Tax deductible sailing

[cliveshelton]

Now I would be the first to say that when we earn money we should pay the tax for it. There's no sense in risking being accused of evasion. However, boaty people are terribly resourceful as evidenced from the enormous help available here. Whilst some may make a living from their sailing, which presumably means that costs are offset against income (servicing, consumables etc.) I wonder if your average sailor has found a way to legitimately do some cost saving? Those of us who are self employed can sometimes "share" the odd expense between office and boat (eg pc, tablets) but it would be interesting to hear about the more imaginative methods. I'm not encouraging immoral ideas of course but I'm sure that some must know a few tricks that might be useful to others. In the old days many city firms had yachts which staff could used. How did that work for tax purposes? Why can't I do the same and offer "clients" days out for hospitality purposes? I could offset mooring fees etc.

 

[Otter]

Interesting idea. But to use your boat for business it would have to be coded and the insurance would be higher and you'd have to be qualified.

 

[nimbusgb]

Get sponsorship from your company to do some racing, rename the boat and get some advertising on the car when used for sailing. ( magnetic panels ) advertising takes many forms these days no reason for the accountant to refuse the expenditure.

 

[Rossynant]

Quite few people I know that run their own "business activity" (however this is called in English) got boats included into the business. Purchased by leasing company rather then buying - so the purchase price is cost directly deducted (in monthly rate), plus running expenses. Boat must be commercial naturally and sometimes is chartered or used for sail teaching, or just managed by some charter company. This in fact generates loss (who gets profit on boat this days?) against other profits in business.

 

[maxcampbell]

We were agents for a foreign boat design co, so our boat was a demonstrator, and we had to demonstrate it. Ran all the money through a separate account.

 

[BelleSerene]

If you're a small business owner and yachting expenses are on the accounts, the tax man'll be all over you and effectively the burden is on you to prove to his satisfaction that expenses are genuine and at market rate. If you want to offset a tax loss for a chartering business against profit in your trading company, he'll be all over you like a rash getting you to prove that the chartering business is genuine - that you've placed ads soliciting charters, etc, beyond a normal burden of proof. And he'll ask you to pay personally for pleasure use of the boat.

And all fair enough - it's too easy otherwise to have a bogus 'chartering' business that whoops, fails to get any customers, and pays your boating expenses out of your trading revenue before taxable profit.

Plus, you'll need to get the boat 'coded' for charter, make the appropriate mods to it, get the right insurance and so on.

I wouldn't go near it. I even use our boat for some entertainment - both staff and clients/partners - and I don't charge a penny to the business for it. (I legitimately could; I just don't want the taxman perceiving there's something going on.)

 

[Uricanejack]

Now I would be the first to say that when we earn money we should pay the tax for it. There's no sense in risking being accused of evasion. However, boaty people are terribly resourceful as evidenced from the enormous help available here. Whilst some may make a living from their sailing, which presumably means that costs are offset against income (servicing, consumables etc.) I wonder if your average sailor has found a way to legitimately do some cost saving? Those of us who are self employed can sometimes "share" the odd expense between office and boat (eg pc, tablets) but it would be interesting to hear about the more imaginative methods. I'm not encouraging immoral ideas of course but I'm sure that some must know a few tricks that might be useful to others. In the old days many city firms had yachts which staff could used. How did that work for tax purposes? Why can't I do the same and offer "clients" days out for hospitality purposes? I could offset mooring fees etc.

Start you own religion. apoint youreslf as a spiritual leader. Set out on your boat to preach to small comunties.
you are now tax free in many countries. Although remarakably unwellcome in many small comunities. but when has that evere stopped a missonary

 

[charles_reed]

Get sponsorship from your company to do some racing, rename the boat and get some advertising on the car when used for sailing. ( magnetic panels ) advertising takes many forms these days no reason for the accountant to refuse the expenditure.

Many years ago Keith Hancock tried just that with "Mezzanine". It went to appeal and he lost!

 

[onesea]

Start you own religion. apoint youreslf as a spiritual leader. Set out on your boat to preach to small comunties.
you are now tax free in many countries. Although remarakably unwellcome in many small comunities. but when has that evere stopped a missonary

So if I set the boat up to the church of the "SingleMalthaggisum", then welcomes all comers to join me for Drinks and Food. I could get the Taxman to give me my Vat Back on all expenses for the boat? and of course all single Malt and Haggis bought for use on her.

