vat and qualifying ships ebook
TRANSCRIPT
Buying or selling a boat and all at sea? A guide to UK VAT rules (June 2015)
By Ann L HumphreySolicitor & Tax Specialist
2Buying or selling a boat and all at sea?
Copyright © 2015 Ann L Humphrey
All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, without the prior written permission of the author, except for brief quotations the source of which is acknowledged and certain other non-commercial uses as permitted by copyright law. For permission requests, please contact Ann Humphrey.
Disclaimer
Although the author has made every effort to ensure that the information in this book was correct at the time of writing, the author does not assume and hereby disclaims any liability to any party for any loss, or damage caused by errors or omissions.
Contents
Buying or selling a boat and all at sea?
5 6 7 7 8
9 9152829
Author’s note
Introduction
VAT-free sale: non business transactionVAT-free status: zero-rating
Qualifying ship – definitionHow to Calculate Gross Tonnage
Frequently asked questions
Further reading
Image credits
Advantages of zero-rating for a qualifying ship
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5Buying or selling a boat and all at sea?
Author’s note
This e-book has its origins in a blog post I wrote in 2011. That blog post (which you can read here http://bit.ly/VATBoats) created an unexpected level of interest.
It became apparent there was confusion on the part of boat-owners, boat-sellers and prospective boat-buyers on VAT as it affects them. Unfortunately HMRC’s guidance on this matter is not as helpful as it could be so it is hoped that this short guide will clarify matters. Some of the common queries in this area are dealt with in the FAQs section at the end of the guide.
I would like to thank Justin Yeoh for his help in putting together this guide.
Author’s note
My Place
All the proceeds from this eBook are going to a charity called My Place which is dedicated to transforming the lives of the most disadvantaged and at-risk children in various parts of Asia. To find out more about their work please visit their website:
http://www.myplaceintl.org/
6Buying or selling a boat and all at sea?
Introduction
Sales of boats in the UK are, in principle, subject to VAT either at the standard rate of 20% or at a 0% rate (referred to as ‘zero-rating’).
There are two ways in which a vessel can be bought and sold free of UK VAT:
1.Where it is a sale by a person who is not carrying on a business for VAT purposes, for example, a sale by a private individual; or
2. Where it is a zero-rated sale.
Where a vessel is zero-rated there is no VAT chargeable on the purchase and there can be other benefits which are explained below. The conditions for zero-rating are also set out below.
Houseboats are zero-rated as long as they are designed or adapted for permanent habitation, have no means of self-propulsion and are not capable of being readily easily adapted for self-propulsion. The supply of facilities for mooring a residential houseboat is exempt from VAT. A houseboat is not a ’residential houseboat’ if ‘residence in it throughout the year is prevented by the terms of a covenant, statutory planning consent or similar permission’.
Introduction
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In order for a sale to be subject to a VAT charge it must be a sale by a person who is or is liable to be VAT-registered in the course of his business. This means that to be taxable the boat being sold must be an asset of a business that is or should be VAT-registered. Private sales are not taxable. This rule applies to all boats.
Buying or selling a boat and all at sea?
VAT-free sale: non business transaction
VAT-free status: zero-rating
Certain vessels have a special status in VAT law and sales of them are VAT-free. The EU rules normally only relieve ships suitable for use on high seas and/or for passenger transport but the UK rules are more generous.
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Interested in reading more?
This is an extract from my eBook. It costs £35 and all proceeds from this eBook go to charity. The cost is considerably less than if you went to see a solicitor for advice.
If you wish to find out more and purchase it please follow this link:
http://bit.ly/VATQualShips
Introduction
9Buying or selling a boat and all at sea?
The following images were used courtesy of the following contributors:
Page 1 – http://bit.ly/ImgCred1Page 4 - http://bit.ly/ImgCredit2Page 7 - http://bit.ly/ImgCredit3
Image credits