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

[lw395]

Whatever happens it's going to be a 2 way street. If VAT becomes payable a 2nd time on boats being sold out of the U.K. to Europe then presumably U.K. VAT will become payable on EU boats being imported into the U.K. regardless of their tax status in the EU. In that event it will be easier for someone in the UK to sell their boat in the U.K. because any imports will be subject to an additional 15/20% or whatever VAT. If you want to buy from outside the U.K. you take the hit. Talk about selling your boat to a mate in Ireland and buying it back for €1 or enlisting the help of Irish Travelers is, in my view, complete nonsense. If you do want to do something sensible to make your life easier after Brexit then rent or invent an Irish granny and get yourself an EU passport. The most sensible statement I saw so far on this thread was from Tranona #25 when he said "All this discussion and speculation is pointless as there is nothing you can do to change what might apply to an existing boat" and it's a great pity he didn't finish his contribution at that.

I agree with that, except speculating is not pointless, if it raises the issues and informs decisions.

 

[lw395]

Presumably if you're a sailing school using the boat for commercial purposes, you'd need some sort of temporary import licence to take a working boat to the EU too?

No, ships in harbour are not counted as imported. There may be a limit on how long you can stay. There might also be restrictions on plying the trade of sailing school though?

 

[Irish Rover]

U.K. registered boats entering the EU may have to paint their hulls blue to match the colour of their owner’s passportS.

 

[dunedin]

Surely all that will be necessary is to sail across the channel (the North yin, that is) to Noriron and then cross the invisible, open, tarriff-free, border with Eire that both sides have promised and you are in the EU with no restrictions on transferring goods.

Have to cross the Irish Sea in daylight and good visibility - otherwise may crash into the new Customs Border Posts being establishedin the Irish Sea, which are not on our old un-updated charts ;-)

 

[GrahamM376]

You are right, it is not the U.K. HMRC aspect that was the concern in this thread - it’s the EU side.

And hopefully there may be transition arrangements - but this thread is specifically about any contingency planing possible in the event these do not transpire as time runs tight.

I suspect that any item, including a boat, which remains in the same ownership and is EU VAT paid before Brexit, will maintain its status. I also suspect that a change of ownership across borders afterwards may be a chargeable event.

 

[awol]

Have to cross the Irish Sea in daylight and good visibility - otherwise may crash into the new Customs Border Posts being establishedin the Irish Sea, which are not on our old un-updated charts ;-)

Probably that's why they bought the 8-off ex BP ARRCs .

 

[lw395]

But the up-side is that it may be possible for a UK citizen, who is not an EU resident/citizen, to cruise EU waters for 18 months at a time in a boat on which no VAT is ever paid....

 

[macd]

But the up-side is that it may be possible for a UK citizen, who is not an EU resident/citizen, to cruise EU waters for 18 months at a time in a boat on which no VAT is ever paid....

...although it might need to be remotely controlled for nine of those months

 

[jordanbasset]

...although it might need to be remotely controlled for nine of those months

 

[Capt Popeye]

Have to cross the Irish Sea in daylight and good visibility - otherwise may crash into the new Customs Border Posts being establishedin the Irish Sea, which are not on our old un-updated charts ;-)

Humm well yea, BUT, them new border posts are also being fitted with Wind Turbines so should be easy to see ?

 

[st599]

No, ships in harbour are not counted as imported. There may be a limit on how long you can stay. There might also be restrictions on plying the trade of sailing school though?

Surely it's no different to ITN having to carnet their cameras when shooting at the UN in Geneva, or Ford having to carnet their latest car to show it at the Geneva Motor Show? The equipment is UK based, the staff are UK based, tax is paid in the UK but their tools of the trade used for commercial purposes require a licence.

 

[lw395]

Surely it's no different to ITN having to carnet their cameras when shooting at the UN in Geneva, or Ford having to carnet their latest car to show it at the Geneva Motor Show? The equipment is UK based, the staff are UK based, tax is paid in the UK but their tools of the trade used for commercial purposes require a licence.

Maybe not very different, but a yacht can be treated as a ship, and ships have slightly special treatment.
Quickly gets complex.

 

[Tranona]

Maybe not very different, but a yacht can be treated as a ship, and ships have slightly special treatment.
Quickly gets complex.

Once again this issue and the related issue of recognition of RYA qualifications for instruction and commercial crewing are on the RYA priority list.

 

[Kerenza]

I have (had) many years of experience with carnet, from Russia, USA, Africa and Europe, sometimes travelling in and out of Europe on the same assignments.
While I'm sure that would never be the answer for sailing schools or any other commercial venture, if it were, it doesn't stop at a single item. Ie the boat. Each individual item not a permanent fixture would need to be valued, weighed, have a permanent identification attached and itemised on the carnet with storage location details. Some countries ask for individual photos. I did one trip with 400 6x4 photos all cross referenced, which didn't get looked at all.
The carnet would need to be inspected and stamped at the point of departure with a copy deposited pending return. Upon arrival it may or may not be inspected and items chosen at random from the list for inspection - get the idea?
I've taken two weeks and lots of bribes to get in and out of Russia.
One occasion travelling between France and Switzerland by bus our crossing point was happy to let the bus and all contents cross, except for me with a small carnet. However I could cross by foot and carry my equipment, rejoining the waiting bus once the border people had a look.
We've even been detained leaving a country because our video tapes (long time ago!) were now no longer blank and had a value exceeding the original cost.
No, carnet not a viable option.
K

 

[macd]

No, carnet not a viable option.

