For a while new regulations proposed by the Her Majesty's Revenue & Customs (HMRC) in the UK have caused some concern with the Isle of Man (IOM) yacht sector and the IOM Customs over yacht chartering. Following a series of meetings involving HMRC, the IOM Customs & Excise (IOMCE) service and the IOM Yacht Forum, the position now appears stabilised and seemingly to the good of the IOM yacht industry.

These meetings discussed the guidance from HMRC on yacht charter and leasing as produced in Brief 56/09. This brief provides guidance on indicators for abusive practice. HMRC states that "provided clear evidence exists of earnestly pursued chartering to third parties which meets the business test and the criteria for economic activity. Then there is a legitimate right to recover input tax on the business asset(s), subject to the usual rules for input tax recovery." So providing the conditions are met, the guidance adds, "no uncertainty should be created if a yacht is also used by the person who is the funder or ultimate owner of the chartering entity."

"The message to the industry is simple," stated an IOMCE spokesman. "Examine the third-party chartering activity. If this stands up as an economic activity earnestly pursued and can be so evidenced, then Customs will not seek to apply the abuse principle. What can not be tolerated is sole use of a yacht by the person who is the funder or ultimate owner of the chartering entity".

The view of the IOM Yacht Forum is that these meetings have clarified the whole position with an emphasis on the economic benefit of the yacht charter market.


Superyacht Business / David Robinson, 17 February 2010