Boat VAT – any contingency planning possible for a Brexit No Deal?

[dunedin]

NOTE: Please keep this to practical boating and implications on this thread, and avoid debating the politics to keep this as a Scuttlebut item.

Many of us have a substantial amount of cash tied up in the VAT paid on our boats. Clearly we may all hope for a good Brexit settlement deal that preserves this, but what contingency planning, if any, could/should we do in case of a Brexit with No Deal?

This is contingency planning, so let’s not have lots of views on the probabilities of this scenario. But if we did become UK resident owners of UK flagged boats in March 2019, and there was no deal, presumably we would be treated the same as a US / Australian / Russian boat today? What would this mean regarding VAT status under the letter of current EU law.

And, for example, one pundit who should be reasonably well informed suggested he would be ensuring his boat is in EU waters, and documented as such, on Brexit day next year. Would this have any contingency benefits, even if only marginal? An early Scuttlebut cruise to Cherbourg perhaps?

Thoughts ?

 

[lpdsn]

Sail to Ireland. Sell your boat to a mate. Buy it back with an Irish bill of sale. Beware of stamp duty so best to say €1 plus other considerations.

 

[npf1]

Sell the boat before Mar-19 ?

 

[Daydream believer]

Sail to Ireland. Sell your boat to a mate. Buy it back with an Irish bill of sale. Beware of stamp duty so best to say €1 plus other considerations.

No need to go to Ireland. Just lob a traveller 50 euros to sign some forms for you & say cash changed hands.
Who is to say where the exchange took place.Most of them own houses in Ireland so have the correct address for your purpose.

 

[awol]

Well, my boat was in the EU when VAT was deemed paid so I don't see a problem unless I permanently export it. Buying a boat after Brexit (if sanity doesn't descend before then) might be different kettle of halibut.
But will I need my passport when I pop across to Noriron?

 

[lw395]

I would think that a UK owned boat would be treated as 'foreign' and therefore only entitled to stay in the EU for a limited time before attracting import duty.
If the boat is registered in an EU country, that registration might become void as soon as the owner no longer has right of residence.

I would hope that a UK owner would have his boat treated as VAT paid if he sells it in the UK, wherever it happened to be on exit day.
But I suspect if you sell a British-owned boat to an EU citizen post Brexit, they (the buyer) might have to pay VAT on it, the same as you currently have to if you buy one from the US.
I expect spending a couple of months a year in Turkey will be obligatory.

At present, AIUI, a UK citizen can buy a new boat and not pay VAT on it, provided it is delivered to say Jersey and is never caught as permanently imported to the EU.
So ISTM that post exit, I could still do that, and as far as the UK authorities were concerned, being in the EU would be 'abroad', so VAT free boating might become more accessible?

I reckon the only way to protect the EU-VAT paid status would be for the boat to be owned by an EU person or company on exit day.

 

[Heckler]

I would think that a UK owned boat would be treated as 'foreign' and therefore only entitled to stay in the EU for a limited time before attracting import duty.
If the boat is registered in an EU country, that registration might become void as soon as the owner no longer has right of residence.

I would hope that a UK owner would have his boat treated as VAT paid if he sells it in the UK, wherever it happened to be on exit day.
But I suspect if you sell a British-owned boat to an EU citizen post Brexit, they (the buyer) might have to pay VAT on it, the same as you currently have to if you buy one from the US.
I expect spending a couple of months a year in Turkey will be obligatory.

At present, AIUI, a UK citizen can buy a new boat and not pay VAT on it, provided it is delivered to say Jersey and is never caught as permanently imported to the EU.
So ISTM that post exit, I could still do that, and as far as the UK authorities were concerned, being in the EU would be 'abroad', so VAT free boating might become more accessible?

I reckon the only way to protect the EU-VAT paid status would be for the boat to be owned by an EU person or company on exit day.

Get a T2L like some of us did last year, instructions in PBO this month. HM Customs basically accepting that the boat is a tax paid bit of kit

 

[macd]

Get a T2L like some of us did last year, instructions in PBO this month. HM Customs basically accepting that the boat is a tax paid bit of kit

I suspect the OP is rather less bothered about HM Customs than comparable bodies elsewhere. After Brexit, a T2L issued by HMRC will quite possibly be of less value in the EU27 than the paper it's printed on.

However, there will very likely be some sort of transitional arrangements agreed in due course. Little point in getting lathered about it just yet. And, lest anyone think we're a tiny niche and likely to be overlooked, many of the fiscal and regulatory issues are part and parcel of 'modes of transport' measures, which will have a rather bigger claim on negotiators' attention.

