Finance - zero VAT for liveaboards

[sharpness]

On ‎24‎/‎07‎/‎2018 at 21:38, eco-boat said:

Personal Update

 

My blog is now quite old (5 years I believe) and much of my intentions and many of my views have changed as I have learned more about the boating world. I will resume writing on the blog very soon because my fit-out will start in the next few weeks.

I have been planning to buy a boat from Colecraft for 6 years. Last week, after having a build slot booked for 12 months and them having a significant deposit for 6 months and days away from steel cutting, they told me that they didn't want to build a boat for me, they don't have the time, and I should take my deposit back. I understand why they did this - they are traditionalists and I am a long way from that, so to them I am a 'difficult customer'. It did shatter my dreams though.

Next day I picked up the pieces and bought myself a new, already built, sailaway by Collingwood. I had to make a few compromises and I'll be doing alterations for months to come but it will get me on the water sooner.

 

     Mark

Has the OP given up on the VAT? Part of his post #22 quoted above says he has now bought a Coolingwood sailaway "off the shelf" They surely wouldn't have sold to him without charging VAT or is he expecting to reclaim it?

[BruceinSanity]

7 hours ago, sharpness said:

Has the OP given up on the VAT? Part of his post #22 quoted above says he has now bought a Coolingwood sailaway "off the shelf" They surely wouldn't have sold to him without charging VAT or is he expecting to reclaim it?

AIUI, Collingwood have sold him the sailaway VAT free. They have always been in the lead for claiming that their boats can be “qualifying vessels”.

[Sea Dog]

2 hours ago, BruceinSanity said:

AIUI, Collingwood have sold him the sailaway VAT free. They have always been in the lead for claiming that their boats can be “qualifying vessels”.

Can anyone see a way this isn't going to end in tears after a futile battle with the vat man?

[RLWP]

1 minute ago, Sea Dog said:

Can anyone see a way this isn't going to end in tears after a futile battle with the vat man?

Yes

 

It only becomes a problem if the VAT man looks into it. Why would they know about it?

 

It won't be the only boat built and paid for this way

 

Richard

[Graham Davis]

Richard,

They will know about it when the OP presents them with a pile of invoces and asks them for his money back.
And then they will start asking questions, which is why many of us have suggested he gets written confirmation BEFORE he starts buying things.

[RLWP]

1 hour ago, Graham Davis said:

Richard,

They will know about it when the OP presents them with a pile of invoces and asks them for his money back.
And then they will start asking questions, which is why many of us have suggested he gets written confirmation BEFORE he starts buying things.

Is that how the process works? He buys from Collingwood, pays VAT then claims it back? Or does he not pay it in the first place

 

Richard

[philjw]

5 minutes ago, RLWP said:

Is that how the process works? He buys from Collingwood, pays VAT then claims it back? Or does he not pay it in the first place

If Collingwood truly believe that the boat qualifies for zero rating then they will not charge VAT on the sale. That will not get the OP out of paying VAT on anything that he buys from other sellers or from Collingwood if the purchases are not part of the contract to buy the boat.

[eco-boat]

13 hours ago, sharpness said:

Has the OP given up on the VAT? Part of his post #22 quoted above says he has now bought a Coolingwood sailaway "off the shelf" They surely wouldn't have sold to him without charging VAT or is he expecting to reclaim it?

I bought the boat with 0% VAT. There's nothing in the contract to say that VAT liabilities are transferred to me the buyer, and the boat builder is confident that VAT will not be demanded by HMRC.

 

     ark

[eco-boat]

20 minutes ago, philjw said:

If Collingwood truly believe that the boat qualifies for zero rating then they will not charge VAT on the sale. That will not get the OP out of paying VAT on anything that he buys from other sellers or from Collingwood if the purchases are not part of the contract to buy the boat.

This is correct.

 

I have been doing VAT returns for my business every three months for the past 12 years. On the sale side of the form, you enter a sale value and you enter the VAT you charged. For most businesses the VAT value is always 20% of the sale value, but when it isn't, alarm bells start ringing at HMRC. Boat builders who build live-aboard widebeams are an example of where the VAT value is significantly less than 20% of the sale value. HMRC sees this and investigates. My boat builder has experienced this a lot in the past, and as I have said previously, has even gone to court to fight HMRC and won.

HMRC write the rules, the boat builder conforms to the rules, I pay zero VAT. It's that simple.

 

     Mark

[philjw]

2 minutes ago, eco-boat said:

 

I have been doing VAT returns for my business every three months for the past 12 years.

Don't be tempted to reclaim the VAT on items you buy for the boat through your business accounts then. As I'm sure you know this is not allowed unless you can convince HMRC that the boat is to be used as part of the business.  Good luck with that one.

