Another VAT conundrum ?

[Lightwave395]

My boat is in France and was there on Dec 31 2020 so is thereby deemed VAT paid in Europe AIUI.

Due to both Brexit and a health issue for my partner, when I can actually get into France I'm planning on bringing her back to UK at least for what would be left of this year depending on how the health issue resolves.

I know there's no VAT issue with bringing the boat back to UK as the boat is UK VAT paid and she's only been in France for just over 2 years, but will that mean, as I'd like, I subsequently move her back to France maybe next year or the year after where will she be considered to be VAT paid...?

I'm guessing the most likely scenario will be that I lose my EU VAT paid status when I return here, even though I can clearly prove she was in France last Dec 31

 

[madabouttheboat]

When you come back to the UK you will have to claim RGR (assuming you are qualified to). Effectively, you will then lose your EU VAT paid status. You can't claim EU RGR when you go back as you are not an EU citizen. You can't bring it back to the UK under TA arrangements as this is not available to UK citizens. Leave it in the EU is the best advice I can think of giving.

 

[Tranona]

There is a view that you do not lose EU paid status as, if the EU state interprets RGR in the way it was intended and the way that HMRC interprets it, you will be entitled to claim RGR within 3 years. The fact that you are not an EU citizen does not matter it is the status of the boat that counts. Many non UK citizens live in the UK, take their boats out of UK and return using RGR. The test on interpretation will likely come when if you sell it in the EU. That is whether the buyer accepts that it is EU VAT paid. Collecting firm evidence covering its time in the EU and on 31/12/21 is a good idea. Many marinas in Spain where there are a lot of boats like yours have letters for the owners covering this issue.

 

[Chris_Robb]

There is a view that you do not lose EU paid status as, if the EU state interprets RGR in the way it was intended and the way that HMRC interprets it, you will be entitled to claim RGR within 3 years. The fact that you are not an EU citizen does not matter it is the status of the boat that counts. Many non UK citizens live in the UK, take their boats out of UK and return using RGR. The test on interpretation will likely come when if you sell it in the EU. That is whether the buyer accepts that it is EU VAT paid. Collecting firm evidence covering its time in the EU and on 31/12/21 is a good idea. Many marinas in Spain where there are a lot of boats like yours have letters for the owners covering this issue.

Agreed - but actually when you leave a jurisdiction you export the vessel and loose the right to free movement, technically.
BUT
You have a right under EU law and the uK Law conversely (as they started from the same UCC directive) to the right to a 3 year exemption enabling you to return without making an RGR claim. After 3 years you will have to make a claim under Special Circumstances (and the UK - under Exceptions Circumstances (same thing) to return. At the moment each nation seems not to have told their relevant customs departments..... There will no doubt be appeals to the EU Commission to complain about breeches in EU Law .
Remember that Goods have NO Nationality - just Location and Free movement if legitimately in that location. Unltimately the ownership nationality is entirely irrelevant.

 

[Bobc]

Surely you can bring it back for up to 18 months without "importing it" or having to claim RGR, and then take it back to France?

 

[TernVI]

It's been gone over many times, but 'citizen' is not relevant. It's all about where you are 'resident'.

The old rule was that an EU resident could not use a boat in the EU if that boat was not 'union goods' with what we loosely call 'VAT paid Status'.

If that rule has been cut'n'pasted into UK law, then the OP cannot bring his 'EU goods' boat back without formally importing it, which he should be able to do free, using 'returned goods relief'. But once it is formally imported using RGR, I think it would cease to be EU goods?

 

[Irish Rover]

Agreed - but actually when you leave a jurisdiction you export the vessel and loose the right to free movement, technically.
BUT
You have a right under EU law and the uK Law conversely (as they started from the same UCC directive) to the right to a 3 year exemption enabling you to return without making an RGR claim. After 3 years you will have to make a claim under Special Circumstances (and the UK - under Exceptions Circumstances (same thing) to return. At the moment each nation seems not to have told their relevant customs departments..... There will no doubt be appeals to the EU Commission to complain about breeches in EU Law .
Remember that Goods have NO Nationality - just Location and Free movement if legitimately in that location. Unltimately the ownership nationality is entirely irrelevant.

