VAT Reclaim

Not sure under what circumstances you think you can "reclaim" VAT. You can treat the VAT as an input tax if you have bought it for commercial use and you are VAT registered. If you are a private individual and bought the boat in the EU you have to pay VAT. There is no mechanim for reclaiming it.
 
Perhaps I should have said more!
I intend to be a bona fide company. It may be that the company & vat registration should come first and the vat reclaim thereafter? The previous owner paid vat on purchase and subsequently reclaimed it. I would rather many thousands of pounds were in my pocket, not the Government's who will only squander it.

Michael.
 
[ QUOTE ]
Can anyone help with advice how to make a vat reclaim on a yacht? Tried to contact our Government but no reply!
Note that the yacht was purchased as "vat reclaimable", vat has been paid, (it was reclaimed by the first owner - I am the second owner)

Michael

[/ QUOTE ]

Not quite sure what you mean here? Are you running a charter business?

If the previous owner reclaimed the vat he paid on the new purchase, then a subsequent purchaser, (you?), would have to pay the vat on the purchase price..... I am guessing that you have paid the vat to the seller, and he will be accounting for it to HMRC.

You would only be able to reclaim it if you have a valid reason, e.g. business use, or whatever. Unless you are running a business with the yacht, (charter), I'm not so sure that you can reclaim the vat.

That is not to say that you were misled by the sellers term "vat reclaimable", as it could be if you are entitled to reclaim it.

Unless I am missing the point, I think this is something you perhaps should have established before purchase.

Hope I'm wrong

Richard
 
VAT reclaimable means that the seller is a business and that yacht is VAT not paid.

You will pay VAT on the purchase for which you will have the receipt. If you are a business, then you can claim this back under certain circumstances - and in all cases offset this (input tax) against the VAT you charge for your charters.

As far as I am aware if you are a business and you buy a VAT paid yacht from a private person, that you cannot account for the VAT as an input tax.

Incidentally in most countries the same applies for houses, offices etc. If you buy new from a builder you can claim back the VAT on the house/office price. But of course the tax man will want to get the VAT each month on the rent.

The inland revenue take a very suspicous view of any charter business which does not make a profit - they suspect it is set up purely so you can avoid paying VAT.

--
 
You have already bought the yacht and paid the VAT?
You cannot 'be' a VAT registered company, you can buy one or form one, but it has a separate identity to 'you'.
Alternatively, you personally can be a VAT registered self employed trader.
You can sell the boat to your company, but as you are not VAT registered your company may have a problem getting the VAT back, because the VAT is not in the companies purchase.
You need some very specific advice. As a start I would ask one or two of the chartering agencies who must have done this before. Also persevere with the VAT office. They can be very helpful. There is lots of stuff on there website, not all easy to find.
Good luck!
 
It is possible to reclaim VAT as an input tax on purchases made before you registered. The normal way is to set up your business, register for VAT and then make your purchase. However, your business must be a commercial operation where you are clearly expecting to make a profit and you will have to charge and account for VAT on all your sales.

HMRC will take some convincing to accept VAT as an input tax unless you have a proper charter business. Obvious as otherwise everybody would try and claim VAT back!

You can get all the basic rules on VAT from the site, but suspect you will need professional advice if you are trying to set up a business involving a yacht.

Just to be clear "VAT reclaimable" has no real meaning. All it shows is that you have bought the boat from a VAT registered dealer who is obliged to charge you VAT - even on a second hand boat. This does not give you any right to reclaim it - unless it is treated as an input tax on your own VAT registered business. This is different from buying a similar priced boat from a private individual where there is no VAT to account for.
 
Many thanks for all the advice.
As a final comment, we bought the yacht in Nov 08, "VAT paid". The vat was paid by the seller at point of sale to us, (having been reclaimed by him soon after his original purchase new - it was used in a sailing school operation) It was our understanding from the selling broker that vat could be reclaimed by a subsequent buyer, i.e. us, providing that the requirements of the revenue were met. We have an idea to engage in some business activities next year which would allow us to reclaim the vat legally. I was trying to pursue the matter without involving my accountant, for obvious reasons. However, I think I will do just that to progress the matter.

Thanks again,

Michael.
 
