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Where Taxpayers and Advisers Meet

CGT on a Boat

zen273@rya-online.ne
Posts:4
Joined:Wed Aug 06, 2008 3:03 pm

Postby zen273@rya-online.ne » Thu Jun 12, 2003 2:17 am

We bought an ex-commercial vessel (built in 1925) in 1984 for a four figure sum and spent the next 8 years and a big 5 figure sum converting it into a private pleasure craft. The boat has only been used for private purposes, not business or residential, and is kept in continental Europe.

We have received conflicting advice on whether or not CGT is applicable if we sell the boat since it is now worth something over £200,000. Unfortunately much of the paperwork relating to conversion costs was lost in a burglary but we have the original bill of sale. We would much appreciate comment on the following:

1. Is CGT payable? (wasting asset?? historic/vintage vessel???)

2. If CGT is payable what chance have I got of establishing that allowable expenditure of up to about £100,000 was incurred (independent surveyor's valuation of works???).

3. If there is a chargeable gain can we as private individuals roll this over in some way, e.g. by buying a letting holiday cottage.

Many thanks for any thoughts out there.

zen273@rya-online.ne
Posts:4
Joined:Wed Aug 06, 2008 3:03 pm

Postby zen273@rya-online.ne » Fri Jun 13, 2003 12:25 am

Just to clarify (1) above I think it could be reasonably argued that at the time of purchase in 1984 it would not have been realistic to predict that the vessel would have a remaining lifespan of fifty years or more, although that could be the case now, with improvements in paint treatments and canal water quality having reduced corrosion rates.

Ian McTernan CTA
Posts:1232
Joined:Wed Aug 06, 2008 3:02 pm
Location:Bedford
Contact:

Postby Ian McTernan CTA » Fri Jun 13, 2003 4:35 am

Not an expert on boats but would assume that CGT would be payable on the basis that the asset has been in existence so long- any boat experts out there I would welcome comments on this.

As to proving the expenditure, presumably this was done by a boatyard and they should be able to provide copies of any paperwork you require, and you should be able to prove the expenditure from bank statements if necessary.

Depending on how many owners there are, there may be little of no gain after taking into account each persons CGT annual exemption, taper relief and indexation allowance.

Roll over relief could be obtained through investment in an EIS scheme or similar, but would only be worthwhile if the gain is big enough after the above.

Regards.

Ian McTernan CTA
McTernan Associates Ltd
ian@imcternan.com
McTernan Associates Ltd
Chartered Tax Advisers
Bedford
Email through link on website:
http://www.imcternan.com


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