For the UK the sale of the yacht was zero rated as it had been sold to a business registered for VAT in another EU member state. However, HMRC argued that the leasing company was a sham and the real sale was from the UK company to the private buyer and therefore UK VAT of approximately £250,000 was due.

An appeal was lodged by the yacht seller to the VAT & Duties Tribunal. HMRC agreed they had made an incorrect claim and agreed to pay the client's costs.

The amount is still in dispute.

Simon Newark, partner at UHY Hacker Young, represented the yacht seller. He says:

"This is another case of HMRC bullying the taxpayer to raise revenue. If the yacht seller had accepted the first decision they'd have been more than £250,000 worse off. As soon as HMRC was challenged it caved in. Disgracefully, the taxpayer's legitimate claim for costs is now in dispute."