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INFORMATION CENTRE
Yachting VAT Notes
23/04/2010
Yachting VAT Note April 2010
LEASING VAT – COURSE CORRECTION
Change is coming to the Isle of Man. This month the Island’s Customs authorities circulated a rare “Practice Note” (PN) to its yachting business sector. The PN demands that relevant service providers take out trash quickly from the VAT system or be forced to do so. The trash relates to ‘abusive leasing and chartering structures’ which putative service providers must voluntarily de-register for VAT no later than 31 May 2010.
Abusive leasing and chartering structures are essentially ones that have registered for VAT with the sole aim of attaining an improper tax advantage. They recover VAT on purchase of the yacht under pretext of carrying on a chartering business. However, the yacht is simply leased or is somehow made available to the individual who funded the purchase, directly or indirectly, for fractional amounts of VAT spread over many years. Third party charters, if any, are just patchy and unsubstantial.
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