Bl**dy VAT again sorry?

[RobWales]

Scenario................
I have seen a boat I fancy which is currently in the EU and was supplied new into the EU in 1998.
The current owners are its second owners and they also own a small engineering company.
They say that they can supply me an invoice for the purchase price (circa 50k)that will show that 20% of that 50k is for their tax/vat (as he calls it)therefore showing that tax/vat has been paid by me for the purchase within the EU.
Can anyone see a problem here?
And other than shipping would I be liable for any further costs?
Thanks
Rob

 

[peterb26]

I think you need to be sure to have the ORIGINAL sales invoice for the boat when it was NEW to the first owner. Or at very worst a copy which is legally certified by a lawyer in the country of origin.

Its no good knowing the VAT has been paid on subsequent sales - its the first sale of the boat that the VAT man will be interested in, 'cos thats the biggest amount of VAT!!

Having just moved a boat within the EU - nobody is interested in copies at all. They all want the original and its a nightmare.

 

[RobWales]

Thanks
What happens then if that is not available?
And what paperwork would my shipper need to satisfy customs on re-entry with the boat into the UK?
This may just about put the KAIBOSH (spelling) on my plans!

 

[peterb26]

I dont know Rob. However, as a first instance I would ring the VAT helpline in the UK.

They dont have an axe to grind (like the seller!) and once youve got through to someone about Boat Vat, its likely that they will be able to tell you exactly what your options are.

In my experience, they are very helpful - but few of them are "Boat VAT" specialists, so your first hurdle is getting transferred to someone who is!

Good luck.

 

[fireball]

That's handy if VAT wasn't paid in the first place.

AFAIK a VAT receipt for your vessel shows that you have paid VAT for your vessel .

 

[capnjack]

I agree that copies are not much good. However, as far as I am aware doesn't it depend on which country the boat was first built and how old it is, if it was first exported and then returned? For example, if the boat was exported at new tax free and then later brought back to its original country of build, it will be liable for VAT in that country and then it depends how old it is when it returns. From the sound of it the current owners may have bought it tax free and bought it back to the original country of build thus making it liable and the reason they have a tax invoice. If you are able to then prove that taxes have been paid, the boat can be safely moved within the EU. Surely the Customs office of that particular country would have a record?

 

[Deleted User YDKXO]

A couple of key questions here. Is the boat currently owned and being sold by the engineering company because the invoice would be useless if the bill of sale shows a different name and address?
Secondly, is the price of £50k that you have agreed ex VAT or inc VAT? If it's ex VAT, then technically you are commiting a fraud by representing the boat as VAT paid because the VAT is payable on £50k not £30k so make sure all the documents show a purchase price of £30k not £50k. If it's inc VAT, then the existing owner must provide an original invoice to him or the previous owner showing VAT
I can't see whats in it for the owner to do this because, if his engineering company issues an invoice to you for £30k + VAT, then theoretically he should hand the VAT over to his local tax authorities in the normal way

 

[Gludy]

I dealt with this a few years ago sending copies of the original invoices but VAT people wouild not issue a letter or any documentation to declare the boat VAT paid. It is a real nightmare which I hoped the RYA was sorting out with the VAT people.

I even asked them to inestigate the VAT basis of my boat thinking the end rtesult would be proof of payment but they were not interested.

You cannot win.

 

[Nick_H]

How do you work that out for a boat that was supplied new into the EU, and is still in the EU? Surely most likely situation is that its never been anywhere but the EU, but the current owner just doesn't have a copy of the original VAT invoice.

In which case Rob2556 I would call the manufacturer with the boat serial no. and try to get the dealers name, then call them and try and get a copy of the original sales invoice.

It seems to me there is no way you can absolutely prove that a boat is UK VAT paid. Even if you have the original sales invoice showing VAT paid, it could have been re-claimed by a subsequent owner. It also seems there is no register of which boats do and don't have VAT paid, so the tax authorities would be in the same situation as you when trying to find out if tax was paid, they would need details of every transaction involving the boat. As the amount of tax is not huge, I would say the original sales invloice showing VAT paid, plus an invoice from your seller charging VAT should mitigate the risk to an acceptable level.

Situation (in this respect at least) is better in rest of Europe, as once VAT is paid on a boat it cannot be re-claimed, so if the original invoice shows VAT paid then the boat is VAT paid.

 

[Deleted User YDKXO]

I had the same situation with one of my previous boats and I contacted the manufacturer direct. They refused to supply a copy of the original invoice to the dealer claiming that it would take too much time and effort to locate it and, in any case, it was confidential. I also contacted the original supplying dealer but he was equally unhelpful. Even so, all you would get is a photocopy of a photocopy so, in theory, it's not a legal document anyway
Btw, it does'nt matter if the VAT is subsequently reclaimed or not. It's the payment of it that counts

 

[capnjack]

[ QUOTE ]
How do you work that out

[/ QUOTE ]

Just a guess I'm afraid, because he mentioned they were the second owner and they had an invoice which supposedly showed tax paid. I guessed the invoice mentioned was from their purchase of the boat. He didn't say where in the EU the boat originated.

Do you think the original owners may have claimed the purchase VAT back at some stage and depending which country, can they do that?

 

[Gludy]

If the original sale is to a vat registered person/company then each transaction after that states the VAT - so the seller pays it on sale and the buyer reclaims it.

However id the sale at some point is to a non-vat registred person then the vat trail stops there and he must sell it on VAT included. So it possible for a £1m boat to be sold on for say £500k and the net vat collected is on the £500k not the £1m.

 

[Deleted User YDKXO]

I'm struggling to understand that. In a transaction between 2 VAT registered entities, the net effect is that no VAT is paid because the seller receives it and pays it to C & E and the buyer pays it and reclaims it from C & E. Eventually when the boat is sold to a non VAT registered entity, the buyer cannot reclaim the VAT but at that point, only one amount of VAT has been paid to C & E (calculated of course on it's value/sale price then not new) and not reclaimed so the boat value only ever contains one amount of VAT

 

[Gludy]

Yes - that is the same as what I wrote.

The VAT chain is broken when a non-vat person buys it and it is the vat paid by that first non-vat person in the chain that determines how much VAT HMG gets.

 

[Deleted User YDKXO]

Yeah but that does'nt equate to £500k VAT in a £1m boat. If a £1m boat is sold a number of times between a number of VAT reg entities and then eventually is sold for £500k to a non VAT reg entity, the only VAT amount which ends up with C & E is 17.5% or whatever of £500k. The difference between £1m and £500k is depreciation not VAT

 

[fireball]

that is what he said ....

If a VAT registered company sold a company owned boat (that had VAT claimed back on it) to an individual then it would HAVE to be a VAT Invoice - that is PROOF that VAT has been paid on that vessel at that time.

 

[Gludy]

Mike
That is what i said - the vat would be based upon the £500k not the £1m.

 

[Deleted User YDKXO]

OK, misunderstanding, sorry

 

[fireball]

Can he have that in writing? .... oh you have /forums/images/graemlins/blush.gif /forums/images/graemlins/grin.gif

 

[Hurricane]

Ok then

From that little arguement that you all ended up agreeing it seems that the most important invoice to keep would be the invoiced raised to the first non-VAT registered owner - up to this point everyone paid VAT and everyone reclaimed it.

I believe that the RYA are trying to get C&E to agree a better system of proving the VAT status.