Reclaiming VAT boat purchase with B&B Boating

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replacing luck

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Following on from my previous post regarding the commercial rate fuel, I have had it on good authority that I can in fact reclaim the VAT for a qualifying boat if I use my boat with Beds on Board or Air B&B!! Without the costs associated with coding and charter advertisement.
Has anyone thought about this or have any experience?
 
replacing luck said:
Following on from my previous post regarding the commercial rate fuel, I have had it on good authority that I can in fact reclaim the VAT for a qualifying boat if I use my boat with Beds on Board or Air B&B!! Without the costs associated with coding and charter advertisement.
Has anyone thought about this or have any experience?
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There is nothing specific to support this view. It will all depend on whether HMRC is prepared to accept your purchase as a business asset, and of course would only be applicable to a new boat.

Difficult to see how purchasing a new boat of sufficient size and quality, paying its running costs just to use for a B&B could be a good viable business idea!
 
When we discussed boat purchase with our accountant, she reckoned that she could swing almost anything other than boats and horses past the HMRC as a company expense. She warned that if we tried our luck with either of them, we would have tax inspectors all over us like a rash!
 
maby said:
When we discussed boat purchase with our accountant, she reckoned that she could swing almost anything other than boats and horses past the HMRC as a company expense. She warned that if we tried our luck with either of them, we would have tax inspectors all over us like a rash!
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Yep, when I ran our boat as a charter boat I had an investigation after the first tax return.
 
How is this any different to chartering without the costs of coding? Are the owners of all charter boats proving that it is purely as a business asset?
Is chartering any better as a viable business idea! I can't see it personally?! Although I understand the need for good book keeping.
 
replacing luck said:
How is this any different to chartering without the costs of coding? Are the owners of all charter boats proving that it is purely as a business asset?
Is chartering any better as a viable business idea! I can't see it personally?! Although I understand the need for good book keeping.
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While in principle a charter boat can reclaim VAT, in practice as many here have found out it is not so easy. As maby says, HMRC have an aversion to allowing anything on boats, and even if you convince them that against all the well known odds you are going to make money you will not get it back either immediately or in one go.

Chartering is rarely a viable business on its own in the UK. There is simply not the demand to earn enough to cover the running costs, let alone justify the capital expenditure. Those who do it usually just hope to recover some fixed costs, or it suits their related activities. Nothing to do with "good book keeping" just simple economics. Fail to see how just renting out "rooms" on a boat could justify the investment. Again those schemes are aimed at people who own the asset already and just hope to recoup some costs by letting it out when they are not using it.
 
jfm said:
Oh well, they'll know all about VAT law then. Even if they do, you need to ask a precise question and look at the precision in the answer. Devil is all in the detail
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Anyone thinking of trying to get a boat accepted as a business expense needs to be very sure that all their tax affairs are squeaky clean. You are going to set alarm bells ringing in HMRC HQ and they are going to go through your accounts with a fine tooth comb. We are no Amazon or Google and there's nothing intentionally dodgy in our finances, but I would certainly not do anything to draw attention to them... The tax man is very good at sniffing out anything even remotely questionable once they get looking
 
Not sure if you meant to reply to me Maby; I'm not saying anything different from what you're saying and I've never recommended putting a boat on UK business books (though it can make sense if the circumstances are right and you know what you're doing)
 
Do try it and see how you get on.

The odds of 100% occupancy showing a profit including depreciation and of course nil personal use ( so not coded and hence will never move ) is in my view zero so it would fail the viable business with a view to a profit test

Occupancy will of course be nothing like 100%
 
jfm said:
Not sure if you meant to reply to me Maby; I'm not saying anything different from what you're saying and I've never recommended putting a boat on UK business books (though it can make sense if the circumstances are right and you know what you're doing)
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I was not disagreeing with you, more a case of making observations related to your comments...
 
I think we are losing the focus a bit.
If I chose to use the boat and pay the VAT according to that usage how is that not going to be of considerable saving. Lets face it how many days a year am I actually going to go out in it in the Solent? I would bet that it would be somewhere around 30-50 days per year if its a good summer/spare time/ holidays calc. By my poor mathematical nouse that still leaves 315 days of the year to rent.
So that is correct not 100% occupancy.
I have been quoted that roughly speaking 20 nights rental will return me £5000 less 5% booking fee's - so £4750. I'm not following the disaster road that I'm being led down at this juncture? In fact i'm almost considering a bigger boat, as I can offset the mooring fee's/ fuel/ servicing/ repairs/ finance! Or is this too good to be true?
 
HMRC are not daft and will not allow something that never stands a chance of making a profit to perpetually reclaim VAT.

So you submit the return. It is a new registration and the first thing you want is £x back.

They will ( it has just happened to me - business legit) immediately trigger a VAT inspection.

You are below the turnover threshold required for compulsory registration so it was voluntary.

They will ask about the business - they wont agree to something that makes ongoing reclaims based on not being a going concern - i.e. losses are assured. They will disallow the claim and probably have a wider look at your affairs ( the last bloke who did a PAYE inspection on me - not VAT I accept - had all my personal tax records in front of him to my surprise. They are all the same people now.

So using the above people are not going to want to stay on a boat in the heart of winter. So you get maybe £10k per annum. Well less than costs. All your private use will attract VAT based on the market rate for the vessel. if using if for 30-50 days this is quite possibly more than the nights you will let.

You are trying to game the system and the people on here are telling you it wont work. I know VAT well, JFM is a black belt.

If you are a legit charter operator then fine, but mixing personal use of a boat and B and B rates( which will be much much lower than charter rates and hence very unlikely to make a profit) will simply raise enquiry.

Please try it and report what happens.

It is too good to be true.
 
replacing luck said:
I think we are losing the focus a bit.
If I chose to use the boat and pay the VAT according to that usage how is that not going to be of considerable saving. Lets face it how many days a year am I actually going to go out in it in the Solent? I would bet that it would be somewhere around 30-50 days per year if its a good summer/spare time/ holidays calc. By my poor mathematical nouse that still leaves 315 days of the year to rent.
So that is correct not 100% occupancy.
I have been quoted that roughly speaking 20 nights rental will return me £5000 less 5% booking fee's - so £4750. I'm not following the disaster road that I'm being led down at this juncture? In fact i'm almost considering a bigger boat, as I can offset the mooring fee's/ fuel/ servicing/ repairs/ finance! Or is this too good to be true?
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It is too good to be true

First, to get the VAT registration you have to have a business. You've just admitted £4,750k gross income on a very expensive boat, so it will be loss making, and that's not a business.

Second, you talk about "offsetting" various expenses, presumably to get a tax deduction. The maximum tax deduction is £4750 pa, which is a £2k cash benefit to you. So with an extra £2k per annum in your pocket, you mention buying a bigger boat. It might need to be just 1mm bigger :).
 
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