Commercial use of fuel

[Polwart]

As I understand it petrol boats opperated commercially can recover the fuel duty from HMRC. Presumably that means if I chartered a RIB with skipper for a day the charter company can recover that money and I pay for fuel at the "duty free" rate. Would the same apply to a bareboat charter?

In which case can I set up a company XYZ Ltd, have XYZ Ltd buy a boat (and code it), then XYZ charter the boat to me (at a sensible commercial rate so it is an "arms length transaction") and XYZ Ltd provide the fuel and recover the duty?

[Simon B]

Polwart,

I'd love to get this answered, my dive club would indeed benefit from a drop in duty for fuel that is not used on the road, for "leisure", commercial operators can reclaim this for providing what is a leisure service via their business. I dont want to see diving go the way of golf in certain areas of the country.

[BruceB]

I am sure BSAC or one of the other larger organisations will have answers to this.
However I am sure if it was possible someone would have said something by now?
I think setting up a company may be a bit naughty, OK unless they figure out what you have been up to and start looking for the reclaimed tax money back

[Polwart]

Originally Posted by BruceB

I am sure BSAC or one of the other larger organisations will have answers to this.
However I am sure if it was possible someone would have said something by now?
I think setting up a company may be a bit naughty, OK unless they figure out what you have been up to and start looking for the reclaimed tax money back

If this is pure and simple tax evasion then I wouldn't be interested - but if it was simply tax avoidance then it might make a boat upgrade more attractive. There are downsides, including the extra cost/hastle of coding, presumably higher insurance costs and the need prepare accounts etc & to make the filings etc to companies house, so its not dead straightforward.

My gut feel is that a bareboat/pleasure charter won't be entitled to commercial fuel rebates even if the charter company provides the fuel? Perhaps someone can clarify?

[Tim M]

My understanding of it was that you can only claim it back if it is used solely for commercial use. Therefore it wouldn't work for bare boat charter. There is a flow chart thingy that tells you what you can and can't claim back for, somewhere on the HMRC website.

[Polwart]

Originally Posted by Tim M

My understanding of it was that you can only claim it back if it is used solely for commercial use. Therefore it wouldn't work for bare boat charter. There is a flow chart thingy that tells you what you can and can't claim back for, somewhere on the HMRC website.

thanks tim. you're right: http://customs.hmrc.gov.uk/channelsP...239#P206_22058

section 2.5 says no. If my hypothetical company were to provide a skipper that would be different. I suppose in theory (if I were correctly qualified) the "company" could employ me as the skipper too but then I assume they would expect to see records of payment to the skipper and NI and PAYE on those payments would add more paperwork and cost negating any benefit.

Simon B - reading this the only way your club dive boat would be elegible would be: (1) get the boat coded (2) get all your skipper's commercially endorsed (3) charge your members a reasonable amount (not just a token gesture) for going on the boat. The last one probably defeats the purpose!

[Orville]

Hi All,
For many years our diving club claimed the duty back on fuel used in the club's boats as they were classed as safety support vessels and an extra fee over and above membership fees was paid each time the boats were used.

'Unfortunately' the practice was then highly advertised within the amateur club arena with a bit of a "Fill your boots" presentation. (imo: )

This, coupled with some strong representations from some commercial operators, highlighted the whole practice and HMRC reviewed it all.

The result of this review was that 'member clubs' could no longer reclaim the fuel duty.

This meant that our club lost an annual cash injection windfall of some £1300, which is obviously a big hit in a club environment.

This document highlights the clarification of notice "HMRC Reference:Notice 263 (May 2004)" linked to by Polwart above, kicking out any chance of dive clubs benefitting:

http://www.hmrc.gov.uk/briefs/excise-duty/brief4607.htm

HTH

Orve.

[Simon B]

This is a shame, unlike some better off clubs we have had to work hard to keep our costs down and access open to all income levels. There are some clubs which clearly have mebership fees that preclude lower incomes in the way some golf clubs have annual membership charges akin to a phone number!

We use charter vessels but also want to retain our own boat, our club effectively acts as a small business in terms of our Community Amatuer Sports Club status.

I do understand HMRC's "It doesnt work like that" viewpoint as every man and his dog would claim blatantly for refund as a dive support vessel. Will put it on the back burner for now.

[ChasTheBoat]

i was told by hmrc that a safety vessel would more than likelly be classed under the lower tax bracket!!

[Polwart]

Originally Posted by Jamesthompson

i was told by hmrc that a safety vessel would more than likelly be classed under the lower tax bracket!!

the rules/definition for a safety vessel are quite tight (see previous link). Including that it must not be carrying passengers (i.e. anyone who is not there primarily for the rescue function).