HMRC U-turn on tax on returning boats

[sailaboutvic]

I see that the Financial Times have an article on the front page confirming that HMRC will grant an extension to give boats an extra year to avoid paying VAT again. Their interpretation seems to be that boats in EU for 3 years on 31st December 2020 will now have until 31st December 2021 to return without paying extra tax.

I guess that this clarifies the ambiguity mentioned by the RYA and HMRC are not taking it as 3 years from 31st December 2021. I doubt that this is guaranteed to be completely correct as it depends on the quality of journalism.

I noted that the article concludes by saying that there may be a double whammy at the EU end if UK registered yachts remain in the EU as member states seek quick wins in getting extra cash. VAT director at accountants Hillier Hopkins said "leaving a vessel in EU waters could also cause tax liabilities because VAT paid status only applies to EU flagged craft." This is completely at odds with RYA's statement from Barnier's office regarding VAT paid boats already in the EU at the end of 2020.

I noted that the article concludes by saying that there may be a double whammy at the EU end if UK registered yachts remain in the EU as member states seek quick wins in getting extra cash. VAT director at accountants Hillier Hopkins said "leaving a vessel in EU waters could also cause tax liabilities because VAT paid status only applies to EU flagged craft." This is completely at odds with RYA's statement from Barnier's office regarding VAT paid boats already in the EU at the end of 2020.

Is this HMRC trying to scare us in bring our boats back so they can hit us for VAT ?

 

[nortada]

I noted that the article concludes by saying that there may be a double whammy at the EU end if UK registered yachts remain in the EU as member states seek quick wins in getting extra cash. VAT director at accountants Hillier Hopkins said "leaving a vessel in EU waters could also cause tax liabilities because VAT paid status only applies to EU flagged craft." This is completely at odds with RYA's statement from Barnier's office regarding VAT paid boats already in the EU at the end of 2020.

Is this HMRC trying to scare us in bring our boats back so they can hit us for VAT ?

Is VAT policy a EU wide thing or is it decided by individual states?

 

[Chris_Robb]

Is VAT policy a EU wide thing or is it decided by individual states?

The basic premise of VAT is that it is an EU Directive. Each member state sets its own rates. In the last few years the commission has been trying to get control and create an EU wide rate, in common with its aim for full federalization - thats why we left!

VAT is paid on Goods. Goods have NO nationality - they just have a location and they have certain rights - such a Free Circulation created by the payment of VAT.
This so called Vat expert has no bleeding idea - Its nothing to do with Flag - I know plenty of Aussies who bought a vat paid yacht in the EU and reflagged Australian - in Greece they have to carry a Transit log but have it marked UNLIMITED as opposed to an 18 month date.

This whole thing is a complete storm on a teacup. A hard pressed Brexit department is hardly going to change the law on RGR without good reason - far simpler to rubber stand and change the works EU to UK.....

I am disappointed in our sailing bodies who are just arguing about the export date (important) and the 3 years rule. They have decided that it is a simpler message to argue that part first and deal with the Waiver of the 3 years rule later. Why Why Why? Its far easier to say - " Dear Boy - why dont you just change the words EU to Uk and the law and just rubber stamp it" thats all we want!

And that sthe campaign I have taken up with the Brexit Change department - with a bot of backing and pushing by my MP.

 

[nortada]

The basic premise of VAT is that it is an EU Directive. Each member state sets its own rates. In the last few years the commission has been trying to get control and create an EU wide rate, in common with its aim for full federalization - thats why we left!

VAT is paid on Goods. Goods have NO nationality - they just have a location and they have certain rights - such a Free Circulation created by the payment of VAT.
This so called Vat expert has no bleeding idea - Its nothing to do with Flag - I know plenty of Aussies who bought a vat paid yacht in the EU and reflagged Australian - in Greece they have to carry a Transit log but have it marked UNLIMITED as opposed to an 18 month date.

This whole thing is a complete storm on a teacup. A hard pressed Brexit department is hardly going to change the law on RGR without good reason - far simpler to rubber stanp and change the words EU to UK.....

I am disappointed in our sailing bodies who are just arguing about the export date (important) and the 3 years rule. They have decided that it is a simpler message to argue that part first and deal with the Waiver of the 3 years rule later. Why Why Why? Its far easier to say - " Dear Boy - why don't you just change the words EU to UK and the law and just rubber stamp it" that's all we want!

And that's the campaign I have taken up with the Brexit Change department - with a bot of backing and pushing by my MP.

Hi Chris,

Many thanks for, as always, the definitive answer, laced with a lot of common sense.

N

 

[Marceline]

Sorry if this has been asked before (as someone looking to buy their first boat the VAT and EU/UK situations are increasingly baffling),

but would private boats 1984 or earlier be exempt from the various VAT EU/UK requirements ?

 

[syvictoria]

Sorry if this has been asked before (as someone looking to buy their first boat the VAT and EU/UK situations are increasingly baffling),

but would private boats 1984 or earlier be exempt from the various VAT EU/UK requirements ?

Hi. It's not an exemption as such, but a 'deemed VAT paid' status. This is covered in section 4 of:

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

part of which reads:

"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, may be deemed VAT paid under the Single Market transitional arrangements. As Austria, Finland and Sweden joined the EU later, the relevant dates for vessels in these countries are ‘in use’ before 1 January 1987 and moored in UK or EU on 31 December 1994."

Edited to add that documents are in theory required to prove the vessel's age and location on the relevant date. If/when you would be asked to produce these documents would perhaps depend upon the boat's current location and your intended cruising area.