Are you sure this is correct? My understanding is an application must always be made but the grant of RGR is guaranteed within 3 years if you meet the other conditions.

 

[Irish Rover]

It's been gone over many times, but 'citizen' is not relevant. It's all about where you are 'resident'.

The old rule was that an EU resident could not use a boat in the EU if that boat was not 'union goods' with what we loosely call 'VAT paid Status'.

If that rule has been cut'n'pasted into UK law, then the OP cannot bring his 'EU goods' boat back without formally importing it, which he should be able to do free, using 'returned goods relief'. But once it is formally imported using RGR, I think it would cease to be EU goods?

The jury is out on this one but I agree with your conclusion.

 

[Chris_Robb]

Are you sure this is correct? My understanding is an application must always be made but the grant of RGR is guaranteed within 3 years if you meet the other conditions.

Its called an Exemption.....so far not country has required someone to actually do a claim! Over 3 years yes - they have, but only for yachts bought into the UK from 3rd countries on the deck of a ship, then a customs agent handles the clearing, and the owner has to declare in the form 3 things - He was the one who exported it, It has had no major modifications, and No duty has been reclaimed.
Yachts returning on their own Bottoms have to date just filled in the C1331 - waited till the customs told them to piss off and have never apparently had to make the claim.....
What happens in each country in the EU could be unpredictable to start with .

 

[st599]

Surely you can bring it back for up to 18 months without "importing it" or having to claim RGR, and then take it back to France?

Temporary Admission is not available to residents in the Custom's area of concern. So a UK resident can TA in to EU and an EU resident can TA in to UK, but not the other ways around.

 

[Irish Rover]

Its called an Exemption.....so far not country has required someone to actually do a claim! Over 3 years yes - they have, but only for yachts bought into the UK from 3rd countries on the deck of a ship, then a customs agent handles the clearing, and the owner has to declare in the form 3 things - He was the one who exported it, It has had no major modifications, and No duty has been reclaimed.
Yachts returning on their own Bottoms have to date just filled in the C1331 - waited till the customs told them to piss off and have never apparently had to make the claim.....
What happens in each country in the EU could be unpredictable to start with .

OK noted. I was under the impression an actual application form would have to be filled [c1314 in the UK]. A friend in Ireland brought his yacht back a couple of years ago after 2 years in the US and he told me he had to complete an application for RGR. I don't know the details and he's not currently contactable to check.

 

[Tranona]

Temporary Admission is not available to residents in the Custom's area of concern. So a UK resident can TA in to EU and an EU resident can TA in to UK, but not the other ways around.

That is correct. It means also that every time you sail over to France you are using TA with an 18 month time limit. Equally every EU boat that visits the UK is doing so under TA. It will be interesting to see how, or if this is operationalised, then how consistent the enforcement.

 

[Graham376]

My boat is in France and was there on Dec 31 2020 so is thereby deemed VAT paid in Europe AIUI.

I know there's no VAT issue with bringing the boat back to UK as the boat is UK VAT paid and she's only been in France for just over 2 years, but will that mean, as I'd like, I subsequently move her back to France maybe next year or the year after where will she be considered to be VAT paid...?

I'm guessing the most likely scenario will be that I lose my EU VAT paid status when I return here, even though I can clearly prove she was in France last Dec 31

I don't see any problem in you keeping EU and UK VAT paid status. You have proof of the boat being in EU on 31/12 and assuming you are the person who took it from UK to there, you can take it back this year to keep UK status. Lots of boats leave and return to the EU every (normal) year just like the UK, why should there be a problem taking it back in a reasonable time scale?

