A very taxing matter

A yacht manager arranged on behalf of the owner to store a helicopter ashore whilst not in use. During a routine inspection by customs, it was found the helicopter had stayed in the country for more than six months and was therefore now liable for payment of VAT in the amount of £115,000.

Prior to arranging the storage, the manager had a meeting with the storage company. The manager had believed that an agreement had been reached where the company would be responsible for tax matters. However, the meeting was not followed up with written instructions. The company alleged that although the matter had been discussed, nothing had been agreed.

The owner was scheduled to board their yacht and required the helicopter to be delivered. The helicopter had since been seized by customs, and in order to release it, the manager had to pay the full amount of the VAT. The storage company rejected any liability for the failure to warn the manager that the helicopter had to be taken out of the country before VAT was payable. Lawyers were instructed to consider a recovery action against the storage company. However, due to a lack of written advice obtained from lawyers, there was less than a 50% chance of recovery. The manager was reimbursed by ITIC in full for the VAT of £115,000.