Yacht Insurance
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Charter Yacht Insurance

yacht insurance for luxury yachtsSo having looked at the issues of yacht insurance and MCA coding for your charter yacht, which so far have involved extra costs, are there any benefits ( other than paying the running and maintenance costs ) of chartering? - the simple answer is yes, but if you follow advice from friends, neighbours or yachting friends, prepare for a nasty shock and a call from HM Customs and Excise.

If you propose to operate a legitimate charter business then this is fine, and all the normal rules of running a business will apply. If you propose to operate the charter principally for your own benefit but pretending to be a charter business, then this will be seen as a benefit in kind and will be disallowed by the tax authorities. HM Revenue & Customs  have tightened up considerably in the last few years  as more and more owners have been tempted to try this, due to the increasing costs of owning and running  the yacht, which makes the VAT to be reclaimed, significant. So what is considered a legitimate charter - below are some guidelines, but remember you should take independent legal and financial advice before going ahead.

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Yacht Charter Insurance 

In order to reclaim VAT, both on the purchase of the yacht and the day to day running costs, then in order to be considered a viable business by the tax authorities, it must be set up as a legitimate company, with a legitimate management structure. The most common form is a limited company which offers limited liability protection to the directors and is also the most credible for the tax authorities. Many companies over the years have purchased a yacht for "corporate entertainment", with the primary intention of using if for the benefit of directors and their families only - please don't try this one as the authorities are well aware of this type of yacht finance scheme, and they take a dim view. Individuals will be taxed as having received  benefits in kind and the VAT will be reclaimed with penalties.

Charter Boat Insurance

Whilst setting up a limited company in the UK is very straightforward, tax rates (both corporate and VAT) can be higher than elsewhere in the world and it may be worthwhile considering other countries of registration. One of the most popular is the Isle of Man since it is still part of the UK for VAT purposes, but not for corporate tax purposes, unlike other locations such as Jersey, Guernsey and the BVI, thus offering the best of all worlds. Your accountant should be able to advise on all aspects of setting up and running the charter business from the Isle of Man, and indeed there are several companies that specialise in providing the management controls and infrastructure needed to satisfy the various authorities.

In summary, if you are proposing to run a legitimate charter business, with real clients using a proper company structure then you will be fine. The company will be audited in the usual way by your accountant and you will provide annual returns and deduct costs, expenses and reclaim VAT in the usual way. If you are proposing to "charter" principally for your own or the benefit of family and friends, then you will get caught eventually, and pay the price.

Now assuming you are running a professional charter business - what about the crew and their insurance?

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Marinablu International Ltd is an Introducer Appointed Representative of  Pantaenius UK Ltd who are authorised and regulated by the Financial Services Authority (FSA)  - pantaenius yacht insurance