VAT on mooring costs

[Hekaterine]

Hi. I've done a search on VAT and haven't found any topics so apologies if this has been discussed before but...

 

We live on our boat and currently moor in a marina, where we pay VAT on our mooring fee. Our neighbour gets Housing Benefit, which tells me that the Council accepts that some or all of the mooring charge is rent. Surely that means that some or all of the mooring fee should be VAT-exempt?

 

Anyone on here know more about this than I do? I'm wondering whether to have a chat with Customs and Excise.

 

Ta in advance.

 

Karen

[mayalld]

Hi. I've done a search on VAT and haven't found any topics so apologies if this has been discussed before but...

 

We live on our boat and currently moor in a marina, where we pay VAT on our mooring fee. Our neighbour gets Housing Benefit, which tells me that the Council accepts that some or all of the mooring charge is rent. Surely that means that some or all of the mooring fee should be VAT-exempt?

 

Anyone on here know more about this than I do? I'm wondering whether to have a chat with Customs and Excise.

 

Ta in advance.

 

Karen

 

Do bear in mind that getting HMRC to declare something VAT-exempt is a sure fire way of increasing your landlords costs, and hence your mooring cost.

[Hekaterine]

Do bear in mind that getting HMRC to declare something VAT-exempt is a sure fire way of increasing your landlords costs, and hence your mooring cost.

 

Hadn't thought of that - but surely they have to do a VAT return anyway? Would it create a lot more difficulty for them if some of the fees were VAT exempt and some not?

[WJM]

"Do bear in mind that getting HMRC to declare something VAT-exempt is a sure fire way of increasing your landlords costs, and hence your mooring cost"

 

 

Huhh!!!!!? Hows that? To a supplier VAT is ultimately invisible, it comes in one door and out the other, the landlord collects it and then hands it over to HMRC. VAT has no affect on costs to anyone other than the end user.

 

 

 

 

"Would it create a lot more difficulty for them if some of the fees were VAT exempt and some not?"

 

No - a VAT return is a VAT return. It does not matter what it contains, still roughly the same amount of work (with a computerised system about 5 minutes work)

Edited October 31, 2008 by WJM

[mayalld]

Hadn't thought of that - but surely they have to do a VAT return anyway? Would it create a lot more difficulty for them if some of the fees were VAT exempt and some not?

 

Yes!

 

As things stand now, just about all their sales are subject to VAT.

 

This means that they can reclaim all the VAT that they pay on things that they but (whether to sell, or to use for running the business)

 

If (say) 90% of their sales are VAT exempt, they will only be allowed to reclaim 10% of the VAT that they pay on supplies.

 

That means their costs rise, and somebody has to pay!

[WJM]

You dont understand VAT.

 

A business collects lots of VAT (on Sales) and pays out a smaller amount of VAT (on expenditure). At VAT Return time you give HMRC the VAT that you have collected on their behalf minus the VAT that you have paid out. So a VAT registered business never ultimately 'pays' any VAT, it merely handles it. VAT is not a cost to a VAT registered business. Only the end user actually pays it because he has no way of reclaiming or offsetting it.

 

 

I should add that, if in some exceptional circumstance you happened to pay out more VAT than you collected (a large equipment purchase), HMRC will actually send you a cheque for the difference - yes, they give you money!!!!

Edited October 31, 2008 by WJM

[mayalld]

You dont understand VAT.

 

A business collects lots of VAT (on Sales) and pays out a smaller amount of VAT (on expenditure). At VAT Return time you give HMRC the VAT that you have collected on their behalf minus the VAT that you have paid out. So a VAT registered business never ultimately 'pays' any VAT, it merely handles it. VAT is not a cost to a VAT registered business. Only the end user actually pays it because he has no way of reclaiming or offsetting it.

 

 

I should add that, if in some exceptional circumstance you happened to pay out more VAT than you collected (a large equipment purchase), HMRC will actually send you a cheque for the difference - yes, they give you money!!!!

 

All correct, except that a company that makes Vat-exempt (as opposed to zero-rated) supplies cannot reclaim all the input tax.

[david and julie]

I've just had a quick look on the VAT site and it says this in relation to moorings.

7.6 Moorings for houseboats

If you supply a mooring for a houseboat the mooring is exempt.

 

If you supply a mooring for any other type of vessel, then your supply is standard-rated unless it qualifies for zero-rating as explained in Notice 744C Ships and aircraft.

