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Posted

Any STRUCTURE, purchased or self-built to be used as a DWELLING does not attract VAT. I have successfully reclaimed in full the VAT charged on my self-build house and also the purchase of a new motorhome.

If I purchased a boat to be used as a dwelling, I would reclaim the VAT. I am VAT registered (voluntarily), so this is easy for me, but in principle should be possible for anyone.

I have reviewed the forum comments mainly centred on boat sizes, QS weights etc, but no-one seems to be discussing the possible VAT avoidance aspect of, for example live-aboard narrowboats , purchased or self-built (all materials used in constuction) ie a dwelling.

Also, all items incorporated within the structure (toilets, plumbing electrics, cupboards, etc) can also be included as part of a VAT reclaim (either individually via a quarterly return or as a lump sum on completion). Even if the dwelling is for use as a second, or even third home, then the same principle applies.

Comments welcomed.

Posted
3 hours ago, tonymoo said:

.................but no-one seems to be discussing the possible VAT avoidance aspect of ...................

 

 

Be very careful how you phrase your statements - the 'avoidance' (evasion) of tax is illegal 

I think you are maybe talking about the fact that things can be Zero rated. When we had our house built all of the goods we purchased and the labour were zero VAT zero rated - not VAT exempt.

Posted
3 hours ago, tonymoo said:

Any STRUCTURE, purchased or self-built to be used as a DWELLING does not attract VAT.

 

As Alan points out, yes it does. The rate however is zero. 

 

Classing a boat as a 'structure' is I think, asking for trouble. Maybe you got away with reclaiming the VAT but if a human inspector ever runs his eye over your VAT returns I suspect you might be receiving a letter...

 

 

 

Posted

Boat has to be a certain size then it is possible google Colin Stone vat for the relevant case. Most narrowboats and wide beams too small. Different rules for houseboats I.E. no engine.

also see here

Posted
16 minutes ago, Phoenix_V said:

Different rules for houseboats I.E. no engine.

 

 

 

There are different definitions of a Houseboat depending on if you talk with ;

C&RT

Local Authority Planning

The TAX man

 

C&RT for example expect that it will have an engine and be occasionally moved for lift outs, blacking etc,

The local authority expect it to have permanent connections to water, elec / gas and sewage

The tax man exects it to be a certain volume

Posted
15 minutes ago, Alan de Enfield said:

 

 

 

 

The tax man exects it to be a certain volume

You are confused the volume definition refers to a ship used as a home, see Colin Stone VAT as I mentioned above. Houseboats can be any size but cannot have an engine or be designed so that they could

https://www.gov.uk/guidance/vat-treatment-of-caravans-and-houseboats-notice-70120

 

7.1 A houseboat is defined for the purposes of VAT as being a floating decked structure which:

  • is designed or adapted for use solely as a place of permanent habitation
  • does not have the means of, and which is not capable of being readily adapted for, self-propulsion
Posted
3 minutes ago, Phoenix_V said:

you are confused the volume definition refers to a ship used as a home, see Colin Stone VAT as I mentioned above. Houseboats can be any size but cannot have an engine or be designed so that they could

 

Indeed - but the subject of the thread is claiming VAT, and in which case the TAX man has dimensional (volume) requirements 

Posted
58 minutes ago, Alan de Enfield said:

 

 

Be very careful how you phrase your statements - the 'avoidance' (evasion) of tax is illegal 

I think you are maybe talking about the fact that things can be Zero rated. When we had our house built all of the goods we purchased and the labour were zero VAT zero rated - not VAT exempt.

 

My understanding is that 'avoidance' is a term for legally not paying a tax using recognised tax rules. Some avoidance schemes may be a sham but new self-build houses are certainly a genuine way of avoiding paying VAT, or should I say being able to claim the VAT back.

 

Tax evasion is just that, not paying taxes that are due by illicit means, normally not declaring the income.

56 minutes ago, Phoenix_V said:

Boat has to be a certain size then it is possible google Colin Stone vat for the relevant case. Most narrowboats and wide beams too small. Different rules for houseboats I.E. no engine.

 

A butty that is without an engine towed to a mooring would fulfil the rules of a houseboat. That could then be sold by the maker with 0% VAT.

 

The new owner wouldn't normally be VAT registered and so anything they do would not be subject to a VAT inclusive price if they sold it on.

 

So, if the rear of the boat had some swim plates[1] and an engine added at a later date, while those costs would be subject to VAT the original VAT claimed by the boat builder wouldn't be charged to the new boat owner.

 

Not sure if that would still make economic sense unless you were adding a classic engine to the 'house-boat'.

 

[1] I added this as the boat must not be readily adaptable to accept a form of propulsion so perhaps shouldn't have swim plates. I guess depends on how many butties have swim-plates.

Posted
12 minutes ago, Mikexx said:

 

My understanding is that 'avoidance' is a term for legally not paying a tax using recognised tax rules. Some avoidance schemes may be a sham but new self-build houses are certainly a genuine way of avoiding paying VAT, or should I say being able to claim the VAT back.

 

Tax evasion is just that, not paying taxes that are due by illicit means, normally not declaring the income.

 

Tax avoidance is using the 'loop holes' in legislation (or two contradictory pieces if legislation) to 'avoid' paying tax.

 

Since the Ramsey case some years ago the courts have been looking at 'tax avoidance' schemes differently, and now look to see if the purpose of the law is being upheld, rather than just the 'letter of the law'

 

Following the decision in Ramsay, a clear line of authority has developed where the courts will determine a tax avoidance scheme to have no effect if they believe the scheme to be contrary to the purpose of tax law.

