Advice on VAT invoice

[greggreystones]

Hi, I am new to boating , I have been told that I must get a VAT invoice to prove that the VAT has been paid. I am looking to buy a boat in Belguim, I have agreed a price and the broker has sent me an invoice from the Original finance company (SGB) which shows the outstanding amount to be only 15 euros + Vat, which they are saying is all I need to prove the boat has had the VAT paid. The broker informs me that this is all that was needed for the second owner to have the boat run under the Belguim flag and you can only run under the Beguim flag if VAT is paid. I am sure he is correct, but wanted to know if anyone had any advice or experience similar to this.

 

[Whitelighter]

*settles down, puts on fire, gets bowl of pop corn and waits for the fireworks*

The U.K. Is hyper VAT sensitive. The rest of the EU think we are mental/just don't care.

I suspect the vessel is subject to a leading scheme, and as such I doubt a VAT paid invoice doesn't yet exist.
There will be experts along in a minute to tell all

 

[MapisM]

the Original finance company (SGB) which shows the outstanding amount to be only 15 euros + Vat

I suppose that by "outstanding amount" you actually mean the nominal redemption payment at the end of a leasing.
If so, that piece of paper implies that the first "formal" owner (the bank) bought the boat, leased it to the first "real" owner (the guy you are purchasing the boat from), who eventually became also the formal owner at the end of the leasing, by paying that 15 Eur VAT invoice. In this respect, yes, the VAT was obviously paid in full originally (by the bank).

All well and good, but actually you don't care - and neither does HMR&C, unless they have reasons to believe that you are actually the receiver of something stolen, the accomplice of a VAT fraud, or something else illegal.
Fact is, the purchase of a boat originally sold and always kept in the EU from a private individual is not a VAT-table transaction, period.
Just complete the BoS below, that's all you need. Oh, and welcome to the asylum! :encouragement:

https://www.gov.uk/government/uploa...le/301532/msf_4705_bill_of_sale_rev_02-14.pdf

 

[KINGFISHER 9]

In the amount paid box just put "£1 and other considerations" ... handy when you come to sell it again!

 

[Tranona]

In the amount paid box just put "£1 and other considerations" ... handy when you come to sell it again!

That is completely irrelevant from a VAT point of view.

 

[KINGFISHER 9]

That is completely irrelevant from a VAT point of view.

Sorry you didn't understand my comment.

 

[ari]

Sorry you didn't understand my comment.

I'm afraid I didn't understand it either - could you explain the relevance to VAT please?

 

[jfm]

Greg are you still tuned in? Just wanted to check before typing a longer reply

 

[petem]

Greg are you still tuned in? Just wanted to check before typing a longer reply

I'm not Greg but am 'tuned in'!

 

[Tranona]

Sorry you didn't understand my comment.

Not sure you understand the OPs question either - which is perhaps why your post is irrelevant.

 

[greggreystones]

Hi Guys
Thanks for all the replies, I think what Mapis M stated is correct, a nominal amount was paid by the owner to the bank at the end of the agreement (included VAT) which then meant he owned the boat. I really want to know if that is proof that VAT has been paid.

 

[KINGFISHER 9]

Just made a suggestion if the chap had to fill in the price paid box on the Bill Of Sale that was shown ... just a simple suggestion. What is it about this silly aggressiveness on forums? The anonimity I suppose! Like 14 year olds on Twitter ... probably.

 

[Tranona]

Just made a suggestion if the chap had to fill in the price paid box on the Bill Of Sale that was shown ... just a simple suggestion. What is it about this silly aggressiveness on forums? The anonimity I suppose! Like 14 year olds on Twitter ... probably.

But he was not asking what to put on the BoS, but whether the documentation offered was sufficient evidence of VAT payment.

So your post was irrelevant and of no help to the OP. You did not explain why you were making the suggestion.

Nothing to do with "silly aggressiveness" - just wondering why you would post something that is not relevant!

 

[superheat6k]

An interesting comment by the man from HMRC who assessed my recent import and VAT payment was that it is illegal for HMRC to levy VAT twice.

Thinking this point forward this means that if it is 'likely' or 'probable' or even 'possible' that VAT has been paid then benefit of doubt must de facto pass to the owner of a secondhand item, who anyway is not required to account for VAT on such item when it was first sold. This means that the onus of proving VAT paid status would always rest with HMRC, and it is unlikely they could ever prove categorically that VAT had not been paid, therefore the default position is that if in doubt 'VAT has been paid'.

Not sure I wish to be the one to test this hypothesis, although now quite few grand lighter I wish perhaps I wasn't quite so honest.

 

[jfm]

An interesting comment by the man from HMRC who assessed my recent import and VAT payment was that it is illegal for HMRC to levy VAT twice.

Thinking this point forward this means that if it is 'likely' or 'probable' or even 'possible' that VAT has been paid then benefit of doubt must de facto pass to the owner of a secondhand item, who anyway is not required to account for VAT on such item when it was first sold. This means that the onus of proving VAT paid status would always rest with HMRC, and it is unlikely they could ever prove categorically that VAT had not been paid, therefore the default position is that if in doubt 'VAT has been paid'.

Not sure I wish to be the one to test this hypothesis, although now quite few grand lighter I wish perhaps I wasn't quite so honest.