Then all I would have to do is hoist my Standard as a call to worship? so boats could follow me safely to a safe port.

Where I would preach the values of my religion (does the boat even need coding for this?). Of course this would have to involve other close religions, the "GinTonicOlivesums", "ChampOyster's", for the x Military "Pinkgynism" I think we have some eastern europeans around what about "Vodkchilys"?
All with our own religious standards to raise in port on arrival. Of course in the event 2 religions would meet there would have to be some sort of cermany, where the meaning of each religion was discussed and celebrated?

I had thought about naming the religion "Winewomansongters" but you have not heard my singing.

If I had to spend the whole Vat return solely on Single malts single malts I would of had one hell of a years sailing.

 

[Talulah]

Another factor now is that VAT cannot be reclaimed on the boat purchase all at once.
VAT reclaim on boats over £50k is spread over 10 years.
http://www.hmrc.gov.uk/vat/managing/reclaiming/capital-assets.htm
You also have to aportion private useage.

I know very little about VAT but the above link explains what I'm on about.

 

[savageseadog]

It would be a foolish person that would admit to anything on a public forum

 

[PhillM]

My accountant says there are three sure fire ways to contact HMRC - by phone, buy company yacht and buy a race horse.

 

[Cookee]

As a race boat builder and racer I put the lot through the books as well as sponsorship - the revenue told me I couldn't run the race boat through the company as I was gettng "Enjoyment" from it - when I asked them how I should invoice the sponsorship money and how the VAT would work they said that would be fine and we'll take the VAT and tax from the sponsorship money! Is it worth it? Probably not but beating the tax man fair and square is a good feeling!

 

[Sybarite]

Now I would be the first to say that when we earn money we should pay the tax for it. There's no sense in risking being accused of evasion. However, boaty people are terribly resourceful as evidenced from the enormous help available here. Whilst some may make a living from their sailing, which presumably means that costs are offset against income (servicing, consumables etc.) I wonder if your average sailor has found a way to legitimately do some cost saving? Those of us who are self employed can sometimes "share" the odd expense between office and boat (eg pc, tablets) but it would be interesting to hear about the more imaginative methods. I'm not encouraging immoral ideas of course but I'm sure that some must know a few tricks that might be useful to others. In the old days many city firms had yachts which staff could used. How did that work for tax purposes? Why can't I do the same and offer "clients" days out for hospitality purposes? I could offset mooring fees etc.

Many years ago I asked the question in France. I was told that yachting income was not taxable for an individual (I think it was a tacit agreement rather than being inscribed in law.) because accounting for depreciation was likely to outweigh any income one made.

 

[Daydream believer]

Here is a way to save the VAT & tax on your boat
Assume you want to buy a one off boat or a new design of boat
Start a company with the declared intent to hire out yacht moulds
Deposit a sum of money in the company as working capital
Have the design done & make sure it is a marketable design
Have a set of moulds made
Then rent the moulds on a fee per boat moulded to a boat yard who are interested in building boats but want to avoid the potential up front mould cost
The first complete boat built is passed to the mould company ( You)
Your company will not get a complete boat for the mould rental but will have to pay a bit more for the finished contruction
Use it as a demonstration boat for the company building the finished boats & for other potential users of the mouldings.
Say you are not getting any personal use but sailing for promotional purpose. Do a bit of racing
All costs are set against the company which you have financed but costs are now tax deductable
If you are lucky you may recover the cost of the moulds plus a bit to cover the cost of running the boat
Retain ownership of the moulds all the time or if you want to sell up then sell the boat & the moulds.
If there is a slight profit for the taxman then even better
Start all over again carry on dreaming

 

[BelleSerene]

Many years ago I asked the question in France. I was told that yachting income was not taxable for an individual (I think it was a tacit agreement rather than being inscribed in law.) because accounting for depreciation was likely to outweigh any income one made.

That's the main benefit to some people of putting a boat through their company: the depreciation charge on the boat is set off against their company profits.

It's also why the (UK) taxman is so hot on mixing boats with trading companies.

