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Old 23 September 2004, 03:34   #1
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VAT Issues

Has anyone experience of demonstrating to the Customs and Excise / Revenue that since their RIB is going to be chartered out to a private company from time to time for corporate entertainment, and thus it needs to be MCA local Solent coded, the VAT should be reclaimable? I am told coding will cost around:

"The cheapest option available requires you to stay within categorised waters (ie The Solent).

This will mean the following costs:

Inspection fee 80.00
Safety equipment (Approx) 750.00* +VAT"

I guess we will have most of the safety stuff anyway, so this seems a worthwile exercise on the face of it.... The boat has a VAT element of nearly 4000.... And it will genuinely be used to scare my clients from time to time.

Thanks

Bruce
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Old 23 September 2004, 03:59   #2
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Hi Bruce
as i understand it VAT can be claimed back if you register for VAT voluntarily
or your turn over is in excess of 55,000 , not sure if its a worthwhile excercise, as when you go to sell the boat you will have to repay the Vat and start again. who will be your driver, make sure they are suitable in experience and qualifcations and either local authority boatmans license or MCA commercial endoresement k
regards Tim
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Old 23 September 2004, 04:22   #3
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You may be able to recover the duty on the fuel used for chartering as well assuming it's a petrol boat - Customs and excise are very helpfull and will even give you the forms for this!
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Old 23 September 2004, 04:22   #4
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Reclaiming VAT & tax issues...

It's not as easy as just registering for VAT.

There may also be some confusion about the turnover limits. If you make standard rated sales you can apply to be registered at any level of turnover. But if your standard rated turnover is over the registration limit (currently 58k) you have to register.

For a valid registration you have to prove to the C&E that you are carrying out a trade (and they will ask for proof - sales invoices etc) and not just that there may be some incidental use of your boat. They aren't really that willing to just give you 4k because you may give a "couple of jollies" to your customers twice a year. The fact that the boat is coded is also not a sign that you have a valid trade. I have plenty of clients with coded yachts and other boats who do it for the safety but who have been unable to reclaim the input VAT once the C&E start to ask for proof of trade. When you sell the boat you will have to account for output VAT on the sale price.

Don't forget that if you have registered for VAT you also have to register the new trade for income tax (or pay a fine if you haven't done this within 90 days) and pay self-employed rates of NIC unless you already are. If you do carry out a trade you can claim capital allowances against the cost of your boat and equipment - up to 40% in the first year. This could obviously create a personal income tax loss if you own your boat which can be set off against your other personal income or CGT for the tax year.

However, beware the fact that the IR will also want to disallow the private proportion of your expenses, capital allowances etc which will probably be far in excess of any business advantage you may gain.

It's all a question of how seriously you are going to take the business use aspect. It's a big subject once you start thinking through the implications!
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Old 23 September 2004, 04:31   #5
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Agreed.

Theres a couple of members of the Forum who are Vatmen....perhaps they can help you.

If you really want to do it then I suggest you put it throgh a yacht management company as a charter boat. Tim Griffin ( Cowes) who charters out Toha (sorry Solent Ribs) may be able to help and another company called firstaway training or firstawaycharters working out of Ocean Village.
International Rib Specialists in Lymington or there is another guy called Mark Brown Tempest Marine (Fareham) who is big mates with Lee and Kevin and does a fair bit of work with Solent rib owners

Also you don't need coding to do what you want you can get a local license from Lymington its cheaper and more effective for occasional use

If you want it coded talk to Searider.

This post has been brought to you by Yell.com
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Old 23 September 2004, 04:32   #6
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Thanks Jon
you have cleared up a few questions i had as well, a good reply
regards Tim
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Old 23 September 2004, 06:21   #7
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Quote:
Originally Posted by tim griffin
Thanks Jon....
....a good reply
Agreed.
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Old 23 September 2004, 09:03   #8
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Also don't forget that you will have to charge your corporate/charterers VAT on their invoice as well. Would make you 17 1/2% dearer than the next guy or 17 1/2 % worse off!!
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Old 24 September 2004, 05:15   #9
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Quote:
Originally Posted by Rogue Wave

If you really want to do it then I suggest you put it throgh a yacht management company as a charter boat. Tim Griffin ( Cowes) who charters out Toha (sorry Solent Ribs) may be able to help and another company called firstaway training or firstawaycharters working out of Ocean Village.
International Rib Specialists in Lymington or there is another guy called Mark Brown Tempest Marine (Fareham) who is big mates with Lee and Kevin and does a fair bit of work with Solent rib owners
HMM! alot would depend before i consider putting boats on my books experience is the major factor , size of the rib and insurance and qualifications
just because someones boat is coded or local authority licensed does not mean they will get work through a charter company all the above has to be taken into account first. i have to be 100% sure of the ability of the skipper in charge and feel comfortable that they are safe in their operating procedures and they know what they are doing.If they are not capable i run the risk of losing business.
regards Tim
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Old 24 September 2004, 06:39   #10
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I've found this thread interesting to say the least. I think (which isn't often) what was ment in the first place was a way of purchasing a rib and find a creative way to miss out on the tax portion. I don't think the intention was ever to lease it back , work the boat or use it other than taking out "Personel Clients" to justify the VAT element.

So

Assuming you have your own Company - What about sponsorship of your own rib. Buy it through you own Company so its pre tax income. ie your company(yourself) buys the rib for "marketing purposes" or you buy it as an individual (post income tax money) and charge your own company (yourself) "sponsorship" for having the Companies name on it.
So it can be deemed a marketing tool for your business.

I don't know if that makes sense - reading it back but hopefully you know what I mean


Paul
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