A Few VAT Scenarios

[Laser310]

I apologize in advance, for another VAT question...

Some of his has probably been covered, but I didn't find the exact answers.

1) A citizen of the UK, who is not a resident of the UK, buys an EU VAT paid boat.
How long can the boat be in the UK before UK VAT is payable, assuming the owner does not become a resident of the UK?
A person becomes a "Tax Resident" at 183 days, I believe, would that be a trigger?

2) Citizen of the UK buys a UK VAT paid boat
My understanding is that, for a non EU resident, the boat can be in the EU for no longer than 18 months or EU VAT is payable.
What if the owner becomes a non-citizen resident - say of France, when is French VAT payable? Immediately, if the boat is in France?
What if the owner has a French Long Term Stay visa? This is a step on the way to residency, but I think is short of residency.

Thanks.

 

[AngusMcDoon]

I apologize in advance, for another VAT question...

Some of his has probably been covered, but I didn't find the exact answers.

1) A citizen of the UK, who is not a resident of the UK, buys an EU VAT paid boat.
How long can the boat be in the UK before UK VAT is payable, assuming the owner does not become a resident of the UK?
A person becomes a "Tax Resident" at 183 days, I believe, would that be a trigger?

2) Citizen of the UK buys a UK VAT paid boat
My understanding is that, for a non EU resident, the boat can be in the EU for no longer than 18 months or EU VAT is payable.
What if the owner becomes a non-citizen resident - say of France, when is French VAT payable? Immediately, if the boat is in France?
What if the owner has a French Long Term Stay visa? This is a step on the way to residency, but I think is short of residency.

Thanks.

1) 18 months. Yes.

2) Citizenship has no bearing. It's residency that counts. So immediately if the boat is anywhere in the EU.

The 18 month rule (UK and EU) is not like the Schengen 90/180 rule. When the boat reaches its 18 months it only has to leave the customs area for 1 day to restart a new 18 months.

There are other rules for people permanently relocating to a country which allow possessions, including boats, to be brought in without VAT being due. However, this exception is rarely used and you would need professional advice.

 

[Tranona]

Angus covers it. It is only residence that counts, and just to add, if you change your residence to France then you will almost certainly be eligible for changing residence relief, along with all your other possessions you bring with you. Be aware though that some states such as Spain have their own rules for those taking up residence in addition to the EU Resident relief so taking professional advice if going down this route is advisable.

 

[stranded]

Angus covers it. It is only residence that counts, and just to add, if you change your residence to France then you will almost certainly be eligible for changing residence relief, along with all your other possessions you bring with you. Be aware though that some states such as Spain have their own rules for those taking up residence in addition to the EU Resident relief so taking professional advice if going down this route is advisable.

Sorry for resurrecting an old thread, but we have decided to make the move to France, with our UK vat paid and registered boat.

We will certainly do as you suggest and seek professional advice on this and other tax issues, but are you able to clarify whether if we get the changing residence relief you mention that means our boat will be deemed EU VAT paid.Or will we still be on temporary importation?

And either way, would we need to pay UK vat again if we move back to the UK in a few years.

Finally, if I may really push my luck, our long term plan is to gift the boat to our (UK resident) daughter (with her enthusiastic agreement!) when we can no longer use it. If we gifted the boat to her now, but we continued to keep her in France while we are resident here, would that be legitimate or be considered to be unacceptable gaming of the system?

 

[Sandy]

Sorry for resurrecting an old thread, but we have decided to make the move to France, with our UK vat paid and registered boat.

We will certainly do as you suggest and seek professional advice on this and other tax issues, but are you able to clarify whether if we get the changing residence relief you mention that means our boat will be deemed EU VAT paid.Or will we still be on temporary importation?

And either way, would we need to pay UK vat again if we move back to the UK in a few years.

Finally, if I may really push my luck, our long term plan is to gift the boat to our (UK resident) daughter (with her enthusiastic agreement!) when we can no longer use it. If we gifted the boat to her now, but we continued to keep her in France while we are resident here, would that be legitimate or be considered to be unacceptable gaming of the system?

You really, really need to speak to a professional accountant and solicitor who has experience in such matters AND get the agreement of the UK and French tax authorities.

My wife, a professional accountant, who worked for one of the 'Big Four' spent a considerable amount of time trying to keep clients on the right side of regulations. The regulations are complex and you will need agreement in writing from the tax authorities in both legal/tax domains. Leaving the EU has made things more complicated than she was working with.

Good Luck.

 

[stranded]

You really, really need to speak to a professional accountant and solicitor who has experience in such matters AND get the agreement of the UK and French tax authorities.

My wife, a professional accountant, who worked for one of the 'Big Four' spent a considerable amount of time trying to keep clients on the right side of regulations. The regulations are complex and you will need agreement in writing from the tax authorities in both legal/tax domains. Leaving the EU has made things more complicated than she was working with.

Good Luck.

Worry not Sandy - we will definitely definitely be getting proper advice before actually doing anything - this is just getting a handle on what the options/considerations may be to factor into our planning.

 

[billskip]

If we gifted the boat to her now, but we continued to keep her in France while we are resident here,

I can't speak for France...but Spain puts the owner or user responsible, for example if as a resident in Spain I used a boat belonging to my son who was uk resident I would be considered as the owner...

As said you need professional advice about France.....

 

[RunAgroundHard]

Be careful with gifting as daughter may end up with a tax liability.

 

[Tranona]

Sorry for resurrecting an old thread, but we have decided to make the move to France, with our UK vat paid and registered boat.

We will certainly do as you suggest and seek professional advice on this and other tax issues, but are you able to clarify whether if we get the changing residence relief you mention that means our boat will be deemed EU VAT paid.Or will we still be on temporary importation?

And either way, would we need to pay UK vat again if we move back to the UK in a few years.

Finally, if I may really push my luck, our long term plan is to gift the boat to our (UK resident) daughter (with her enthusiastic agreement!) when we can no longer use it. If we gifted the boat to her now, but we continued to keep her in France while we are resident here, would that be legitimate or be considered to be unacceptable gaming of the system?

Yes, you can apply for transfer of residence relief in France. Granting of that relief makes it EU VAT paid. there are restrictions on use and when you can sell, but are not onerous. This www.gov.uk/guidance/application-for-transfer-of-residence-relief-tor1 is the UK guidance which AFAIK is cut and paste from the EU rules, but of course double check with the French rules.

If you move back to the UK with the same boat you can claim Returned Goods Relief which is as simple as advising HMRC through the reporting system and getting confirmation from them that relief applies. In the meantime as a non resident you can visit freely either under TA as a non resident if you have a non UK registration or under RGR which means you can keep your UK registration.

Gifting the boat to your daughter now in the way you describe would immediately result in it losing its UK VAT paid status as RGR is only available to the person who takes the boat out of the EU. much the same would happen if you stopped using it later then gifted it and it stayed in the EU. If, however she wanted to use it in the UK to avoid VAT you would have to bring it back under RGR and then transfer ownership. It would then lose its EU VAT paid status.

 

[stranded]

You are a goldmine Tranona! Many thinks to you and all - the picture is much clearer now. And we will of course still get expert advice when the time comes.