UK Yacht Owning Companies A Note of Caution!

We here at Oceanskies are regularly asked to register yachts on behalf of UK limited liability companies which in certain circumstances  can provide a sensible method of yacht ownership.

We do however  recommend that any yacht owner who is considering the ownership of a yacht through a UK company should take appropriate fiscal advice before proceeding from their own professional advisers such as their accountants, lawyers or tax advisers.

If a UK company is identified as a sensible way of proceeding then we also recommend that the yacht owner utilises the services of a reputable firm of UK accountants, or other professional company service provider, to incorporate and look after the company and make the proper legal and fiscal returns to the UK company registry (UK Companies House) and the UK tax authorities (Her Majesty’s Revenue & Customs or HMRC).

We often see UK companies marketed as ‘cheap and easy’ low maintenance ownership options for yachts without mention of the legal and/or fiscal reporting requirements that are required to keep the company in goodstanding.

Yacht owners should be wary in particular of yacht registration companies offering low cost UK yacht owning company and registration packages whereby the UK company is often marketed as a ‘dormant company’ requiring little or no statutory or fiscal compliance.  We quote wordings that we have seen to this effect such as:

“…we setup a UK LTD. and you will transfer the ownership of your vessel into this dormant LTD that you own. The LTD is only used for boat ownership so no taxes or government filings will be due.”

 &

“Basically, we arrange for you a “dormant” company for the purpose of yacht registration. A dormant company is a company in rest, and which has no commercial or economical activities at all. It has no tax number and has no bank account. Therefore it has very limited formal obligations.

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“We setup a United Kingdom LTD for you in 24 hours. This LTD is owned by you but can also have additional owners if needed. The total cost for the setup of the LTD is 349.00 Euro and after that 249 Euro annually. As the LTD is only used for owning a boat you will not need to pay any taxes or do any government filings.” 

The reality is that there are legal and fiscal obligations that must be fulfilled by the Directors and Shareholders of any UK company. The fact that the company might own a yacht does not change these requirements or necessarily mean that the company can really be treated as a dormant company. The UK Companies House website provides detailed information on UK company reporting requirements.

It should also be remembered that the ownership of yachts through UK companies could have other potential tax consequences, for example, benefit in kind taxes, capital gains taxes, inheritance taxes and sales taxes such as VAT.

The take home message is that yacht owners intending to own their vessels through UK companies should take professional advice before proceeding and be wary in particular of low cost solutions whereby the appropriate filing and submissions are not being made to the UK Companies House and any relevant tax authorities such as the HMRC.

We would stress that this guide should not be taken as any kind of company, tax or legal advice. We can if required refer any yacht owner who is considering the incorporation of a UK company to own their yacht to professional company administrators in the UK and we are always happy to provide a bespoke proposal for the registration of any yacht in the name of the company under the UK flag.