 

 

This line of authority has developed a process for dealing with tax avoidance. First, the courts have consider whether a scheme is constructed for the purpose of tax avoidance.

A much cited case in tax law is the case of Barclays Mercantile, where The House of Lords described tax avoidance in the following terms:

“structuring transactions in a form which will have the same or nearly the same economic effect as a taxable transaction but which it is hoped will fall outside the terms of the taxing statute. It is characteristic of these composite transactions that they will include elements which have been inserted without any business or commercial purpose but are intended to have the effect of removing the transaction from the scope of the charge.”

 

This end result will be a matter of interpretation and in doing so judges have to look at the purpose and spirit of legislation. As set out in Inland Revenue Commissioners v McGuckian:

20 minutes ago, Mikexx said:

new self-build houses are certainly a genuine way of avoiding paying VAT

 

 

No it is not - you are paying for zero rated goods - you are not 'avoiding' paying the VAT

Posted
4 hours ago, tonymoo said:

I have successfully reclaimed in full the VAT charged on my self-build house and also the purchase of a new motorhome.

 

HMRC are very clear about what is Zero Rate VAT. To my knowledge it is zero rated only if it is adapted for disabled use. Therefore I am surprised about your claim or it was a while ago.

 

I suppose there is nothing to stop you having the vehicle modified, say with a chair lift as long as it conforms to HMRC criteria. However the application form VAT1615A requires (note even HMRC can't spell):

 

The disabled person named in this declaration usually uses a wheelchair for their mobility and the permanently and substantially adapted vehicle is for their personal use.

 

And

 

The disabled wheelchair user named in this declaration is chronicaly sick or has a disabling condition (provide brief details below) and the adaption of the vehicle is necessary because of this condition

6 minutes ago, Alan de Enfield said:

No it is not - you are paying for zero rated goods - you are not 'avoiding' paying the VAT

 

Quite, as per definition of avoidance. I'm sure those using the old K2 schemes would like you to think they are not 'avoiding paying' tax too.

Posted
6 minutes ago, Mikexx said:

HMRC are very clear about what is Zero Rate VAT. To my knowledge it is zero rated only if it is adapted for disabled use. Therefore I am surprised about your claim or it was a while ago.

 

 

We had our house built in 2005/6 and it was at zero rated VAT - and it was nothing to do with being disabled.

Posted
26 minutes ago, Alan de Enfield said:

No it is not - you are paying for zero rated goods - you are not 'avoiding' paying the VAT

 

Quite. You are paying VAT at the prevailing rate for that supply, i.e. zero per cent. 

 

At some point in the future the chancellor might decide to change that rate to something above zero. VAT exempt supplies are I believe, a different matter. I don't think a chancellor can arbitrarily change that status. 

 

(But I'm not sure!) 

 

 

Posted
15 minutes ago, Alan de Enfield said:

 

We had our house built in 2005/6 and it was at zero rated VAT - and it was nothing to do with being disabled.

 

I never said it was when it came to homes. I feel you have taken my quote entirely out of context. In fact the sentence was about a motorhome responding to a post by the OP that I even quoted in my reply.

Posted
Just now, Mikexx said:

 

In fact the sentence was about a motorhome 

 

Then maybe you should not have quoted the part where he mentions his 'self build house' and just quoted the relevant 'vehicle'.

Posted

I went through the VAT calculations about 18 years ago a couple of years after I bought my widebeam to see if I could reclaim the VAT

I don't know if the rules or methods of calculation have changed since then but my widebeam didn't even come close to qualifying and there would be no chance for a narrow boat. 

Posted

ISTR its not even the actual weight of the boat or the volume. One inputs various measurements into a chart and it spits out a 'notional tonnage' for VAT purposes which bears little relation to the actual weight or volume. 

Posted

To clarify some aspects of my posting:

1.Tax avoidance is the application of appropriate jurisprudence in a financial transaction and is completely legal. However HMRC will challenge any cases that appear to be a contrivance to eascape due tax.

2. Tax evasion is the non-payment of tax due by whatever means are available and is completely illegal and in the UK and some other jurisdictions, a criminal offence.

3. Zero rating and exempt can both apply for some cases (eg self build house ). The result is effectively the same-no tax payment is required. 

 

I do choose my words carefully.

 

Posted
34 minutes ago, MtB said:

ISTR its not even the actual weight of the boat or the volume. One inputs various measurements into a chart and it spits out a 'notional tonnage' for VAT purposes which bears little relation to the actual weight or volume. 

It is effectively a measurement of volume rather than weight.

Posted (edited)
55 minutes ago, MtB said:

ISTR its not even the actual weight of the boat or the volume. One inputs various measurements into a chart and it spits out a 'notional tonnage' for VAT purposes which bears little relation to the actual weight or volume. 

 

It is actually the volume that a number of 'tuns' (barrels) would fit in - nothing to do withe 'tons' or 'tonnes'.

It is worked out by a length x beam x height from base to gunwales (or the hold 'roof')

 

The tun (Old English: tunne, Latin: tunellus, Medieval Latin: tunna) is an English unit of liquid volume (not weight), used for measuring wine, oil or honey. Typically a large vat or vessel, most often holding 252 wine gallons, but occasionally other sizes (e.g. 256, 240 and 208 gallons) were also used. The modern tun is about 954 litres.

 

Image result for the three tuns inn

 

Three tuns sign hi-res stock photography and images - Alamy

 

Image result for the three tuns inn

Edited by Alan de Enfield

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