This changed the industry out of all recognition and, understandably, some suppliers sought to restore collapsing sales by actively co-operating with customers to reduce, or avoid altogether, the payment of VAT.

VAT avoidance became an essential part of any manufacturer’s business plan.

Despite the scrapping of the luxury tax, the British marine industry has, almost uniquely, continued enthusiastically to explore any legitimate means of minimising a customer’s VAT liability.

Highly sophisticated devices include the use of cross-border leasing arrangements, commercial charters and out-flagging in offshore tax havens.

Unlike elsewhere in Europe, and arguably as a consequence of these events, the marine industry and Customs & Excise (now HMRC) have been slow to co-operate to regularise the ongoing uncertainty regarding VAT on secondhand craft or to capitalise on the strengths of the industry and the attractions of English registration by introducing tax incentives (through lease schemes or discounted VAT rates) for new builds.

French, Italian and now even Maltese tax authorities offer such arrangements, which suggest those countries will derive some benefit therefrom.

Britain is a major player in this now truly global industry. Whilst the Treasury has significantly benefited from that success, the loss of VAT revenue is clearly an issue, which led to the current HMRC challenges to the efficacy of cross-border leasing.

This uncertainty can only damage the industry’s long term prospects of competing with foreign companies operating in a more benign tax environment.  The British Marine Federation (BMF) and the RYA are engaged in consultations with HMRC.  Let's hope they can resolve these issues and ensure that UK PLC is best positioned for the future.