VAT on Boats, Question.

[Alistairr]

Hows does VAT work when buying things like boats?
I know we have to pay it, but whats to stop someone like me setting up a VAT registered company, buying a boat, claiming the VAT back, and then setting up a website advertising the boat for sale, and then just using it themselves.
Do you need to have a certain turnover to be VAT registered?
I do want to buy a new new boat, but more and more companies i look at advertise their boat +vat, which generally puts the boats out of my reach.

Generally i'm wondering how these things work.

Any info is mucho appreciated.

Cheers

Al.

 

[clivew05]

Well turnover has to be 72K to be able to register for VAT at the moment I believe - and .. from and Article in MBM a few months ago - if you use the boat for any purpose except business - ie you want to take it out for a spin (no punters on board ) you have to pay a percentage VAT .... you have to in fact proove that you are not buying it for pleasure more than prove you are!!!!

I have a company and was going to buy one and claim VAT back - but they have you by the short and curlies whichever way you turn .. so not worth it....

 

[davesimmons]

I think also if you have an asset of a company i.e. car, boat etc. and is used for personal gain (your use) you have to pay "Benefit in Kind" which is another tax - seem to remember running something similar past our company accountant and he said that he had loads of clients who had half million pound yachts under their companies and when this new system was bought in they had to sell them just to pay the back taxes.

No expert by any means but the result of the discussion was a no go!

 

[Alistairr]

Ok, so too buy a boat and claim the VAT back, i need to run a business using the boat, but not enjoy it personally!

BIK gets you all ways, Company Cars, fuel, BUPA, Mobile phones, golfing fees and running a company boat! /forums/images/graemlins/frown.gif

Oh well, back to the drawing board!

Cheers

Al.

 

[Whitelighter]

Ok, the VAT on boats differes depending on what your business actually does. The only way you can avaoid paying VAT on a boat is by comlying with the legislation regarding new means of transport (NMT)in the EU. This says that if you purchase a NMT from a company in the EU for export to the UK, the supplying country can zero rate the VAT provided you supply your VAT number. When you bring the NMT into this country you should pay aquisition VAT on that item within 7 days of it landing (arriving)

This is the important bit, if the NMT forms part of your businesses stock in trade - then you can immediatly reclaim the aquisition VAT. It effectively is a paperwork excercise. This does carry some conditions. You must be able to prove your company is actively trading (or is trying to) - this can be done by way of advertising invoices, web sites etc etc and you must INTEND to sell the item within 12 months. It doen't matter if you do actually sell it, but you must be able to demonstrate you tried.

An NMT is either a car, boat or aircraft.

If the NMT is not directly part of the business stock in trade, then the most VAT you can claim back is 50% - this is true with company cars a etc etc. This is because the HMRC specifically assume a fair amount of the use will be for private purposes.

With a yacht, the VAT reclaim is often done through a lease as the asset leased can have 100% of VAT reclaimed by the leasing company as the vessel is deemed to form part of their SIT. This is the same for Contract Hire companies with cars.

 

[Jonnysailboat]

[ QUOTE ]
Well turnover has to be 72K to be able to register for VAT at the moment I believe

[/ QUOTE ]

A company can become VAT registered whenever it wants; but it has to become VAT registered once it's annual income reaches a certain figure (I thought it was 50k but your 72k is probably right!). Some small companies become VAT registered because they think it adds prestige.

 

[Whitelighter]

NMT rules from HMRC here.

 

[Alistairr]

Very interesting thanks Jez,

But what if i was too buy a boat from a UK Importer, how would that work with NMT cause them i'm neither importing or exporting? Or do i have to go direct to the overseas builder?

You given a lot too read up, thanks for the info.

Cheers

Al.

 

[clivew05]

[ QUOTE ]
A company can become VAT registered whenever it wants....

[/ QUOTE ]

Well it can but must have a turnover in the year of 72K - you can become VAT registered as you say whenvever you want - however if your first annual VAT report does not reach 72K they will take it away from you .....

 

[fireball]

A list of turnover limits are available here: http://customs.hmrc.gov.uk/channelsPorta...cument#P28_1576

You do NOT have to turn over 72k to become VAT registered, but they will evaluate your case when you apply.

There is also a Deregistration limit - currently £59k

 

[Jonnysailboat]

VAT Centre is a good one too. It basically says:

"VAT registration is not compulsory but you can voluntarily register to reclaim VAT on purchases. After registration you will have to account for the tax on your sales, where applicable.

There are certain advantages as well as disadvantages attached to voluntary registration. Benefits include:

*Increased credibility for your business;
*If your business makes standard or zero-rated supplies, the ability to claim back the input tax.

However, once registered for VAT, you will have to:

*Account for output tax on all your taxable supplies;
*Keep proper VAT records and accounts;
*File VAT returns regularly."

 

[Hurricane]

There are other ways I believe.
I'm not an expert but if you are buying new I believe you can register in the Isle of Man and still be on the British Shipping register.
I've seen various schemes.
Firstly, if you are going to charter the boat then set up an IOM company and the VAT is charged and credited at the same time - so no reclaiming. The boat, quite specifically, doesnt need to visit the IOM.
I also believe that there are special leasing schemes where you (efectively) lease your own boat from a special holding company which IS VAT registered - you then, of course, pay vat on your leasings but I think it can still be attractive. Not seen much on this type of scheme but it would be interesting to hear if anyone has anything similar.

Here are some useful links.

http://www.yachtsmann.com/advantages/Benefits_of_the_Isle_of_Man.asp

http://www.angloirishbank.co.im/library/yachtsmann/Yachtsmann%206pp.pdf http://www.completeyachtsolutions.com/legal.html http://www.safehaveninternational.com/marine.html

http://www.ey.com/GLOBAL/content.nsf/Isle_of_Man/Yachts_VatBenefits

And this is the Malta lease scheme but I guess that doesnt apply unless you want to go to Malta.

http://www.vat.gov.mt/docs/yacht_leasing_vat_guidelines.pdf

 

[Major Catastrophe]

[ QUOTE ]
Some small companies become VAT registered because they think it adds prestige.

[/ QUOTE ] Or if you are a print publisher, as sales are VAT zero rated and you can claim back all your VAT on purchases. Loverleee. Nice refund payment every quarter. /forums/images/graemlins/grin.gif

 

[thefatlady]

In our case, making only VAT exempt supplies, we cannot register, no matter what our turnover. We therefore pay unrecoverable tax on all our purchases.

I would really, really like to register for VAT, but they won't let me. /forums/images/graemlins/mad.gif

 

[Major Catastrophe]

Despite what has been saide before, I thought anyone could register for VAT.

We have just registered a new company for VAT and we haven't even traded yet. HMC just wanted to know what, if any, purchases we had made in the name of the new company so that we then could not commit a carousel fraud.

 

[thefatlady]

We are unusual. Because we only make exempt supplies, as opposed to zero rated supplies, we are effectively deemed not to make any supplies, and will not do so in the foreseeable future. If we had another line of business which made vatable supplies of sufficient value, we could register, but only for that part of the business.

Our turnover considerably exceeds the VAT threshold. If someone who knows these things has a bright suggestion as to how we could register, I would be delighted. Our accountant has tried to find a way around it and HMRC say we can't.

Some things you think are not taxed, actually are - by the back door.