Buying a boat from the EU and Brexit Transition date (re:VAT)

[Hurricane]

Yep - fully understand your point about VAT being reclaimed.
But I thought that HMRC aren't interested in getting involved or even have the data to confirm one way or the other.
And, I don't believe that HMRC will provide a VAT paid certificate.

I also think that you have to have the right kind of company and have sufficient turnover to be registered for VAT in the first place.
Even then, I thought it was then very difficult to just put any transaction through your company's VAT returns.
And one big transaction would stand out like a sore thumb.
The result is that genuine companies like brokers can claim VAT on their purchases and pay the VAT on their sales without any extra bureaucracy.
The true reason for the "Value" "Added" "Tax" - i.e. they are being taxed on their added value.

It would be very difficult for an individual to set himself up, registering for VAT, specifically to enable him to reclaim any VAT without charging it on the eventual sale.
I suppose that a charter company could be set up with this purpose but, again, that would stand out like a sore thumb.

As I say, I am no expert though.

 

[Nito]

That’s a good point re vat reclaim. I guess this is where provenance and bills of sale/invoices owner to owner comes into it.

With regards to all info pre end of transition, surely that’s obsolete now in the face of this new trade deal. It’s hard to find info but I’ve spent time on the Gov website this morning, UK is still part of the Fiscal ‘territory’, which I’m interpreting as means business as usual with respect to VAT treatment, I could of course be horribly wrong and I’m sure clarity will ensue soon... (click image to full page size to see UK listed at bottom of third attachment).

 

[Nito]

Actually the above appears obsolete!! ;

new guidance only seems to relate to new and not used goods from what I can determine!!

 

[Nito]

Fekked if I can work it out!!

Paying VAT on imports from outside the UK to Great Britain and from outside the EU to Northern Ireland

Doesn’t seem to cover if vat has been previously paid. This link was updated 31st December.

 

[Nito]

Also...
Notice 252: valuation of imported goods for customs purposes, VAT and trade statistics

 

[Hurricane]

I dunno
Please keep researching and reporting back here.
Thats how all of us understand the rules and regs.
IMO, some of the professional agencies (RYA etc) are hopeless at giving us the facts.
As far as I can see, the deal has not made a difference to our understanding.
I may be wrong though.

 

[Farmer Piles]

Surely there must be a MOBO owning tax consultant out there who can give us the lowdown.
In the meantime, I was looking at boats in France and my understanding from extensive reading is that if I was to buy a S/H French tax paid boat, as of now I would be liable to pay 20% VAT on it upon bringing it back to Falmouth. Plus any import duty should there be any.
Happy for that not to be the case as there are a couple of boats in Brittany that would be ideal for me. A fun trip bringing it home too.

 

[Farmer Piles]

So, adding to the general confusion, and being slightly hard of thinking.....
VAT is charged on non-essential items such as boats.
When a boat is sold brand new the VAT is charged and paid to the appropriate body.
A record should be kept that this happened.
There is no VAT owed when a secondhand boat is sold privately.

So, if a boat was sold new in France, VAT paid whilst the UK was part of the EU, and the EU wide VAT agreement was in place; surely then that boat is effectively Tax Paid as the VAT was paid whilst the UK was in the EU and part of the tax treaty.

Therefore buy in Brittany, motor back to Falmouth, no tax to pay.

Or am I being too simplistic and overly optimistic?

 

[Hurricane]

So, adding to the general confusion, and being slightly hard of thinking.....
VAT is charged on non-essential items such as boats.
When a boat is sold brand new the VAT is charged and paid to the appropriate body.
A record should be kept that this happened.
There is no VAT owed when a secondhand boat is sold privately.

So, if a boat was sold new in France, VAT paid whilst the UK was part of the EU, and the EU wide VAT agreement was in place; surely then that boat is effectively Tax Paid as the VAT was paid whilst the UK was in the EU and part of the tax treaty.

Therefore buy in Brittany, motor back to Falmouth, no tax to pay.

Or am I being too simplistic and overly optimistic?

IMO, your post raises two questions.
The first is "What exactly is VAT"
The second is about you moving a boat from France to the UK.