Think the broker has seriously misled you. If you are not currently VAT registered as a business operating a sailing school or charter boat you will not be able to do anything about VAT. The time between purchase and reclaiming VAT for goods bought for a business and registering VAT is in weeks from memory. I know as I have just been through this with my own business (nothing to do with boats) where I registered for VAT before I made any significant purchases.

As I commented earlier, even if you are registered you have to demonstrate that the boat is purchased solely for business use. If you want to then use it when it is not out earning money you will be liable for income tax on benefit in kind.
 
You may register your company voluntarily for VAT: over about £50k pa turnover you are in line to register anyway, but check as this threshold changes.

All capital purchases incurred wholly and necessarily in pursuit of the business aim / trade can be claimed against tax, and the VAT element as an input. Even if the item is purchased before company registration or VAT registration, it can be claimed within a reasonable time frame. As with all things tax-wise there may be some element of negotiation here - the boat has to be demonstrably a tool of trade. Your inspector may be keen to know about how the asset is deployed etc.

What the previous owner paid or didn't pay is irrelevant. It's what you paid when you acquired the asset ie what VAT was taken off you and rendered to the Revenue in the course of the transaction. If the invoice does not show the VAT element, you will not be able to claim it - so a new item rather than a used item is the rule - most time!

PWG
 
A simple rule, if you want to claim vat back you need an invoice to you with vat itemised and charged to you.
Stu
 
Vat threshould is now £67k - plenty of FAQs on website eg

Purchases made before VAT registration: reclaiming the VAT
If you buy goods or services before you registered for VAT, you may be able to reclaim the VAT you paid on them.

You can generally reclaim VAT on goods you bought up to three years before you registered for VAT, and services you bought up to six months before you registered. Remember too that you may be able to backdate your VAT registration by up to three years.

There are conditions you must meet in order to reclaim this VAT, including keeping specific records of what you bought and how you use, sell or dispose of them.

This guide explains what goods and services you may be able to claim back the VAT on, and what you need to do to reclaim it.

On this page:

Reclaiming VAT on goods you bought before registration
Reclaiming VAT on services you bought before registration
Records you must keep
If your business is 'partly exempt'
If you're taking over a business as a going concern
Reclaiming VAT on goods you bought before registration
You can reclaim VAT on goods you bought or imported no more than three years before you were registered for VAT if all the following are true:

the goods were bought by you as the entity (for example, the individual, business or organisation) that is now registered for VAT
the goods are for your VAT taxable business purposes, which means they must relate to VAT taxable goods or services that you supply
the goods are still held by you or they have been used to make other goods you still hold
You can't reclaim VAT on any of these goods:

goods that you've completely used up before you registered for VAT (such as petrol, electricity or gas)
goods that you have already sold or supplied before being registered, or have used to make goods you have sold or supplied before being registered
goods that relate to supplies you make that are exempt from VAT
The word 'goods' includes goods that are intended for resale, and also goods that you keep as assets, such as computer systems, shop fittings, office equipment and furniture, tills, vans and other equipment. It also covers anything else you've bought that isn't a service, so it includes consumables such as stationery.

Find out about exempt and partly-exempt supplies and businesses

Apportioning goods used for both business and non-business purposes
If you buy goods that you use for both business and non-business purposes, you can only reclaim VAT on the proportion of the goods that you use for business purposes. Non-business purposes include items for private or charitable use.

For example if you buy a computer and use it a third of the time for business purposes, you can only reclaim a third of the VAT.

Find out how to reclaim VAT on goods used for both business and private purposes

How to reclaim VAT on goods you bought before registration
To reclaim VAT on goods bought before you registered for VAT, you will need to carry out a careful stock check and record the quantities of goods and the dates when you obtained them. This will form the basis of the records you need to keep to validate your claim - see the section in this guide on the records you must keep.

You will also need to check that you still have evidence that you paid VAT on those goods. You need VAT invoices from suppliers in the UK or the EU, and import VAT certificates (form C79) for imports from outside the EU.

You reclaim VAT on goods bought before registration by including their value in Box 4 of your first VAT Return. Note that you can do this even if you are on the Flat Rate Scheme.

If there have been any VAT rate changes in the period before your registration, you should take care to ensure you are using the correct rate of VAT to calculate the amount you claim back.
 
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