INS AND OUTS OF THE ‘QUAL­I­FY­ING SHIP’ VAT

Canal Boat - - The Boat Test -

HM REV­ENUE & CUS­TOMS had to change its rules on which boats could be zero-rated for VAT fol­low­ing a court case in 2008. Lt Cmdr Colin Stone took a case con­cern­ing his Dutch barge to the High Court and won. The re­sult is a fairly com­pli­cated set of reg­u­la­tions.

A ‘Qual­i­fy­ing Ship’, as it’s called, has to be no less than 15 gross tonnes, and is ‘nei­ther de­signed nor adapted for use for recre­ation or plea­sure’. The gross ton­nage doesn’t re­fer to the weight of the boat it­self, but its the­o­ret­i­cal car­ry­ing ca­pac­ity, cal­cu­lated by tak­ing length, breadth and depth mea­sure­ments and us­ing a spe­cial for­mula. The depth is mea­sured to the deck, which in most cases is the gun­wales. The mak­ers of some boats have re­duced the width of the gun­wales so they can no longer be walked along; this, they say, means the roof can be classed as the deck. This Sheffield Keel, though, needs no such tricks to qual­ify; it does so easily. In any case, though, it’s worth check­ing with HMRC that any boat you buy re­ally does qual­ify.

Apart from the size, a boat can only be zero-rated if the owner in­tends to use it as a place of per­ma­nent habi­ta­tion. That doesn’t mean that the owner has to live aboard im­me­di­ately, but they must be able to demon­strate that they in­tend to live aboard at some point, and HMRC may check.

Even if a boat is zero-rated, you should still ask for a VAT in­voice to be raised. It shows the VAT has been ac­counted for and means there won’t be a prob­lem when it comes to a re­sale. In ad­di­tion, it sat­is­fies Euro­pean Cus­toms should you take the boat to ex­plore the Con­ti­nent. As with ev­ery­thing to do with taxes, it’s ad­vis­able to take good ad­vice, and not leave any­thing to chance.

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