The first
I'm not a VAT expert but in an earlier post today, I touched on the reasoning behind VAT.
The idea is that VAT registered businesses are charged VAT on anything that they buy.
They also charge VAT on any sales that they make.
In most circumstances, a business will reclaim the VAT that it was charged on its purchases but the can't reclaim the VAT that they charged on their sales.
Reclaiming VAT happens when the VAT registered company makes its VAT returns (used to be every quarter but I believe that may have changed now).

So, lets say that you are a company that buys and sells widgets and you buy a widget from your supplier for £100 plus VAT of £20 = £120.
Lets say that your company sells that widget for £150 + VAT of £30 = £180
In your company VAT returns, you reclaim the £20 VAT that your company was charged when the bought the widget but you can't reclaim the £30 VAT on the widget when you sold it.
In other words, your company has paid a net £10 to HMRC
So, you have in fact been taxed for the extra "value" that your company has provided when they sold the widget.
In other words your company has been charged a "Value Added Tax".

So, you can see that if you aren't registered for VAT (a private individual for example) you are probably the last in the supply chain and you won't have any mechanism to reclaim the VAT that was charged to you.

Hopefully, that explains the basis of the VAT mechanism.

Your second point - buying a boat in France and moving it from France to the UK after 1st January 2021.
Sorry, I don't think your idea works but that is what all this discussion is about anyway.
I think that you will be "importing" the boat into the UK and any VAT that was previously paid on the boat would be forgotten.
This is only my view.
But, as I see it, the recent deal between the EU and the UK means that there won't be any import duty to pay but I think you will still be liable to pay VAT.
As I say, I am not sure about this but I think this is the most likely effect.
If it were a new item in France, you may be able yo buy it VAT free or you may be able to reclaim any VAT as the boat leaves the EU but I think you will have to pay VAT as it enters the UK.

I was thinking this is just like when I bought a new boat from the USA.
IIRC, the boat was supplied to me free of any sales taxes in the US but I had to pay import duty and then VAT when it arrived in the UK.
Now that the UK is outside the EU, the same applies except the UK/EU deal means that there isn't any import duty to pay.
I may be wrong but those are my thoughts.

In answer to your previous question, we used to have a very knowledgeable forum poster on these forums who worked in the VAT tax world.
But it seems the moderators of this forum upset him and he no longer posts.
A huge loss to us.

 

[DavidJ]

So if I wanted to sell my boat in Spain (UK VAT paid and been in Spain for 10 years with an SSR number) would an EU citizen be put off buying?
Conversely would my boat be hugely attractive to a UK buyer wanting to shift to boating in the Med but reluctant to pay for exporting his own boat due to EU VAT and also the hassle of deregistering an EU boat if he bought from a EU citizen.

 

[syvictoria]

My apologies if this has been linked to previously, but have you seen the CA's advice at:

Brexit Issues For Cruising Sailors Addressed in RATS Webinar | CA

and also the slide presentation as a PDF file:

https://www.theca.org.uk/system/files/CA RATS Brexit Webinar 2020 12 05 (public).pdf

The 'Vessel Issues' slides contain VAT information relevant to many of the scenarios being discussed here.

 

[Hurricane]

So if I wanted to sell my boat in Spain (UK VAT paid and been in Spain for 10 years with an SSR number) would an EU citizen be put off buying?
Conversely would my boat be hugely attractive to a UK buyer wanting to shift to boating in the Med but reluctant to pay for exporting his own boat due to EU VAT and also the hassle of deregistering an EU boat if he bought from a EU citizen.

IMHO
No
and
Yes

 

[Portofino]

So if I wanted to sell my boat in Spain (UK VAT paid and been in Spain for 10 years with an SSR number) would an EU citizen be put off buying?
Conversely would my boat be hugely attractive to a UK buyer wanting to shift to boating in the Med but reluctant to pay for exporting his own boat due to EU VAT and also the hassle of deregistering an EU boat if he bought from a EU citizen.

Depends .Hassle at both ends .
The EU buyer say a local would be looking to reg it in Spain and get the matriculation number .
Getting it reg d ( I have not seen the form ) even with what paperwork you hold might be problematic
Its surly easier for the local just to buy an existing reg d one from another Spaniard.

second para .
Why ? The U.K. guy surly is better off from a residual/ re sale pov again picking up a local reg d boat from a private individual.
This is what I did and many Med posters on here , and simply re flagged them easy to do btw .
If you keep the “old “ paper trail which comes with buying local it will make reverting back to there original flag with what ever reg procedure easy .
Eg if I sold mine to a Italian ( likely buyer) I still have all the papers from when it was on the Roma reg by a private individual.
It’s never left the Med .