 

Very clear like all their documents.

 

I have found them to be quite helpful on the phone, but you need to prompt them by having the right questions ready. Read the links below and anything else they may refer too. When you've absorbed what you can you need to write down your questions and try not to drift off all over the place.

 

When you phone ask them for a reference number and keep it as they will record the conversation.If the conversation goes in your favour, ask them to confirm it in writing - they may or may not want you to write in for this though.

 

http://customs.hmrc.gov.uk/channelsPortalW...ment#P190_18231

http://customs.hmrc.gov.uk/channelsPortalW...tyType=document

[WJM]

"All correct, except that a company that makes Vat-exempt (as opposed to zero-rated) supplies cannot reclaim all the input tax"

 

I stand corrected then. Zero Rated and Exempt, while they appear the same can be different depending on your perspective. I have no experience of Exempt items.

[mayalld]

Basically, to qualify for zero rating;

1. Must be over 15 Gross Tons
   
2. Must not be a pleasure craft
   
3. Must be a mooring in a Customs Port
   

So, unless you have a Houseboat certificate, VAT at standard rate...

[Dominic M]

All correct, except that a company that makes Vat-exempt (as opposed to zero-rated) supplies cannot reclaim all the input tax.

Indeed so. This is why companies that lease commercial property have the option as to whether or not they make an exempt supply or charge 17.5% VAT on the rent.

 

In general, moorings are a taxable supply at full rate.

[dor]

"All correct, except that a company that makes Vat-exempt (as opposed to zero-rated) supplies cannot reclaim all the input tax"

 

I stand corrected then. Zero Rated and Exempt, while they appear the same can be different depending on your perspective. I have no experience of Exempt items.

 

I used to work for an animal feed company, so 99% of our sales were zero-rated. Every quarter, HMRC sent US a cheque!

[Dominic M]

I used to work for an animal feed company, so 99% of our sales were zero-rated. Every quarter, HMRC sent US a cheque!

I didn't realise KFC was zero rated.

[david and julie]

I'm not going to get bogged down with the intricate details of VAT because its a minfield and I don't profess to know enough about it myself.

 

I do know though that VAT on commercial property is a completely different area than most other forms of VAT though.

 

As I understand it, VATwise, one can operate a business it the usual way, but the property itself can be a completely separate entity.

 

It all depends on whether the owner(or lessee etc) as chosen to opt his interest in the land or building in or out of VAT.

[Timleech]

Indeed so. This is why companies that lease commercial property have the option as to whether or not they make an exempt supply or charge 17.5% VAT on the rent.

 

...but they have to do the same on all their properties, they can't chop & change though they once could.

 

Tim

[david and julie]

...but they have to do the same on all their properties, they can't chop & change though they once could.

 

Tim

The option to waiver exemption last for 20 years and applies to whoever registers an interest in land or the buildings on it. As far as I know If there were a dozen buildings on an industrial estate they can all have there own status according to what the user of each individual building wants.

 

Whenever any buildings are sold or re-let the new user as the choice.

[Timleech]

The option to waiver exemption last for 20 years and applies to whoever registers an interest in land or the buildings on it. As far as I know If there were a dozen buildings on an industrial estate they can all have there own status according to what the user of each individual building wants.

 

Whenever any buildings are sold or re-let the new user as the choice.

 

When I was negotiating the lease on my dry-dock from BW, about 18 years ago, I was offered the 'VAT or no VAT' option. Not being registered at the time I of course chose No VAT and terms were agreed on that basis.

As was normal for BW estates dept at that time they dragged their feet (for years!), & by the time we got near to signing the rules had changed and landlords had to choose one or the other for all their new leases. They opted to go for VAT on everything, and I didn't get any real sympathy for the fact that my rent had suddenly increased by 17.5% (or whatever it was then)

 

Tim

[Hekaterine]

Thanks for all your help so far. this is really useful stuff.

 

So, unless you have a Houseboat certificate, VAT at standard rate...

 

Is there a specific definition of a houseboat then? i.e. not just a boat you live on (sorry to sound thick)

 

EDIT - sorry I am thick - have just checked the link properly and I see the definition is no self-propulsion.

Edited October 31, 2008 by Hekaterine

[stickleback]

But if you buy a 30 year lease on a mooring, which some marinas offer, it is a one off payment with no VAT incurred. And works out about £966 per annum, which, having been paid, can't go up.

 

Stickleback

Edited November 1, 2008 by stickleback