 

[Tranona]

I don't see any problem in you keeping EU and UK VAT paid status. You have proof of the boat being in EU on 31/12 and assuming you are the person who took it from UK to there, you can take it back this year to keep UK status. Lots of boats leave and return to the EU every (normal) year just like the UK, why should there be a problem taking it back in a reasonable time scale?

But the key question is whether it goes back under TA or RGR. If the latter it can be sold in the EU without any VAT payment. The TA and RGR processes are very different, and as I suggested earlier it is not clear how they will be operationalised. If the rules in VAT Notice No8 (which are essentially the same for both EU and UK) are followed then on entry you must apply for one or the other. However as Chris Robb noted earlier enforcement , line with most customs procedures for yachts, has been very light touch in the UK.

As yet, unlike Schengen rules for people, I have not seen anything that indicates systems are in place to operationalise the rules - on either side, except that entry into UK requires completing a C1331 and reporting arrival. Experience suggests HMRC usually just acknowledges and only inspects if there is a declaration of import, or refers to Border Force if there are immigration issues. Formally checking each individual boat in and out is a massive job and not sure they are in a position to do this. (again on either side).

 

[Graham376]

But the key question is whether it goes back under TA or RGR.

RGR because it's EU VAT paid by being there on 31/12.
Because I wasn't in a marina or boatyard, I had the Policia Maritima inspect and photograph the boat on the mooring on 31/12 and they wrote a report for me, confirming its presence. When collecting the document, they advised as far as they were concerned, the boat is in free movement in EU. I'm considering playing them at their own game by asking for a T2L to be issued

I will be sailing from and back to EU waters as has always happened (Gib & Morocco) and don't expect anything to have changed - no-one ever showed any interest in the past.

 

[Baggywrinkle]

The Union customs code, regarding the RGR, states that non-Union goods, after having been exported as Union goods out of the EU territory, can be reintroduced within three years and declared as goods in free circulation without paying any importation duty.

In order to be eligible to the returned goods relief regime when you come back into the EU waters and therefore keep your free-circulation status you will need to meet the following requirements:

• The owner of the vessel should remain unchanged between exportation and next importation into the EU
• The vessel shouldn’t be substantially modified (the vessel can’t be transformed; maintenance and routine works are accepted)
• The vessel should come back into the EU within 3 years after the exportation

French yacht importer: The Returned Goods relief (RGR) - YMCA yachting

If you do not want to take residency in France, then you can import under Temporary Admission (TA) and do not need to pay VAT or customs duty either but need to exit and return every 18 months to reset the TA clock.

As already mentioned, it depends where you ultimately intend to sell the boat.

In France on RGR or TA will still have a 3 year clock running in the UK - after 3 years out of the UK, import under French RGR will leave the boat as union goods (VAT paid in the EU) ... but under TA you will lose VAT paid status in the UK after those 3 years - the boat will then be VAT unpaid in both EU and UK.

If it were me, and if France was my preferred cruising ground, then I would go down the French RGR route, the boat would then be Union Goods, and if you wanted to, then you would be able to take up residency in France at a later date without any VAT issues or sell the boat in the EU as VAT paid. There are no time limits on the boat other than the UK 3 year RGR clock ... but if you never intend to return the boat to the UK this is not a problem.
If you do intend to return the boat to the UK within 3 years, then TA in France would be the quickest, cheapest and most sensible option IMO - a long as you don't want French residency (or residency of any EU country).

Between residency and 90/180 schengen there is the French long-stay visa .... I don't know what effect this would have on a boat under TA.

 

[Tranona]

RGR because it's EU VAT paid by being there on 31/12.
Because I wasn't in a marina or boatyard, I had the Policia Maritima inspect and photograph the boat on the mooring on 31/12 and they wrote a report for me, confirming its presence. When collecting the document, they advised as far as they were concerned, the boat is in free movement in EU. I'm considering playing them at their own game by asking for a T2L to be issued

I will be sailing from and back to EU waters as has always happened (Gib & Morocco) and don't expect anything to have changed - no-one ever showed any interest in the past.

I know you have your evidence - but will you be asked to present it every time you go into a marina?

