VAT status

[Deleted User YDKXO]

I'm thinking about buying a boat in Spain which is currently owned by an American individual and VAT has never been paid on the boat. I can buy the boat through a UK VAT regustered limited company so the company can also own the boat VAT free
Question. Would the company have to pay the VAT in Spain or UK and then reclaim it or can the transaction take place without any VAT being paid and reclaimed? This is a major issue as reclaiming VAT in Spain or any other EU country would be very difficult for a UK company


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[gosouth]

Good question, I am just buying a used boat for charter and understand from my accountant I can not reclaim VAT on used vessels?

I watch this space with interest, Happy Easter everyone.

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[markl]

I was also advised by my a/c against purchasing a new boat and trying to claim vat back. unless you are a charter company you may have to pay tax at 20% of new price EVERY year you own the boat as it is a benifit.

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[boatone]

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[Deleted User YDKXO]

Thanks but this only refers to individuals owning boats not companies.

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[Deleted User YDKXO]

Yes, the company would have to be set up as a charter company and you would have to realise some charter income to convince the IR that it was a business
In these circumstances, my a/c calculated the benefit in kind as follows and he told me this method has been accepted in a couple of other cases he's handled
The boat is available for charter 365 days per year less the number of days you have used it for personal use (for example 30 days a year). So the benefit is calculated as 30/365 x the total value of the boat x your tax rate. So for a £200k boat @ 40% tax rate, the tax actually payable would be around £6500
Now whether other accountants would take the same view, I dont know

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[Deleted User YDKXO]

Thats correct but you could consider buying a used boat from outside the EU (eg Channel Islands, Malta, Croatia), paying the VAT on entry into the EU and reclaiming it in your VAT return assuming you buy the boat through a VAT registered company
Or, similarly, buy an ex company owned boat which is ex VAT. If you buy it from a company outside the UK but inside the EU, they can invoice you without VAT. If you buy it from a UK company then again you can claim the VAT back on your return
What you cannot do is buy a VAT paid used boat, even as a VAT registered company, and claim the VAT back

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[kindredspirit]

A VAT registered UK company can buy the boat in Spain VAT free, no problem.

It is then liable to VAT at the UK rate.

Question? Is the IVA (Spanish VAT) cheaper then UK VAT?

If you are not using the boat for commercial purposes you are legally speaking liable for VAT somewhere. Would paying the VAT be cheaper in Spain or the UK?

(I didn't say this, but you could buy the boat IVA free in Spain and sail it back to Britain and pay the VAT at a "subsequent date.")


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[Deleted User YDKXO]

I think you would have a choice where to pay the VAT. In Spain the VAT regime is kinder in that I think they use some kind of valuation procedure to value the boat which tends to undervalue the boat and the rate is 16% anyway. Definitely worth paying VAT in Spain IMHO
In any case, if the company buys the boat for a commercial purpose such as charter, tuition, angling etc, the VAT can be reclaimed or not paid
My initial question really concerned what effect buying the boat from a non EU individual would have on the VAT status as opposed to buying from an EU or non EU company

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[kindredspirit]

hmm... I see. A bit more complicated. I didn't read your question thoroughly enough. I'm not really sure in this situation. I think you would have to check with Customs & Excise.

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