Purchasing a boat through a company

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ska_mna

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Hi all,

Just wondering if anyone has had any experience with financing and purchasing a boat through a 'vehicle' Limited company rather than personally? So for example, getting a mortgage in a company name and then perhaps chartering the boat out for a few weeks of each year so that the boat is a company asset? Any benefits or drawbacks for getting finance etc.? Legalities for liveaboard? Company would be registered in UK and VAT registered.

Thanks!
 
Look into 'Benefits in Kind'. As a director of the company owning the vessel you will get personal tax bills based on the value of the vessel and its running costs as the assets are deemed to be available for your use.
Been there; never again!!
 
One point which may be irrelevant in your case, but you will not be eligible to apply for a warrant to wear a defaced ensign should you be a member of a yacht club that has that privilege.
The yacht must be the personal property of the owner applying for a warrant and must not be owned by a company etc.
 
As with so many schemes of this kind, it all starts well enough, but then questions get asked, followed by more que...At some stage the bureaucracy will look at the balance of asset use and income, vs the balance of asset costs and maintenance.

If, say, income is 10% from verifiable third party chartering (not relatives etc) but the majority of costs are covered by the company of which you are the main/sole director, presumably financing the company from your private means etc....You see what I mean. The bureaucracy will conclude that, whatever you claim, the facts speak of an asset for personal pleasure kept in a company shell financed by you with a trickle of income from other users. Guess what the tax advantage will be in this setup? And you could be assessed in arrears personally for benefit in kind... ouch !

Now, when it comes to VAT the scene is altogether murkier.
Record keeping, submissions, inspections...you probabaly won't want to go there. Stay this side of the requirement to register!

You could buy a boat and inject it as capital into an independent company already trading in this kind of activity, using it for a peppercorn rate between commercial lettings. Do you know someone who would give you security of tenure for your asset if you treated it this way?

Otherwise, if you can get the third party income element up, and show it is a real business not a convenience, you stand a chance on your own. Not otherwise.

PWG
 
Thanks for the replies, most appreciated. I already run another small Ltd with a business partner so was considering setting this new one up and then invoicing my existing company for work that I do rather than putting through as dividends/PAYE (i.e. hire myself as a consultant - not sure if this is do-able?). That way the new company is trading and has an income. The yacht would then be bought through the new company as an asset.

I was reading this article, which is actually for Australia. Is this equivalent to the UK?
http://tinyurl.com/3datnn

Any other opinions welcome. Any one else done this?

Thanks.
 
Just reading about Benefits in Kind and think I get the picture. So if it's an asset, and is used by employees, it's taxable as a benefit. So I'm guessing if the company didn't own the yacht but just leased it, things would change? If it was leased could it be written off against corporate tax?
 
I think you understand the picture I painted, the only thing I would add is that you are not taxed by usage, but by the fact that it is available for your use. And they don't consider a layed up period as unavailable for your use!!! I didn't get involved with leasing the boat to the company so I cannot advise you. I gave up when bills for megabux hit the doormat and my tax adviser charged £500 to resend my letter of mitigation under their letterhead.
 
I was in this position a long time ago and received a letter from the Inland Revenue asking about director's benefits. I replied stating that a lot of hard work was involved rather than a benefit and they never took it up again. This was not a new company, but purchased as an addon to a rental business. I can't say that that part of the business was a great success.

The company made a capital gain 6 years later when the yacht was sold, only because of inflation and a depreciation charge that had been used previously.

Mind you they were quite lenient about expensive cars in those days, so no doubt things are somewhat different now.
 
Thanks for the info James. I found this article which is interesting;

http://tinyurl.com/2dkeso

To quote one section regarding Benefits in Kind;

"This [Benefits in Kind] danger should be taken very seriously, and where a company is involved you should try to establish that the item is not available at times when you are not using it. A board minute and strict company policy to that effect may be effective in eliminating the charge.

Alternatively, and probably better, don't have the boat, plane etc owned by a company at all. Restructure your business in such a way that the benefit in kind code does not apply to the situation. This may not be so difficult as it sounds."

The article doesn't go on to explain ways of achieving the latter suggestion. Any ideas what this is implying?

By the way, I'm not trying to be dodgy here. If I do anything like this, I want to be above board with it all.
 
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