Superheat, I don't wish to pick a fight but that is not correct. The VAT guy is not correct, and the conclusion about onus of proof isn't correct. I realise you might think "Well the HMRC guy said it so it must be right" but that isn't how the world works. Front line HMRC folks in general are far from being deep experts on tax law.

Sure VAT isn't levied twice on the very same transaction so when you imported your boat you paid 20% not 40%, but that cannot have been his point. VAT can be paid on the same item multiple times. Eg if you take your boat to Jersey tomorrow and sell it to a UK guy there, and he sails it back to UK, he has to pay VAT again even though you only just paid it 2 months ago. Not that you'd do such a daft thing of course. Or if you buy a new boat in UK you pay the VAT to the dealer even though they already paid it when they bought the boat from the builder a few weeks previously, and so on (the dealer gets a credit of course)

 

[petem]

Superheat, I don't wish to pick a fight but that is not correct. The VAT guy is not correct, and the conclusion about onus of proof isn't correct. I realise you might think "Well the HMRC guy said it so it must be right" but that isn't how the world works. Front line HMRC folks in general are far from being deep experts on tax law.

Sure VAT isn't levied twice on the very same transaction so when you imported your boat you paid 20% not 40%, but that cannot have been his point. VAT can be paid on the same item multiple times. Eg if you take your boat to Jersey tomorrow and sell it to a UK guy there, and he sails it back to UK, he has to pay VAT again even though you only just paid it 2 months ago. Not that you'd do such a daft thing of course. Or if you buy a new boat in UK you pay the VAT to the dealer even though they already paid it when they bought the boat from the builder a few weeks previously, and so on (the dealer gets a credit of course)

JFM, regarding your last sentence I always understood the critical doc to obtain was the vat invoice to the first end Customer. Would the factory invoice be sufficient to show Vat paid? I appreciate this could be hard to obtain due to the passage of time and the fact that it shows the trade price to the dealer..

To put the question another way, if a uk manufacturer sells a bit to a Spanish dealer who then sells it to a Swiss end user (who is Vat exempt - if that is the correct term), is the boat Vat paid from the original sale to the dealer?

 

[MapisM]

if a uk manufacturer sells a bit to a Spanish dealer who then sells it to a Swiss end user (who is Vat exempt - if that is the correct term), is the boat Vat paid from the original sale to the dealer?

I believe the short answer is no P, the "first" invoice as such proves nothing. But I'm sure jfm, tranona, or some other expert can explain you why better than myself.
Btw, in your example (as I understand it: a UK manufacturer exporting some goods to a VAT-registered subject in Spain), the VAT invoice should indeed be issued, but at zero rate.
But that aside, the concept of end users who are VAT exempt because they are Swiss really made me ROTFL - their reputation precedes them!

 

[petem]

I believe the short answer is no P, the "first" invoice as such proves nothing. But I'm sure jfm, tranona, or some other expert can explain you why better than myself.
Btw, in your example (as I understand it: a UK manufacturer exporting some goods to a VAT-registered subject in Spain), the VAT invoice should indeed be issued, but at zero rate.
But that aside, the concept of end users who are VAT exempt because they are Swiss really made me ROTFL - their reputation precedes them!

P, I'm glad I continue to provide you with some amusement!

Let me ask the question in another way.

Use Case 1
Step 1 - FL (for example) sell boat to Spanish dealer as stock boat. VAT invoiced (Invoice A) and paid on trade price.
Step 2 - Dealer reclaims VAT.
Step 3 - Dealer sells boat to EU resident. VAT invoiced (Invoice B) and paid on retail price.

Alternate Flow
Step 1 - As above
Step 2 - As above
Step 3b - Dealer sells boat to non EU resident. VAT invoice shows zero %.

In a Use Case 1, where Invoice B is lost, but the boat is known to be VAT paid because its on the Spanish Register, does Invoice A have any value as proof of VAT paid?

Pete

 

[MapisM]

P, I'm glad I continue to provide you with some amusement!

1st of all, I hope it was clear that my previous "ROTFL" statement was made with the tongue firmly in cheek - btw you surely aren't the first and won't be the last to have such perception of CH, hence my comment on their reputation.

Back to the point: in your example, invoice A (unless I'm missing some specific trick or some recent regulation changes) has to be issued at zero rate, according to the rules on intra-Community transactions.
Otoh, if FL sells the same boat to a UK dealer, the VAT is indeed paid on invoice A, but the dealer can (and obviously does) recover it.
Therefore, even if you have an original UK "VAT paid" invoice, issued from the factory, that alone still does not bless the boat as "VAT paid" for all subsequent transactions, I'm afraid.

 

[petem]

Back to the point: in your example, invoice A (unless I'm missing some specific trick or some recent regulation changes) has to be issued at zero rate, according to the rules on intra-Community transactions.

Ah, OK I wasn't aware of that but it makes sense.

Therefore, even if you have an original UK "VAT paid" invoice, issued from the factory, that alone still does not bless the boat as "VAT paid" for all subsequent transactions, I'm afraid.

That's the interesting point. The "VAT paid" invoice to the first owner does in practice (in the UK) appear to "bless the boat as "VAT paid" for all subsequent transactions" (even though the boat may have been subsequently exported, reimported, etc). So why is this not the case for the manufacturer to dealer invoice?