HMRC to shore up tax gap
Owners of luxury yachts are locked in a battle with HM Revenue & Customs over a tax scheme designed to wipe out VAT bills on the vessels
Tax advisers are promoting VAT schemes to luxury yacht owners so individuals
incur little or no VAT, which the taxman said was causing it ‘serious concerns’.
Individuals provide funds to purchase the yacht, and the title is then
transferred into a shell company that is controlled either by the individual or
The shell company purports to use the vessel in a chartering or leasing
business and VAT is then reclaimed or not paid if bought outside the EU. The
vessel is then chartered or leased to the individual.
The taxman has brought in its anti-avoidance group to investigate whether
contrived leasing and charter schemes are abusive, and whether the tax claims
can be rejected on ‘abuse of rights’ principles.
Read more on ‘abuse of rights’ at accountancyage.com/2159209