I know that this has not been an issue in the past, but that is because British registered boats had free movement. That is no longer automatically the case as your own example shows.

Imagine a race or rally with 100 participants pitches up in Cherbourg. Is the VAT status going to be checked for each one? and then at every at every other port they enter? or will they get a ticket stating the boat has entered under TA and can move around for 18 months. Many yachts will go back and forth as in the past. Does leaving the EU stop the clock as it does for a person leaving Schengen?

Lots of unanswered questions.

 

[TernVI]

... to operationalise the rules ...

do you mean 'operate'?

 

[Bobc]

Can I pose this question please?

What if the OP (who's boat was in the EU on 31/12/20 as hence has EU Vat status), wanted to hop across the channel to the UK with it for a week or two as part of a summer cruise.

He would have to call Yachtline, but would he have to RgR the boat, and even if so, when he goes back to the EU with it, he still has all the documents proving that he was in the EU on 31/12/20, so presumably any official who wanted to enquire about vat status would conclude that the boat was deemed EU vat paid.

Am I missing something, or is this a cute way of getting both EU and UK vat status on his boat?

 

[Baggywrinkle]

Can I pose this question please?

What if the OP (who's boat was in the EU on 31/12/20 as hence has EU Vat status), wanted to hop across the channel to the UK with it for a week or two as part of a summer cruise.

He would have to call Yachtline, but would he have to RgR the boat, and even if so, when he goes back to the EU with it, he still has all the documents proving that he was in the EU on 31/12/20, so presumably any official who wanted to enquire about vat status would conclude that the boat was deemed EU vat paid.

Am I missing something, or is this a cute way of getting both EU and UK vat status on his boat?

The point is that being in the EU on 31.12.2020 means it is NOT VAT paid in the UK. It was an either UK or EU option.

On leaving the EU you will need to clear out and get a Schengen stamp to stop accumulating schengen days - they will process the boat at the same time, it will also be "checked out" which will start the 3 year EU RGR clock.

Bringing a boat into the UK requires the following .....

Arriving in the United Kingdom
Do I need to fly the yellow ‘Q’ flag?
If you are arriving from outside the UK (and this includes the Channel Islands) you must fly the ‘Q’ flag, where it can readily be seen, as soon as you enter UK waters (the 12 mile limit). Do not take down the flag until you have finished reporting to the customs authorities. Failure to comply will make you liable to a penalty. If you are arriving from an EU member state into Northern Ireland, there is no need to fly the ‘Q’ flag.

Do I need to notify the customs authorities on arrival?
When arriving direct from outside the UK you must phone the National Yachtline. You will need to inform the Yachtline if any of the following apply:

• UK VAT has not been paid on the vessel
• you have on board goods which are to be treated as surplus stores as per Notice 69A.
• you have any prohibited or restricted goods
• there is any notifiable illness on board
• there are any people on board who need immigration clearance
• any repairs or modifications, other than running repairs, have been carried out since the vessel last left the UK
• you have any goods for personal use on which you need to declare and pay UK tax or duty and cannot do so via the online service. Notice 1: Travelling to the UK

You will need to comply with any further instructions that you are given.

If arriving from outside the UK the National Yachtline will ask you to complete form C1331.

Notice 8: sailing your pleasure craft to and from the UK

If the original UK bill of sale showing VAT paid is available, then I would imagine HM Customs will also expect documentary evidence proving location in the UK on 31.12.2020 - to ensure it wasn't one of the boats in the EU on that date. If you don't have both VAT paid proof and UK location proof for 31.12.2020 then I would not like to speculate what might happen if you tick the VAT Paid box on the C1331.

As a UK resident RGR is the only option for an EU VAT paid boat as a UK resident is not allowed to use a non-VAT paid boat in the UK.

To fall through the cracks and escape with VAT paid in UK and EU you need proof of location in both jurisdictions for the 31.12.2020 - if you have that, then one is faked, AFAIK a boat can't be omnipresent.