just want to set up a charter company to reclaim VAT on a boat purchase and, assuming it is a genuine charter operation, then you dont need to set up a CI company, a UK VAT registered company would do. The company buys a new or ex VAT secondhand boat, pays the VAT to C & E and reclaims it in the normal way along with VAT on other business related expenses (although this is difficult to do with foreign VAT eg TVA on maintenance costs in France). Of course, you have to show some charter income as well to prove to the Revenue that this is a proper business and the Revenue will hit you with a benefit-in-kind bill as well for personal use
From previous posts, I believe that jfm has looked into something like this but paying VAT in Spain after a couple of years, the advantage being that Spain uses some form of depreciation table to value the boat which tends to undervalue the boat for VAT purposes so you end up with a reduced VAT bill and a VAT paid boat. Sounds like a good idea to me
With a charter operation dont forget that the boat needs to be MCA coded which may cost several £'000's although I understand that the French, in their own inimitable way, seem to ignore the requirement for MCA coding on smaller boats although it is a definite requirement in the UK and Spain

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[jfm]

dunno yet but in the works

I'm looking into this in depth but not sure of the answer yet. Various people have told me how to do it VAT free (in France) but I'm still searching for an elusive rare item, namely a coherent plausible explanation as to WHY. More later I hope.....

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[EME]

Re: dunno yet but in the works

If you are referring to the French 'leasing' schemes , i also could not find a good reason for doing it either. The Discounted cost of doing it was humongous, might as well have done a 'Spanish' number and saved a few bob that way, also cheaper to reister as Uk-boat and cough up the 17.5%.

I await your observations , but not holding my breath.

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[jfm]

in the works

No, not the leasing. Either register boat in UK using IoM and get input tax refund, or MCA code it (which costs much less than the VAT) then somehow it becomes zero-rated in France (so they say...... still checking this).......

I dunno the answer yet, but I promise I'm looking at it thoroughly!

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