 

[Sailfree]

That's the main benefit to some people of putting a boat through their company: the depreciation charge on the boat is set off against their company profits.

It's also why the (UK) taxman is so hot on mixing boats with trading companies.

Glad for that advice. My accountant did my accounts and depreciated yacht similar to your advice. On a "limited" tax enquiry the IR decided it was an asset for hire and not a service with assets that were depreciating (look it up in detail or see my previous threads on this subject). My Accountant's wrong advice cost me £10,000 as your wrong advice will also cost others dearly.

Your first statemenmt is incorrect please check the facts. The following that is the IR unpublished attitude which is reflected in your second sentence.

1. Anyone who owns a yacht is doing quite nicely and warants a closer IR investigation in all aspects of their business and personal taxation.

2. Anyone who has a yacht that is someway connected to a business is trying to subsidise a pleasure on the business - needs looking at.

The charter company I am with has recently sent out a warning after other owners were looked at very closely and recently a number were charged an amount of unpaid tax due (with interest!). The charter company itself is regularly closely looked at by the IR both for tax and VAT. I was challenged fairly early on wrt my 2001 accounts and had it settled some 3 years later - it cost me then £10,000! My Accountant and myself were both "educated" by the IR. Unfortunately at that time I had just ordered a new boat but had my accounts been done in the correct manner I could never have justified buying a boat. The Accountant was one that did the accounts for a number of Charter companies and boat owners.

As a result of the way the IR treat boat ownership for charter in the UK it cannot be a viable business and will die. The company i am with have had no new boats join the fleet IIRC for the last 3 -4yrs. Boats for charter in warmer climates with a longer "charter window" may be different.

 

[BelleSerene]

Glad for that advice. My accountant did my accounts and depreciated yacht similar to your advice. On a "limited" tax enquiry the IR decided it was an asset for hire and not a service with assets that were depreciating (look it up in detail or see my previous threads on this subject). My Accountant's wrong advice cost me £10,000 as your wrong advice will also cost others dearly.

Your first statemenmt is incorrect please check the facts. The following that is the IR unpublished attitude which is reflected in your second sentence.

1. Anyone who owns a yacht is doing quite nicely and warants a closer IR investigation in all aspects of their business and personal taxation.

2. Anyone who has a yacht that is someway connected to a business is trying to subsidise a pleasure on the business - needs looking at.

The charter company I am with has recently sent out a warning after other owners were looked at very closely and recently a number were charged an amount of unpaid tax due (with interest!). The charter company itself is regularly closely looked at by the IR both for tax and VAT. I was challenged fairly early on wrt my 2001 accounts and had it settled some 3 years later - it cost me then £10,000! My Accountant and myself were both "educated" by the IR. Unfortunately at that time I had just ordered a new boat but had my accounts been done in the correct manner I could never have justified buying a boat. The Accountant was one that did the accounts for a number of Charter companies and boat owners.

As a result of the way the IR treat boat ownership for charter in the UK it cannot be a viable business and will die. The company i am with have had no new boats join the fleet IIRC for the last 3 -4yrs. Boats for charter in warmer climates with a longer "charter window" may be different.

Strange how you have interpreted what I'm saying, Sailfree. To be clear, I have said:

* the UK taxman will look very closely at a trading company that has a yacht (or indeed at a trading company whose owner also has a yacht-charter business) and will subject it to a high burden of proof that the yacht bit is legitimate

* it's not worth doing it

Which you seem to be seconding.

Moreover, as I've said, even though I occasionally use our boat for company entertainment, I still don't make any charge to the company, in order to avoid the taxman wrongly thinking I'm pulling a tax-reduction scam.

Clear enough? I think you'll find that what you call '[my] wrong advice' is in fact precisely the advice that would have saved you £10,000!

 

[Sailfree]

Strange how you have interpreted what I'm saying, Sailfree.

Sorry I did misinterpret your 1st line as saying offsetting cost is main reason for charginga boat against a company.

my apologies

 

[st599]

In the old days many city firms had yachts which staff could used. How did that work for tax purposes?

They still do. Look at regatta entries for the South Coast.

The yachts are owned by a yacht club, the members pay fees which cover the cost of the boats, mooring, repairs, depreciation, coding, insurance etc. Membership is limited to people who work for a certain company.