 

[syvictoria]

This has I know been posted elsewhere, but the latest advice from the RYA regarding VAT from 1/1/21 is available here:
Brexit - what happens next? | Current Affairs | Knowledge & Advice | RYA - Royal Yachting Association

 

[Marceline]

many thanks for the information Syvictoria - really helpful

 

[Paddy Fields]

Interesting thread. Have given up trying to buy a boat in the UK anyway. The plan was to buy a boat in 2021 that was VAT paid in the EU. Now I will make sure it is EU flagged as well.

Is RGR available on a EU VAT paid boat that is returning to the EU after being away for over 3 years (I.e. waiver of the 3 year rule for pleasure craft)? It was common for RGR to be granted by HMRC on boats that had been away for more than 3 years. Wonder if this also true for the rest of the EU.

 

[Seven Spades]

If you are a U.K. resident buying new. Buy it in the U.K. VAT free on the sail away scheme and keep it in Europe and just pop overseas once a season to avoid having to pay vat in the EU. If you return to the UK you will pay VAT on the diminished value so it is a win win.

 

[Chris_Robb]

If you are a U.K. resident buying new. Buy it in the U.K. VAT free on the sail away scheme and keep it in Europe and just pop overseas once a season to avoid having to pay vat in the EU. If you return to the UK you will pay VAT on the diminished value so it is a win win.

Just dont have notions of residency anywhere in the EU! TA is not available to residents!
Dont I just hate tax avoiders! I pay mine

 

[nortada]

Just dont have notions of residency anywhere in the EU! TA is not available to residents!
Dont I just hate tax avoiders! I pay mine

The day you leave an EU country you could revert to being just a UK resident on passage.

Of course, as things stand, you would revert to Schengen Rules and quit the EU at the 90 day point.

As you would be a UK resident, returning to the UK, all very doable.

 

[Seven Spades]

Just dont have notions of residency anywhere in the EU! TA is not available to residents!
Dont I just hate tax avoiders! I pay mine

As an English resident buying a boat on a sail-away scheme tax free is not illegal or in anyway the wrong thing to do it is not taxable, just like buying books. Buying books is not tax avoidance. Obviously if you are an EU resident then you can't use an untaxed vessel in the EU. A tax free boat in the EU must dip in and out of the EU within 18 months to avoid triggering a VAT charge. This does not sound like too much of a hardship for someone buying a new boat.

 

[Graham376]

Interesting thread. Have given up trying to buy a boat in the UK anyway. The plan was to buy a boat in 2021 that was VAT paid in the EU. Now I will make sure it is EU flagged as well.

Is RGR available on a EU VAT paid boat that is returning to the EU after being away for over 3 years (I.e. waiver of the 3 year rule for pleasure craft)? It was common for RGR to be granted by HMRC on boats that had been away for more than 3 years. Wonder if this also true for the rest of the EU.

Why do you want EU flag and be tied to another's regulations? Flag and ownership have no bearing on boat's VAT status, better to be on UK flag.

Not 100% sure about RGR in EU. Residents can claim it and I "think" non-residents can as well.

 

[sailaboutvic]

Just dont have notions of residency anywhere in the EU! TA is not available to residents!
Dont I just hate tax avoiders! I pay mine

Give it another year and the way this government given away money our taxes are going to be so high everyone going to be looking at way to cutting their tax bill down

 

[goeasy123]

We're completely missing the point here. As a UK citizen are you not apalled at the damage HMRC's decision will do to the UK sector serving boat owners. There are many ways the individual sailor can use the rules and the tax HMRC might get is dwarfed by the lost business, job opportunities and new-business tax HMRC might otherwise collect.

As a consequence on HMRC's statement one well known UK owned broker now plans to downsize their UK operations and redirect investment to new EU yards. Their actions alone with loose the UK more than all the reVAT HMRC might get from returning UK owned boats.

 

[Paddy Fields]

Why do you want EU flag and be tied to another's regulations? Flag and ownership have no bearing on boat's VAT status, better to be on UK flag.

Earlier, regarding the FT article, someone else <<noted that the article concludes by saying that there may be a double whammy at the EU end if UK registered yachts remain in the EU as member states seek quick wins in getting extra cash. VAT director at accountants Hillier Hopkins said "leaving a vessel in EU waters could also cause tax liabilities because VAT paid status only applies to EU flagged craft." This is completely at odds with RYA's statement from Barnier's office regarding VAT paid boats already in the EU at the end of 2020.>>

if I buy a boat in the EU, it will likely have an EU flag. However by the time I am realistically going to be in a position to buy, things should be a bit clearer.

 

[Alicatt]

As I told the broker a couple of days ago, I'm now not looking for a boat in the UK, too much hassle to get one selected, inspected, and then brought over here before the end of the year to avoid the extra 21% on top

 

[Hallberg-Rassy]

Funny, I notice a profound lack of gloating from the usual Brexit supporting voters on this topic, about how what a win it was and good things are going to be. Keeping their heads down, are they?

Grey skies​

Raining on me​

Nothing but grey skies​

Do I see​

​

Taxmen
Singing a song
Nothing but Taxmen
All day long​

​

Never'll see the sun shining so bright​

Never'll see things going so right​

Noticing the days hurrying by​

When you're depressed, my how they fly​

​

Blue days​

All of them gone​

Nothing but grey skies​

From now on...​

​

 

[Graham376]

Funny, I notice a profound lack of gloating from the usual Brexit supporting voters on this topic, about how what a win it was and good things are going to be. Keeping their heads down, are they?

Maybe the majority of posters prefer to keep politics out of interesting threads.