 

[Fr J Hackett]

A boat that has VAT paid on it in the UK before March 2019 will effectively had EU VAT status ( part of the VAT will have gone into the EU accounts indirectly) they will not be able to rescind that, however having the necessary paperwork to show that VAT was legitimately paid may prove difficult as HMC&E do not issue a traceable certificate as most European countries do. Whether the bill of sale endorsed as VAT paid will be enough is difficult to say, it seems to be acceptable at the moment. The bigger issue is how long will a UK VAT paid and registered boat be allowed to remain in EU waters? Perhaps look to Swiss registered boats as a clue or Norwegian.

 

[Quandary]

I am entitled to an Irish Passport, would taking the bother to buy one make any difference?

 

[lw395]

A boat that has VAT paid on it in the UK before March 2019 will effectively had EU VAT status ( part of the VAT will have gone into the EU accounts indirectly) they will not be able to rescind that, ......

I am not sure about that.
A boat in this context will be not very different from most other used 'consumer semi-durable goods'.
Do you expect to be able to freely import and export cars, random household goods etc between the EU and UK in 2020?

It is a minefield, with various ill-defined promises about rights of individuals to retain residence etc having been made.
I would hope there would be get-outs for people moving back to their country of origin, but that is not the same as selling your used yacht in 'the single market'.

As a general principle, I don't think we can regard HMCE as the yachtsman's friend. Let alone their EU counterparts.

Personally, I think if I had a UK registered yacht, or one owned by UK domiciled people, based in the med, I would be assuming that in 2020, it would have much the same treatment as a non-EU yacht does now.
So contingency planning might be along the lines of sell soon, spend time in Turkey or maybe do the ARC?

 

[colind3782]

I have an Irish passport but it's a real pain to put a boat on the Irish register as there is no SSR equivalent at the moment. You would probably need an Irish address anyway.

 

[Irish Rover]

I have an Irish passport but it's a real pain to put a boat on the Irish register as there is no SSR equivalent at the moment. You would probably need an Irish address anyway.

I did it in 2010 while resident in Turkey and using my Turkish address. apart from needing a tonnage survey it was reasonably straightforward but does take time. Thing is though you will then be foreign in the U.K. and will probably be on TI there.

 

[Fr J Hackett]

In the aspect of permitted time in EU waters I think you may be correct but there is no way that the yacht could be declared as non VAT paid as it has, it will be a matter of demonstrating that.

 

[lw395]

In the aspect of permitted time in EU waters I think you may be correct but there is no way that the yacht could be declared as non VAT paid as it has, it will be a matter of demonstrating that.

It will be GB VAT paid. <> EU VAT paid.

At present, if you sell a boat outside the EU, it become non-vat-paid if it comes back,
Fairness does not come into it.

 

[Fr J Hackett]

It will be GB VAT paid. <> EU VAT paid.

At present, if you sell a boat outside the EU, it become non-vat-paid if it comes back,
Fairness does not come into it.

If you sell it yes but if it stays in the same ownership?

 

[dunedin]

Sail to Ireland. Sell your boat to a mate. Buy it back with an Irish bill of sale. Beware of stamp duty so best to say €1 plus other considerations.

Why would that help? Already got a bill of sale which shows EU VAT paid. The question is if a worst case No Deal scenario is the VAT paid status still valid if taken back into Euro land

 

[dunedin]

Well, my boat was in the EU when VAT was deemed paid so I don't see a problem unless I permanently export it. Buying a boat after Brexit (if sanity doesn't descend before then) might be different kettle of halibut.
But will I need my passport when I pop across to Noriron?

But isn’t that the potential risk - presumably a U.K. based (and U.K. owned and flagged) boat will become permanently exported from the EU, with potential issues if goes back.
With many boat seats the resale market is largely EU rather than U.K., so if lost VAT status a big hit (16.7%) to the resale value.
You might need a Visa for NI (but that is a different scenario!)

 

[dunedin]

I would think that a UK owned boat would be treated as 'foreign' and therefore only entitled to stay in the EU for a limited time before attracting import duty............
....I suspect if you sell a British-owned boat to an EU citizen post Brexit, they (the buyer) might have to pay VAT on it, the same as you currently have to if you buy one from the US....
.......
I reckon the only way to protect the EU-VAT paid status would be for the boat to be owned by an EU person or company on exit day.

Thanks - for this reply edited down to cover just the existing boats and VAT aspects.

So from what you are saying we would effectively all inevitably lose the (resale) value of the VAT element of our existing boats, if they are ones that are likely to be sold to a wider market than just U.K. buyers - unless can construct a EU owning entity that is fully waterproof !

 

[lpdsn]

Why would that help? Already got a bill of sale which shows EU VAT paid. The question is if a worst case No Deal scenario is the VAT paid status still valid if taken back into Euro land

It would mean bought in the EU regardless of what the outcome of the Brexit negotiations are regarding the status of UK VAT-paid boats. You could visit EU land periodically to ensure you weren't out for more than three years. Doubt they'd take away VAT-paid status from EU boats from other member countries who in the UK on date of departure. Still, if you see no use in it go your own way. After all at the moment it's a bit of a guess as to what would happen.