Dockhead
Well-Known Member
Does anyone happen to know whether transferring ownership of a yacht from one UK company to another for nil consideration will ruin the yacht's VAT-paid status? Or know of a yacht-savvy tax adviser who could help?
VAT Status Question
- Thread starter Dockhead
- Start date
rob2
Well-Known Member
I'd be surprised if the yacht is VAT paid if owned by a limited company! Most will reclaim the VAT after purchase - which claws back the full original VAT amount, then when sold on (presumably at a lower price) they must charge VAT which the new company subsequently claim back - but it's only on the lower value.
Of course, none of this applies if the companies involved are not VAT registered, in which case I believe the same rules apply as to private owners as the VAT has been paid. But I believe a tax expert's advice should be sought.
Rob.
Of course, none of this applies if the companies involved are not VAT registered, in which case I believe the same rules apply as to private owners as the VAT has been paid. But I believe a tax expert's advice should be sought.
Rob.
dt4134
Well-Known Member
If it is owned by a limited company already I don't see where VAT paid status comes into it. What makes you believe you have a VAT-paid status now that could be transferred to a future private owner? Is the company not VAT-registered? Is the boat worth more than the registration threshold?
The rules on VAT are pretty complex and, IMHO, half-baked. I've thrown away most guidance notes that I thought had little reference to my company, but I definitely remember one that could be more or less paraphrased as, if you think you can get away with VAT by artificially dividing things up between two companies, forget it.
So if you are trying to transfer from a VAT reg'd company to a non-VAT reg'd one, they'll probably be very suspicious. They'll also be suspicious if the boat is sold for less than a fair value to avoid VAT.
You may well need a proper accountant.
The rules on VAT are pretty complex and, IMHO, half-baked. I've thrown away most guidance notes that I thought had little reference to my company, but I definitely remember one that could be more or less paraphrased as, if you think you can get away with VAT by artificially dividing things up between two companies, forget it.
So if you are trying to transfer from a VAT reg'd company to a non-VAT reg'd one, they'll probably be very suspicious. They'll also be suspicious if the boat is sold for less than a fair value to avoid VAT.
You may well need a proper accountant.
Tranona
Well-Known Member
You have to look at the nature of the transaction to determine if VAT is payable, and you have not given enough information. Strictly speaking there is no such thing as VAT "status" that is just a lazy piece of shorthand to try and indicate whether VAT should or should not be paid. In fact one transaction involving an individual boat could give rise to VAT, but the same boat that changes hands in a different type of transaction would not.
Yacht Yogi
Well-Known Member
VAT invoices still required
My understanding is that the selling company must invoice the buying company and include the relevant VAT. HMRC will base the amount of VAT due upon the assessed value of the yacht. If you give the yacht away for free then you still have to charge VAT on a realistic value for the boat. The VAT must go to HMRC in your next regular VAT return, regardless of whether or not you recieved any actual money; so you will be out-of-pocket to "the VAT man".
The buying company may reclaim the VAT in their next return. When that company sells the boat to Joe Public it must charge VAT on the VALUE of the boat, not on its price.
This is all to avoid the kind of VAT scam that you seem to be aiming for. HMRC will take a dim view, especially if one of their number happens to be a sailor and read this forum.
My understanding is that the selling company must invoice the buying company and include the relevant VAT. HMRC will base the amount of VAT due upon the assessed value of the yacht. If you give the yacht away for free then you still have to charge VAT on a realistic value for the boat. The VAT must go to HMRC in your next regular VAT return, regardless of whether or not you recieved any actual money; so you will be out-of-pocket to "the VAT man".
The buying company may reclaim the VAT in their next return. When that company sells the boat to Joe Public it must charge VAT on the VALUE of the boat, not on its price.
This is all to avoid the kind of VAT scam that you seem to be aiming for. HMRC will take a dim view, especially if one of their number happens to be a sailor and read this forum.
Tranona
Well-Known Member
Your understanding wrong. The VAT is based on the transaction price - not the value. The only time value comes into it is when the "transaction" involved is bringing an item in from outside the EU. Then HMRC have the option to base it on a valuation. This is logical because in some cases there is no commercial transaction on which to base the value. Equally they could accept the invoice price if you had just bought the boat, or if you had bought the boat and used it outside the EU for some time before importing, base the VAT on your purchase price adjusted for depreciation or improvements as agreed.
There is no VAT if you give something away, because the value of the transaction is zero.
GrahamM376
Well-Known Member
I'd be surprised if the tax man would accept a nil value transfer between companies as everything owned by the company has a "book value", unless completely written off. They would almost certainly raise a query when accounts submitted. Whenever I did transactions between my two companies, both of which were VAT registered, invoices had to be issued for the book value and VAT charged, paid and then reclaimed.