A VAT question

[snowleopard]

Boat bought in the EU by a VAT registered business. Now for sale so owners have to charge VAT on it. A foreign buyer is found. Sellers take it to the Channel Islands and do the deed there, not charging VAT. The new owners leave across the Atlantic - permanently.

Is this Kosher?

 

[westernman]

Boat bought in the EU by a VAT registered business. Now for sale so owners have to charge VAT on it. A foreign buyer is found. Sellers take it to the Channel Islands and do the deed there, not charging VAT. The new owners leave across the Atlantic - permanently.

Is this Kosher?

I think so.
As an EU VAT registered business we do not charge VAT on anything we export outside of the EU.

This sounds like exactly the same situation.

 

[Tranona]

Yes, but the deed could be done within the EU and the buyer could probably reclaim VAT if it is exported. An EU resident could also potentially reclaim VAT if the boat was exported, but the seller would be responsible for ensuring it was actually exported and the liability for accounting for VAT would rest with him until he receives the necessary paperwork confirming it has left the EU permanently. Of course then potentially liable for VAT if it returns to the EU and the importer is not eligible for one of the exemptions.

Probably best to take advice based on the exact circumstances rather than general principles before taking action.

 

[GrahamM376]

You may find some info on this site - http://ec.europa.eu/taxation_customs/customs/procedural_aspects/export/procedure/index_en.htm

My understanding from when I was in business was that unless recognised carriers were used for exports, the buyer was charged VAT but could then apply to reclaim it via customs at port of exit when leaving. I would phone the VAT helpline for advice.

 

[macd]

My understanding from when I was in business was that unless recognised carriers were used for exports, the buyer was charged VAT but could then apply to reclaim it via customs at port of exit when leaving. I would phone the VAT helpline for advice.

I think the OP's scenario involves no departure from a port of exit in the EU VAT area, and no contact with any jurisdiction that could charge VAT. But, yes, he'd be well advised to check this as you suggest.

 

[GrahamM376]

I think the OP's scenario involves no departure from a port of exit in the EU VAT area, and no contact with any jurisdiction that could charge VAT. But, yes, he'd be well advised to check this as you suggest.

If the boat is owned by a business and disposed of, however and wherever it is sold VAT will have to be accounted for in the VAT returns, whether positive, zero or exempt.
If the business takes the boat outside the EC for sale then they have exported it.

It's a potential minefield if foreign customs get involved so I wouldn't cut any corners.

 

[Xcinquemila]

VAT is charged on the physical movement of a product , either between co's and or between borders.
It is therefore that if you come with your own boat from the USA and stay over 183 days with that boat in EU waters one needs to pay VAT. That is the principle.
Thus if one wants to export a boat out of the EU , the movement of the boat is the VAT liability. EU countries allow you to export such boat within 183 days (6 months). The Customs will sign out your boat as you will declare your destination which is outside the EU. Making the boat VAT free.

The clue however is; obviously VAT needs to be recorded either 0 Rate or any other rate. If a yard or a company does not have the appropriate tax status, they will have to use an invoicing system to charge 0% rate, hence the Channel island deed/invoice. You as owner are nothing just then but only the carrier of the cargo "the boat". If you were to register and claim back the VAT, one is still left with a balance as you will need an agent to reclaim the VAT, mostly at a cost of 3% , of which half remains with customs.

Therefore all is easier and done, just sign an offshore contract, which requires an offshore payment, with 0% VAT.
At exiting the Harbor one needs to report any goods , in your case the boat goes to NON-EU..... and the story goes on...

 

[rogerthebodger]

This tells you all about it

http://customs.hmrc.gov.uk/channels...HMCE_CL_000141&propertyType=document#P79_4873

I do it all the time when I visit the UK.

The UK system is open to abuse but the UK venders as it is the vender who refunds the VAT.

In South Africa it is customs who refund the VAT in cash at the departure port.

 

[jimbaerselman]

This tells you all about it

http://customs.hmrc.gov.uk/channels...HMCE_CL_000141&propertyType=document#P79_4873

You'll find that scheme does not apply to "Means of Transport" - EU speak for cars and boats and planes.

 

[Jamesuk]

Yes! As long as you ran all the oaper work through

 

[snowleopard]

Just to clarify, the current owner reclaimed the VAT on the boat when he bought it through his business. I wonder what the VAT man will say if and when there is an inspection and the boat is no longer an asset.

 

[Mariner69]

Selling to a foreign business is straight forward. No VAT is due on the transaction. If it is to a company in the EU you are required to show their VAT on the transaction document (Bill of Sale, Invoice) and then no VAT is chargeable. If selling to an individual in the EU, VAT is chargeable and will need to be shown on the paper work.

If in doubt, a quick telephone call to the VAT help line works well in my experience; 99 per cent of our business is for foreign businesses.

 

[Tranona]

Just to clarify, the current owner reclaimed the VAT on the boat when he bought it through his business. I wonder what the VAT man will say if and when there is an inspection and the boat is no longer an asset.

Presumably it was then only used for business - or he paid tax on benefit in kind for his private use.