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Live aboard change of use


NeenyB

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Hello all, this is my first post as I can't seem to find the answer anywhere .

 

I have a 2019 Collingwood that has been my liveaboard home and I am now considering renting it out as a holiday rental via Airbnb. It will be based in a leisure only marina.

 

It's all planned, with me having to crane it to the location in 2 weeks time and I've suddenly had a thought...

 

As I change the use from home to business, will I have to pay the VAT???

 

This will totally scupper my plan so I need to know asap.

 

TIA

Nina

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Yes I have the marina's blessing. My current marina doesn't, which is why I'm moving. That's great news, Thankyou Laurie. Can I ask how you know? I really want to be sure so I'm not shocked with a huge bill once I put my taxes in etc 

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You will certainly need a different boat licence, commercial insurance, possibly 'Landlord' gas and electical safety certificates and a far more detailed Boat Safety test.

 

Speak with C&RT they have discussed this quite frequently (there is a page on their website) and you will now become a 'hire boat'.

 

32539-canal-and-river-trust-introduces-new-licence-for-boat-renting.pdf (canalrivertrust.org.uk)

 

I'd strongly suggest that before doing anything you consider the implications and additional costs against your likely income.

Edited by Alan de Enfield
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I'm surprised that a marina will countenance such an operation in a "leisure only" site as it is effectively a business. Look on the CRT site and you will see that several other things such as insurance and boat safety become applicable too.

 

Tam

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The marina will have to apply for a change of use planning application as it will become a residence not a leisure site.

 

Are they aware of this?

 

There may also be implications with Health and Safety and the Fire brigade.

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If your income from the letting is over £85,000 per year you will need to register for VAT and charge VAT to your customers. Unlikely you will make that from one boat, but if you have other holiday let properties it is the aggregate income which determines whether you have to register for VAT.

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31 minutes ago, NeenyB said:

Yes I have the marina's blessing. My current marina doesn't, which is why I'm moving. That's great news, Thankyou Laurie. Can I ask how you know? I really want to be sure so I'm not shocked with a huge bill once I put my taxes in etc 

What size Stetson does the marina owner wear?

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41 minutes ago, NeenyB said:

 

It's all planned, with me having to crane it to the location in 2 weeks time and I've suddenly had a thought...

 

 

I hope you thought about all the other issues highlighted in this thread too. If not it sounds like you posted your question just in time and I hope you haven't parted with any money yet.

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2 minutes ago, MtB said:

 

And where does he moor his horse?

Yes indeed. If the you know what hits the fan, and say someone was to die or be seriously injured stopping in this " Air b and b " business venture, VERY serious consequences could be order of the day. As we know without the more stringent BSS alone thats a problem, never mind anything else. However the OP may well have all of these?

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I recently tried to book a cottage on AB&B and gave up after 20 attempts as their website demanded verification of email address but that link did not work.  I found a telephone number for the cottage owner from a neighbour of theirs and booked direct. That saved the huge£50 booking fee.  

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1 hour ago, NeenyB said:

Yes I have the marina's blessing. My current marina doesn't, which is why I'm moving. That's great news, Thankyou Laurie. Can I ask how you know? I really want to be sure so I'm not shocked with a huge bill once I put my taxes in etc 

Your turnover  will have to be 85k or more, I assume you will be below this amount 

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If you recalimed the original VAT as the boat met the necessary 'qualifying ship' regulations, they yes, you probably would have to repay it Check with HMRC.

 

Your 'change of use' would overide the 'qualifying ship' regulations (which only apply to boats for living aboard)

 

Do not rely on some 'odd chap' on the internet, check with the relevant authorities - and - get it in writing.

 

You don't say if it a NB or a fat-boat or what size it is, or, if you recalimed VAT on purchase, or the builder sold it as "VAT Zero Rated".

 

The fact you are having to have it 'craned in' may suggest that it is a 'BIG boat"

 

You can register for VAT with ANY turnover, we were setting up a new business which would initially have around £5,000 turnover, but by registering for VAT we could recover all of the VAT on the £10,000s of infrastructure costs we were putting in, it was well worth while registering. and ongoing costs like electricity, bin emptying etc could all be reclaimed.

Edited by Alan de Enfield
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10 minutes ago, PaulD said:

If OP registers for VAT he will have to pay it and add it to the rental. OK if you rent to a VAT registered company as they can reclaim it but not for private renters.

 

But you don't show it seperately and the 'private renter' never knows or see any reference to VAT.

It an inclusive price, only, that the 'business' pays 1/6th of the income to the Vat-Man

 

When you buy your petrol / diesel does your receipt mention or show VAT ?

You just get X litres at £Y

 

With ABNB you get a receipt saying X nights at £Y per night.

 

I am not suggesting that the OP needs to register, simply that it should be considered as she could transfer the ownership of the boat to the company and reclaim the VAT, then reclaim the VAT on the  mooring fees, the electric used, the diesel used etc.

 

It is a very complex subject which is why I leave it to my accountants.

 

I say again - speak to the experts (your accountant or the HMRC) to see which is the best route for your business.

Edited by Alan de Enfield
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Thankyou for all the contributions. Yes, it is very complicated and there is lots to consider with the business side and of course meeting regulations and safety standards. I am aware and proceeding with most of those points, there was just a couple I was unaware of, Thankyou for highlighting them.

 

So to summarise the answer to my original question-

 

I take it that I would have to earn over £85k (which I wouldn't believe I

 would even at best estimations!) So therefore I would not have to pay the VAT for change of liveaboard. *

 

* Im going to triple check this with HMRC. 