 

[Hurricane]

My apologies if this has been linked to previously, but have you seen the CA's advice at:

Brexit Issues For Cruising Sailors Addressed in RATS Webinar | CA

and also the slide presentation as a PDF file:

https://www.theca.org.uk/system/files/CA RATS Brexit Webinar 2020 12 05 (public).pdf

The 'Vessel Issues' slides contain VAT information relevant to many of the scenarios being discussed here.

Yea - I think most of us saw that.
IIRC, the actual webinar was like Fred Karnos Army - took 15 minutes to sort out the technology.
Something that they should have done days before.
And when it came to the content, most and more had been discussed on here.

What would be interesting is if someone can confirm the facts now that there is a UK/EU deal.

 

[Portofino]

IMHO
No
and
Yes

Opposite answers to me .
Any chance of a explanation, your workings , thinking’s on this ?

 

[DavidJ]

Opposite answers to me .
Any chance of a explanation, your workings , thinking’s on this ?

Just to quote from Paulie300 earlier on this thread
”Moving on slightly, I have two other boats, one bought UK in 2020 vat paid, the other France bought 2018 (never again - a hassle getting it off of the Fr register”
I guess not everyone has found the process easy to do and a UK buyer may prefer a process that he is more familiar with.

 

[syvictoria]

So if I wanted to sell my boat in Spain (UK VAT paid and been in Spain for 10 years with an SSR number) would an EU citizen be put off buying?
Conversely would my boat be hugely attractive to a UK buyer wanting to shift to boating in the Med but reluctant to pay for exporting his own boat due to EU VAT and also the hassle of deregistering an EU boat if he bought from a EU citizen.

Assuming that we're talking about the future and not the past, this (my bold) cannot be true. If the boat has remained continuously in Spain for the past 10 years, it will now (as of 31/12/20) be EU VAT paid, not UK VAT paid. Therefore, yes, it will appeal to an EU buyer. You would need to cancel your SSR registration prior to the change of ownership (at which point it would automatically expire anyway) so as to be able to provide the EU buyer with a cancellation certificate (assuming that they wish to register the boat in their own country).

A UK buyer would be able to continue to benefit from the boat being EU VAT paid, but would not be able to take the boat back to the UK unless they were willing to pay VAT again. RGR can't be used if there's been a change of ownership.

So, to summarise, my vote would be Yes and Yes!

 

[Hurricane]

Opposite answers to me .
Any chance of a explanation, your workings , thinking’s on this ?

So if I wanted to sell my boat in Spain (UK VAT paid and been in Spain for 10 years with an SSR number) would an EU citizen be put off buying?
Conversely would my boat be hugely attractive to a UK buyer wanting to shift to boating in the Med but reluctant to pay for exporting his own boat due to EU VAT and also the hassle of deregistering an EU boat if he bought from a EU citizen.

1 The EU resident could buy David's boat cheaper than buying the same thing from the UK (presumably in this scenario the EU resident wants a UK manufactured boat).
2 It would be cheaper to a UK resident wanting to use a boat in the Med, than buying a UK boat and shipping it out (even excluding the shipping charges).

 

[DavidJ]

the boat has remained continuously in Spain for the past 10 years, it will now (as of 31/12/20) be EU VAT paid, not UK VAT paid.

I’ve seen this more or less in a statement from Caruthers from the RYA. Do you have a more official statement?

 

[syvictoria]

I’ve seen this more or less in a statement from Caruthers from the RYA. Do you have a more official statement?

Notice 8: sailing your pleasure craft to and from the UK

What documents will be required to provide proof of the UK VAT status on a used vessel?
UK residents should only use a vessel in the UK if they are in free circulation in the UK, as UK domestic goods. Included, as such, are pleasure craft with VAT paid or deemed VAT status valid at 31/12/20, located in Great Britain 31/12/20. Deemed VAT paid includes certain vessels that were in use as private pleasure craft prior to 1 January 1985 and were in the UK or EU on 31 December 1992.

Conversely, the same is true of EU VAT paid status if the boat lies in the EU on 31/12/20.

Also, from the CA slides: