advice buying used boat - UK registered or EU for 2021+

[Marceline]

Hi - we' re looking to buy our first ever boat and are getting increasingly baffled by VAT rules and what may/may not be happening after Dec 31st and hoped for some pointers and advice

We're UK residents/passport holders. Our plan is to be UK based for the next few years and sail mainly around the South Coast/British Isles, mainly as my work means I need to be in UK for the next couple of years. But then aiming to travel over to France/Spain/Portugal etc, and then to cruise around Scandinavia and then hopefully in about 5 years be ready to cross the Atlantic and spend a few years cruising (eventually hoping to make it to New Zealand)

Because of this we've been looking mainly at UK based boats (and a fair few we are considering are 1984 or earlier so hopefully exempt from VAT rules)

But we've also seen a couple of boats based in Portugal and France which we really like (and I think they're registered in those countries, though one is UK registered)

My main question is, based on our above hopes/plans - would we be better buying outside the UK and initially traveling out to sail for short breaks initially so that we can explore more of the EU/Schengen countries later on?

Or, if we did get an older pre 1985 boat that had the documentation re: VAT, would this make things 'easier' re: being UK based and traveling over to the EU for the first few years, then leaving UK and then returning more than 3 years later for our more ambitious voyaging hopes?

Sorry if the above is full of tricky or misinformed questions - we're just increasingly baffled with the VAT/registration situations and we've not a huge amount of funds so we really need to avoid getting into VAT dilemas as much as possible.

Many thanks for any advice

 

[lustyd]

I wouldn’t rely on the EU rule about vat exemption for a yacht in the UK after Brexit. It’ll work in the EU for sure and UK is unlikely to change but the way the government are spending they’re going to need income pretty soon!

 

[st599]

I think you'll also need to factor in the Schengen rules for visitors. Currently, a UK boat will be able to spend 18 months in the EU without paying vat, but you can't.

 

[Bobc]

My advice would be to buy a boat in the EU and bring it back to the UK next year.

 

[lustyd]

Bobc as a UK resident you'd likely be liable for VAT immediately in that scenario as it would be an import so probably the worst of all worlds unless the boat was already UK registered and had been in the UK, but it's unlikely such a boat would be based in the EU for sale.

 

[Irish Rover]

The country of registration of the boat is not really relevant. The country of residence of the owner is what will determine its eligibility for temporary admission or its liability for VAT.

 

[scruff]

If I were in your shoes, I'd be holding off buying a boat for 6 months or so until tax implications are clear,. Unless the boat was so cheap an extra surprise 20% bill were inconsequential.

 

[RupertW]

If I were in your shoes, I'd be holding off buying a boat for 6 months or so until tax implications are clear,. Unless the boat was so cheap an extra surprise 20% bill were inconsequential.

The rules have been clear for two years - wherever you are on transition day is the only place that VAT will be deemed paid. Unfortunately the HMRC made all sorts of statements implying that they would allow (how??) VAT to be considered paid in two different regimes post-Brexit, but as this implied a change in the law it was never likely. The EU have always been clear (as per their statements as interpreted by RYA and CA) that it’s a simple case of where your boat is on the day.

In the case of the OP I would agree with the suggestion of buying in the EU - you then have your boat able to travel for evermore in the EU, but have the option of 18 months back in the UK when it suits you.

 

[Baggywrinkle]

As a UK based, UK citizen .... I'd buy a UK VAT paid boat. You can take it to europe and use temporary admission to avoid paying any taxes or import duty in the EU.

As a UK citizen, after 01.01.2021 you will be able to buy and keep a non-VAT paid boat in the EU so long as you have no residency or citizenship in any EU country - this will then be kept in the EU under 18 month temporary admission.

The temporary admission rules give your boat 18 months in the EU before VAT/import duty becomes payable. If you leave the EU and re-enter in those 18 months then a new 18 month period starts. This can be accomplished in a day and is routine for most boats in the EU under temporary admission - I've done it, it's straightforward as there is no definition of how long you have to leave for - simply clear out in a port of entry, sail off out of sight (12 nm offshore gets you out of their teritorial waters), and return a good few hours later and clear back in again stating previous location as "open sea" but explain what you are doing. Customs and police will then simply stamp all your paperwork and the 18 month period will start afresh.

The 90/180 rules for you and your crew will be more of a problem, but you will have to arrange your cruising to accommodate this rule.

If you buy a VAT paid boat in the EU and return it to the UK after 01.01.2021 then IMO it is a grey area. HMRC are being obtuse as to how they intend to interpret returned goods relief and export date of the boat - best to avoid this scenario. Buying VAT unpaid in the EU would be OK, just pay the VAT when you bring it to the UK.

Flag state has no bearing on VAT status, it's ownership and residency of the owner that counts.

 

[Baggywrinkle]

The rules have been clear for two years - wherever you are on transition day is the only place that VAT will be deemed paid. Unfortunately the HMRC made all sorts of statements implying that they would allow (how??) VAT to be considered paid in two different regimes post-Brexit, but as this implied a change in the law it was never likely. The EU have always been clear (as per their statements as interpreted by RYA and CA) that it’s a simple case of where your boat is on the day.

In the case of the OP I would agree with the suggestion of buying in the EU - you then have your boat able to travel for evermore in the EU, but have the option of 18 months back in the UK when it suits you.

AFAIK you can not use 18 month temporary import in a country you are resident in.

 

[RupertW]

AFAIK you can not use 18 month temporary import in a country you are resident in.

Oh, hadn’t realised that - does that mean you would immediately be considered to have imported it even if you came across from France for the weekend? If that’s the case then I’d personally abandon the idea of UK sailing compared to perpetual boat allowed in the EU, but that’s just me.

 

[Baggywrinkle]

Oh, hadn’t realised that - does that mean you would immediately be considered to have imported it even if you came across from France for the weekend? If that’s the case then I’d personally abandon the idea of UK sailing compared to perpetual boat allowed in the EU, but that’s just me.

I had my boat in Croatia, VAT unpaid, under temporary admission for a number of years before Croatia joined the EU ... I could not sail to Italy or Slovenia for exactly this reason.

Bring a VAT unpaid boat, or a boat bought outside your country of residence, that you personally own, into your country of residence and you will be charged VAT and import duty. It is seen as an import.

 

[Irish Rover]

As a UK citizen, after 01.01.2021 you will be able to buy and keep a non-VAT paid boat in the EU so long as you have no residency or citizenship in any EU country - this will then be kept in the EU under 18 month temporary admission.

Sorry to keep harping on this but it's important - citizenship is not an issue here only residency.

 

[lustyd]

AFAIK you can not use 18 month temporary import in a country you are resident in.

That was the point I was making above, it's all great about temporary import elsewhere, but if you can never bring the boat into UK waters without a massive bill that might be an issue!

 

[RupertW]

Sorry to keep harping on this but it's important - citizenship is not an issue here only residency.

I think you are right - I won’t ever want to bring my boat back to the UK but if it was citizenship then that wouldn’t be a problem - residency would be.

 

[lustyd]

To be fair it very much depends on the wording of the VAT law when we leave. Since we’re still under EU regs we don’t know whether citizenship will make a difference, we just know the current EU wording which may change

 

[Bobc]

In all honesty, if you bought a boat in the EU, re-flagged it as a UK boat under SSR, put the SSR number on it and brought it back, I doubt anyone would bother you.

 

[lustyd]

That would depend on whether they were trying to make a point of "taking control of our borders" or not, wouldn't it? Normally I'd agree with you, but I suspect at least one poor soul is going to be dragged into the papers for "tax fraud" to show how well the government and border force are doing post brexit.

 

[st599]

Won't the new app/website they're planning on using to track boats arriving and departing notice? It's not a hard serach to see if a name hasn't appeared in the database before.

 

[Marceline]

Thanks everyone for all the replies and advice - really helpful