08 April 2016

Is it my asset or my company's?

Those who own companies will know that the company is a separate person in its own right and, as such, the company is capable of owning assets in its own name.

Sometimes it is unclear whether a particular asset is owned by the individual or by the company (or some combination of both).

The difference can be crucial for many different tax purposes.

The Blue Yearnings case is, in many ways, unremarkable. However, it serves as a timely reminder to make sure that everyone is clear as to who owns the asset. Simply because you paid for the asset does not mean that it is yours.

Blue Yearnings Limited v Revenue and Customs

This case was an appeal by Blue Yearnings Limited that claimed that it was not responsible for making National Insurance contributions for its ownership of the yacht called 'Space Race'.

The National Insurance position turned on whether Blue Yearnings or its sole director, Mr Blanshard owned the yacht (or whether it was owned 50/50).

Although the company accountant gave evidence orally that Mr Blanshard (the sole Director of Blue Yearnings Limited) paid for the yacht, the documentary evidence showed: (i) an invoice made out to Blue Yearnings Limited; (ii) an insurance policy also made out to Blue Yearnings Limited; and (iii) a set of company accounts which showed the value of the yacht.

The Tribunal heard that in respect of capital allowances, only half were claimed by the company to support the 50/50 ownership split but there was no evidence of this in the documentary evidence to confirm this.

The Tribunal found that as the invoice was addressed solely to Blue Yearnings Limited, it was satisfied that the whole value of the yacht was shown in the company accounts and therefore the yacht was owned entirely by Blue Yearnings Limited for the entirety of the period from purchase.

This meant that where National Insurance contributions were due on the taxable benefit was the entire value of the asset because there had been no benefit in kind to Mr Blanshard to negate this.

This case serves as a timely reminder to document the ownership of assets properly. It is not enough that Mr Blanshard ultimately paid for this. There has to be documentary evidence to support the ownership even if the correct intent is there. Getting it right is crucial, and getting it wrong is fatal and HMRC need sufficient evidence to be convinced of this.

Key contact

Headshot John Barnett

John Barnett Partner

  • Head of Partnerships
  • Private Client Services
  • Tax

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