A VAT conundrum

[PHN]

Isn't this what a T2L is for?
To show that it's legitimately circulating union goods, whether or not VAT was ever paid?
But at £5k it might be below the radar anyway.

https://www.rya.org.uk/knowledge-advice/boating-abroad/Pages/t2l.aspx

"A retrospectively issued T2L does not evidence that VAT has been paid on the boat."

Netherlands is Schengen border. Boats that sail on the North Sea are frequently checked for ID of passengers and paper work of the boat itself. On inland waters that is of course a different story.

 

[Bathdave]

VAT is a very complex tax, and in the context of boat ownership made all the more so because AIUI there are 2 quite different issues here

- whether VAT is payable on the transaction

- whether the boat itself is designated ‘VAT paid’

On my reading of the facts presented by SnowLeopard there is no VAT payable on the transaction ...the charity is not registered for VAT and is not required to charge VAT on the sale..IMHO. This is the contrast with a situation where a Vat -registered entity sells a non VAT paid asset e.g a van to a member of the public, where VAT needs to be levied.

More to the point is the boat then ‘deemed to be VAT paid’ or not ...There are certainly situation where HMRC treat a deeming of VAT status as sticking to the asset. VAT exemption is not the same as VAT zero rating.

On my reading of the facts, in particular the update from SnowLeopard on what the boat builder actually said about their VAT treatment of the transaction, .the exemption granted at the outset on the initial sale does not carry through to subsequent owners. I still not sure a UK owner buying the boat would be liable to declare and pay VAT even on the second hand value (but I am willing to proved wrong on this ) but I suspect he would not be able to define the boat as VAT paid, which may leave some overhanging liability if he takes it to the EU later

my belief is that an EU puchaser would have to pay their own country’s VAT on importing it to their home country, irrespective of the date and the final Brexit outcome

 

[PHN]

my belief is that an EU puchaser would have to pay their own country’s VAT on importing it to their home country, irrespective of the date and the final Brexit outcome

Nope ... if I buy a boat in Croatia ex VAT then I pay the Croatian 25% VAT in Croatia regardless the VAT rate of my own country (inside the EU). That is an EU rule. After Brexit the story will probably be different. VAT in EU is defined by route of physical delivery, not invoice address.

 

[lw395]

https://www.rya.org.uk/knowledge-advice/boating-abroad/Pages/t2l.aspx

"A retrospectively issued T2L does not evidence that VAT has been paid on the boat."
.....

But the issue is not whether VAT was ever paid. The issue is whether the boat is legitimately circulating 'union goods'.
Being a small dayboat, the fact that it's a boat and not some other £5k worth of secondhand goods might be a red herring.
There are tons of secondhand dinghies worth either side of £5k circulation without VAT paper trails.

VAT would be due if it was imported from outside the EU.
VAT would be due if it were being sold by a VAT registered business. But even then, as secondhand goods, a VAT registered dealer might only pay VAT on their margin. Maybe if people are hung up about VAT paperwork, doing the deal via a trader in used goods might help?

 

[PHN]

We should not let this discussion go beyond the intention of the TS. A small dayboat at 5K value will indeed probably not raise a big debate.

Generally speaking the buyer/owner as an individual must have proof of VAT being paid on a boat (with some exceptions to pre 1985 boats) regardless if that is inside or outside the UK.

Then we run into the practicalities of life as who is interested in this 5K boat? You only need one grumpy official but maybe you will never run into that person.

 

[lw395]

We should not let this discussion go beyond the intention of the TS. A small dayboat at 5K value will indeed probably not raise a big debate.

Generally speaking the buyer/owner as an individual must have proof of VAT being paid on a boat (with some exceptions to pre 1985 boats) regardless if that is inside or outside the UK.

Then we run into the practicalities of life as who is interested in this 5K boat? You only need one grumpy official but maybe you will never run into that person.

But a boat which first hits the retail market as used goods from a non-VAT-registered source is not really covered by 'generally speaking'.

If the boat is capable/likely to leave territorial waters (loosely speaking), then it might be prudent to obtain a T2L.

 

[PHN]

But a boat which first hits the retail market as used goods from a non-VAT-registered source is not really covered by 'generally speaking'.

If the boat is capable/likely to leave territorial waters (loosely speaking), then it might be prudent to obtain a T2L.

T2L has nothing to do with VAT - per my previous post. Two completely different topics and BOTH must be covered according to regulations.

Skipping the low value/small boat debate for which this thread was intended then yes, the individual buyer/owner always must have proof of VAT being paid and if there is none that would mean a trip to HMRC to pay it yourself. It is totally irrelevant if the boat is used on domestic waterways only or overseas. If you don't have proof of a VAT status that may lead to problems. Keyword is "may", because maybe nothing happens. Who knows ...

I can only explain the rules as far as I know them and from there it is up to everyone to make there own decisions ...

 

[Graham376]

"A retrospectively issued T2L does not evidence that VAT has been paid on the boat."

That depends on where you are. Although the document was never intended for such use, Portugal have demanded T2Ls on some occasions to satisfy themselves that, in their words, VAT has been paid.

Back to doubts expressed about whether a charity not VAT registered can buy a boat VAT free, this is an excerpt from a UK VAT notice -

4.4 Boats
You can zero rate the supply to an eligible customer (as explained in paragraph 3.1) of a boat which is designed or prior to supply or import is substantially and permanently adapted, for use by disabled persons or to carry disabled persons. To qualify for relief, a boat should include all or most of the following features:

a ramp for wheelchairs
lifts and level non cambered surfaces to accommodate wheelchair movements
specialised washing and lavatory facilities accessible to disabled people
specially equipped galley and sleeping areas and steering facilities designed for use by disabled people
handrails
wheelchair clamps
steering or other controls adapted for use by disabled people