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VAT and Hotel boats


Quaysider

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Good Morning folks,

 

As some of you may already know (from the postings I've made over the last few years) we're finally about to begin operating as a Hotel boat... well I say hotel boat, we are nowhere near as sophisticated as the proper ones - we're trying to be a "liveaboard narrowboat holiday experience" sort of affair - I can't think of a cleverer way of saying that.

Anyway  - the reason I'm posting today is to see if we've got any helpful accounts on-board (every pun intended) who might be able to offer some advice re. VAT. 

I know we dont have to vat register (the turnover is going to be a whole lot lower than the thresehold) but we could voluntarily - and fro what I can gather from the swaheli on the hmrc website, we could submit a vat reclaim for business expenses going back up to 4 years... ERGO, the vat on the boat and materiels bought for it...  that'd be quite a tidy sum and certainly cover our first years living costs until we build up bookings for 2019. 

A couple of questions concern me:  IS there a limit to the reclaim - say against income (ie. 60% of turnover or whatever figure)  and in the 2nd year of trading, can we DE-register without having to  repay the vat reclaimed in the first year?

I am in touch with another hotelier who has very kindly offered help and support but I don't want  him to feel like I'm taking advantage of his good nature - hence trying to find as much as I can myself ... Any advice would be gratefully received.

Cheers, Mark. 

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As above, there are far too many variables and when it comes to VAT, YOU have to get it right.  I wouldn't ask my bank manager for advice on whether to go for a pumpout or cassette, so I wouldn't expect a definitive answer on here when it comes to VAT.  As knowledgeable as our members are.

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Hi Mark,

Well done for going for it.

With regards to your specific question I'm unable to help, my VAT trading days finished 34 years ago.

 However, I would recommend you keep a close eye on the registration thresholds: annual and quarterly ( this used to be about one third of the annual figure) - you may be under the annual mark but your business will be seasonal and you may breach the quarterly figure.  There was talk of lowering the quarterly figure substantially, presumably to get more small traders into the excise net.

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3 hours ago, Quaysider said:

can we DE-register without having to  repay the vat reclaimed in the first year?

From the HMRC website:

VAT after you cancel

You’ll have to submit a final VAT Return for the period up to and including the de-registration date. You must account for any stock and other assets you have on this date if:

  • you could reclaim VAT when you bought them
  • the total VAT due on these assets is over £1,000

 

I doubt you would be able to claim the full amount of the VAT you have paid out on the boat unless the sole use of the boat since you bought it has been to take guests boating.  You might be asked to make some kind of apportionment between own use and business use. You would be allowed the portion of the VAT which relates to the business element.  So when you de-register you would be asked to pay back the VAT due on the value of the boat. How you would value it I have no idea.  It's possible that the VAT due on the business element could come in at less than the £1000 de-minimis limit.

You would of course have to charge your guests VAT on the price of their stay with you.

 

I think we would all be trying this dodge

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Just out of interest has your boat been designed as a hotel boat from the start or is it a new idea? I say this as my friend has two hotel boats and his BSS is more stringent then on my boat, signage and safety glass with visible British Safety glass markings fitted to doors to name a few. They are registered business boats though CaRT so obviously license different too.

Just wondering if they need to be registered as a business also with CaRT as well as HMRC to be able to claim everything back? I'm sure the CaRT business licence is determined on the business turnover(whether you need one or not)

 

 

 

 

Edited by PD1964
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YES - the boat was always going to used for this so we ensured the builder knew about the eventual non-private boat status...  The CRT licence is obligatory for any trade but they have been helpful and have agreed to refund the currently paid up licence pro-rata from 1st April when the business licence commences.

I had a normal bss put on last year just in case we ran out of time getting it ready if you follow... bit of a waste of 130 quid but i wanted to make sure the insurance wouldn't try and get out of paying in the event of claim.

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