[Tim Lewis]

On ‎24‎/‎07‎/‎2018 at 23:02, Graham Davis said:

Lots of very nice words Mark, but until you actually have it in writing from the VAT Inspectors I think you are jumping to (very) large conclusions.

 

And VAT is not just a tax on "luxury items"!

Seem to remember that for a period in the early 1970's that there was a higher rate of VAT on 'luxury' goods!

[eco-boat]

13 minutes ago, philjw said:

Don't be tempted to reclaim the VAT on items you buy for the boat through your business accounts then. As I'm sure you know this is not allowed unless you can convince HMRC that the boat is to be used as part of the business.  Good luck with that one.

Absolutely!

My boat and my business will be kept worlds apart. If HMRC sees any association between the two, the whole boat becomes liable for 20% VAT.

I'm keeping every single receipt, for future scrutiny.

[Albion]

When I bought my Sagar barge (53ft x 12.5 ft) back in 2010 we had to form a contributing group, with Sagar themselves) to start to take HMRC to a tribunal to get them to accept that Sagar barges were a 'qualifying vessel'. We got to the stage of taking a barrister's advice (one with previous experience in the field) and requesting a tribunal date when HMRC backed off because they knew they would lose. Most of the equipment that was fitted by Sagar was zero rated but there were some strange anomalies not allowed by HMRC such as the second (of two) fridges and the auto satellite dish equipment for the TV, IIRC. HMRC insisted that if the vessel was used for Leisure and Pleasure purposes (as opposed to permanent live aboard) it could not be a qualifying vessel but I'm not sure if that wasn't the last bit of their 'dog in the manger' approach being irritated by being challenged.

However the only UK wide beam that I remember getting accepted as a qualifying vessel was a very long one with very high gunwales (that didn't look that attractive IMO) owned by a woman living on it somewhere near London IIRC. I seem to remember that it was discussed on this forum. I also seem to recall that it was up for sale a while ago. From memory, unless the UK wide beam vessel is large and has those high gunwales it can't quite achieve the dimensions that are required in the calculation to get 15 notional tons qualifying vessel status.

Roger

Edited July 26, 2018 by Albion

[RLWP]

5 minutes ago, Albion said:

When I bought my Sagar barge (53ft x 12.5 ft) back in 2010 we had to form a contributing group, with Sagar themselves) to start to take HMRC to a tribunal to get them to accept that Sagar barges were a 'qualifying vessel'. We got to the stage of taking a barrister's advice (one with previous experience in the field) and requesting a tribunal date when HMRC backed off because they knew they would lose. Most of the equipment that was fitted by Sagar was zero rated but there were some strange anomalies not allowed by HMRC such as the second (of two) fridges and the auto satellite dish equipment for the TV, IIRC. HMRC insisted that if the vessel was used for Leisure and Pleasure purposes (as opposed to permanent live aboard) it could not be a qualifying vessel but I'm not sure if that wasn't the last bit of their 'dog in the manger' approach being irritated by being challenged.

However the only UK wide beam that I remember getting accepted as a qualifying vessel was a very long one with very high gunwales (that didn't look that attractive IMO) owned by a woman living on it somewhere near London IIRC. I seem to remember that it was discussed on this forum. I also seem to recall that it was up for sale a while ago. From memory, unless the UK wide beam vessel is large and has those high gunwales it can't quite achieve the dimensions that are required in the calculation to get 15 notional tons qualifying vessel status.

Roger

This is my understanding too, and it seems like it doesn't really matter. If the shell builder says the vessel is 0% VAT and the buyer pays no VAT - that seems to be it

 

Unless the shell builders are actually quoting the price including VAT, saying it is 0% VAT , taking the VAT and paying HMRC

[Albion]

29 minutes ago, RLWP said:

This is my understanding too, and it seems like it doesn't really matter. If the shell builder says the vessel is 0% VAT and the buyer pays no VAT - that seems to be it

 

Unless the shell builders are actually quoting the price including VAT, saying it is 0% VAT , taking the VAT and paying HMRC

From my experience when I was running my own business for many years I'm not sure that, during an inspection, the company would be allowed to get away with this because the Sales invoice supplied to the customer would not match the record of monies paid to HMRC (in effect, two separate invoices would be on record for the same item). It is a while since I did my last VAT return though and even longer since I had my last VAT inspection so I may be wrong on this point.

Roger

[Bod]

Some guidance here.https://www.thefitoutpontoon.co.uk/finance-costs/vat-free-exempt/

Seems it's the gunnel height that is the key, on large wide beams, narrow beams cannot make the dimensions.

 

Bod