 

Thankyou

 

 

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2 hours ago, NeenyB said:

Thankyou for all the contributions. Yes, it is very complicated and there is lots to consider with the business side and of course meeting regulations and safety standards. I am aware and proceeding with most of those points, there was just a couple I was unaware of, Thankyou for highlighting them.

 

So to summarise the answer to my original question-

 

I take it that I would have to earn over £85k (which I wouldn't believe I

 would even at best estimations!) So therefore I would not have to pay the VAT for change of liveaboard. *

 

* Im going to triple check this with HMRC. 

 

Thankyou

 

 

 

Good luck with getting any answer about anything out of HMRC at the moment, they're effectively unreachable... 😞

 

If the boat is a big wideboat and you got VAT exemption on the purchase price because of this, if you start renting it out you will have to pay all the VAT back regardless of the income from renting, because of the change of use, the VAT exemption only applies if it's your sole residence.

Edited by IanD
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31 minutes ago, IanD said:

 

😞

 

If the boat is a big wideboat and you got VAT exemption on the purchase price because of this, if you start renting it out you will certainly have to pay all the VAT back regardless of the income from renting, because of the change of use.

 

Were any Collingwood widebeams built to be eligible for vat exemption? I know they have narrow gunwales but having done the calculation for my own boat I don't think that comes into it and can't see how they could be vat exempt.

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20 minutes ago, blackrose said:

 

Were any Collingwood widebeams built to be eligible for vat exemption? I know they have narrow gunwales but having done the calculation for my own boat I don't think that comes into it and can't see how they could be vat exempt.

 

Going back to a thread (here) in 2016 Collingwood were advertisng their 60x 10 boats as zero rated for VAT

One of the posts :

 

 

I bought a boat from Collingwood VAT @ 0% But you have to sign an HMRC document stating that this will be your only residence. My invoice also states VAT charged at 0%.

Bazza

 

There was one builder (name witheld) who declared that their (wide) boats were compliant and rated them at Zero VAT.

The buyers signed the purchase contract that stated that should the boat be found to be non-compliant than the purchaser was responsible for the payment of the VAT.

 

During the companies VAT audit HMRC found that the boats were not compliant and HMRC demanded 'a lot' of money from the builder for unpaid VAT. The purchase contract was shown, the builder gave HMRC the buyers contact details and the buyers got an unwelcome letter from HMRC demanding £20k - £40k for payment within 14 days.

 

The manufacturers claims were 'removed' from their website post-haste.

 

There was quite a stink about it at the time (particularly as not all buyers were identified).

 

It rated a lot of comments, one notable warning being from the 'Fit Out Pontoon' (the UK's leading Canal Boat Design Consultancy)

 

A word of warning…

It is vital as a ‘Purchaser’ you read all the contractual documentation regarding the purchase of any vessels and in particular VAT free vessels. There’s been a case highlighted to us where a boat had been sold as ‘VAT free’ unfortunately on incorrect grounds which post sale lead to the HMRC correctly chasing the seller for the VAT which should have been charged. In this particular case the contract of sale placed the responsibility to satisfy any such VAT claim on the purchaser so they had to stump up.

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1 hour ago, NeenyB said:

Thankyou for all the contributions. Yes, it is very complicated and there is lots to consider with the business side and of course meeting regulations and safety standards. I am aware and proceeding with most of those points, there was just a couple I was unaware of, Thankyou for highlighting them.

 

So to summarise the answer to my original question-

 

I take it that I would have to earn over £85k (which I wouldn't believe I

 would even at best estimations!) So therefore I would not have to pay the VAT for change of liveaboard. *

 

* Im going to triple check this with HMRC. 

 

Thankyou

 

 

I think you have misunderstood, people are not clear on the question you are asking, so the answers in this thread relate to 2 different interpretations of your question.

 

The first interpretation of your question, is that you are asking if you will have to register your new business for VAT, to which the simple answer is only if your turnover is more than £85,000. The more complex answer is although you don't have too it may make financial sense too - the extra money you will have to charge your customers may be more than offset by the savings you make on your out goings.

 

The second interpretation of your question is that you are asking about the VAT on the original purchase of the boat, assuming you didn't pay any at the time of purchase because it was a liveaboard. The answer to this is complicated, and does not necessarily depend on whether you register your business for VAT or not, if Collingwood sold you the boat brand new and didn't charge you VAT it would be down to them to pay the VAT if the HMRC ask for it, but there might be a clause in your original purchase agreement that says you will have to pay collingwood if they have to pay HMRC.

The change of use will occur regardless of whether you register for VAT or not, so the VAT liability could still occur even if you don't register.

 

Collingwood and other builders have said that the VAT exemption is based on the design of the boat, not it's actual use, if they're right you won't have to pay even if you do change the use.

 

Please don't take what I have said as gospel, I'm just trying to give you a clearer insight into other peoples answers, and a better idea of what questions to ask. 

 

 

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1 hour ago, blackrose said:

 

Were any Collingwood widebeams built to be eligible for vat exemption? I know they have narrow gunwales but having done the calculation for my own boat I don't think that comes into it and can't see how they could be vat exempt.

 

 

They have them on their website now

https://www.collingwoodboatbuilders.co.uk/boats/brand-new-to-market-60ft-x-12ft-6in-cruiser-sailaway-basic-57000-zero-rated/

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