Ocean Charters Ltd v HMRC

In Ocean Charters Ltd v HMRC (TC01688 – 16 January) a company which was controlled by an accountant (W) registered for VAT and reclaimed input tax of £85 000 on the purchase of a yacht. HMRC subsequently formed the opinion that the company was not carrying on any business. They cancelled the company’s registration and issued an assessment to recover the tax. The Tribunal dismissed the company’s appeal. Judge Anne Scott held that W had not adopted ‘the approach of a chartered accountant acting in a business environment’ and appeared to have made ‘a personal investment decision’. The yacht had been used by a businessman who was a close friend of W. There had been ‘no substantive business plan’ and ‘almost no marketing of the vessel’. Accordingly it appeared that the company was not carrying on any business or economic activity.

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