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This publication is available at https://www.gov.uk/government/publications/spotlight-2-vat-artificial-leasing/spotlight-2-vat-artificial-leasing
HM Revenue and Customs (HMRC) are aware of schemes using an artificial leasing structure to exploit the UK taxation laws. The schemes can take advantage of possible differences of interpretation by EU member states. In this case, exploiting the use of a lease with an option to purchase.
The scheme user acquires a new pleasure craft which purportedly has ‘VAT paid status’ while, in reality, paying little or no VAT. The user provides the funds, directly or indirectly, that are used to purchase the asset.
HMRC will challenge examples of this scheme falling within our jurisdiction and recoup the tax that has been avoided.