Years ago I regularly went the carnet route with a motorcycle endurance racing team (so non-commercial). It was a thoroughgoing pain in the proverbial. I particularly resented loading mountains of knackered tyres for the trip back.

If anyone's listening, please don't send us there.

 

[st599]

I have (had) many years of experience with carnet, from Russia, USA, Africa and Europe, sometimes travelling in and out of Europe on the same assignments.
While I'm sure that would never be the answer for sailing schools or any other commercial venture, if it were, it doesn't stop at a single item. Ie the boat. Each individual item not a permanent fixture would need to be valued, weighed, have a permanent identification attached and itemised on the carnet with storage location details. Some countries ask for individual photos. I did one trip with 400 6x4 photos all cross referenced, which didn't get looked at all.
The carnet would need to be inspected and stamped at the point of departure with a copy deposited pending return. Upon arrival it may or may not be inspected and items chosen at random from the list for inspection - get the idea?
I've taken two weeks and lots of bribes to get in and out of Russia.
One occasion travelling between France and Switzerland by bus our crossing point was happy to let the bus and all contents cross, except for me with a small carnet. However I could cross by foot and carry my equipment, rejoining the waiting bus once the border people had a look.
We've even been detained leaving a country because our video tapes (long time ago!) were now no longer blank and had a value exceeding the original cost.
No, carnet not a viable option.
K

I'm not sure they care whether it's viable or not, according to the UN document I put in the other one of these discussions, it's the fall back position - I went to Switzerland with a carnet a few weeks ago. On the way out, Customs was shut - rang them and they said check the flightcase in, go to VAT refunds to get teh carnet stamped. VAT refunds promptly asked to see items 45, 34 and 9 - they were miffed I didn't have them, Coming back, took Heathrow 95 mins to find a customs officer for the red lane.

 

[dunedin]

All this discussion and speculation is pointless as there is nothing you can do to change what might apply to an existing boat. Everything will be determined by what the transition arrangements are and what the agreement is about how boats bought in the UK after the "date" will be treated. .......

I appreciate your wide knowledge on this topic, and yes we all may HOPE that things will get sorted to aid yachtsmen with RYA's list and inputs ..... BUT "rich yachtsmen" (the usual press terminology) may not be high on the list of the Government's priorities as time starts to run out. And this thread was specifically on the contingency of No Deal being agreed, so reverting to letter of current EU law for non member states / boats.

Hence the whole point of this thread is to assess whether there are any things one can do to mitigate any adverse impacts in the event of a No Deal Brexit. Indeed, that process of reviewing potential future outcomes to identify any mitigating actions is the essence of Contingency Planning.

Indeed one potential action has been identified - sell ahead of March 2019. Perhaps extreme, but perhaps not if an individual has a lot of value held in VAT paid and planning on changing boats in the near future anyway.

The other potential action suggested by a pundit, was to ensure their (UK Flagged and VAT paid) boat was within EU waters on exit date. Not sure why they suggested this, but could that have any contingency value?

 

[dunedin]

I am not sure that this is correct.
If I buy something in France today, I pay French VAT on it. I am free to bring it to the UK without paying UK VAT.
Come 2020, if I want to sell it in France, that will be an export/import and LeVAT will be due in France.
Where it's been in the meantime is of little consequence.
I think it might be treated as a break in its VAT status.

The same as, currently, if I take a UK VAT paid yacht to the US, sell it in the US and someone else tries to re-import it to the UK, VAT will be due.

The way I see it, we are leaving the single market. The single market for boats, cars and motorbikes will cease to include the UK.

I'm not sure in actual law, how a yacht is different from any other chattel you might be travelling with? Say I sell my Rolex abroad. Beyond limits, allowances and what's unenforceable, VAT is probably due?

This does seem a pragmatic, if unpalatable, summary of the VAT position unless we are lucky enough to have something better agreed explicitly.

 

[dunedin]

No more wishful thinking then your more negative "belief".

The only basis for your thinking is that the current third party rules will apply - but you have already shown how this is difficult and unlikely. Your suggestion that tax residence of the owner has anything to do with VAT is just wrong. VAT is a transaction based tax so your residence whether for tax purposes or not is completely irrelevant. The freedom of movement on boats is solely dependent on VAT status, irrespective of who the owner is or where s/he resides. Just think about how many non EU residents or citizens own EU VAT paid boats and as I suggested above how many current EU residents own boats where the VAT was paid in a state other than the one where they are resident or citizens. For example I owned a boat where I paid VAT in Greece. For some time it was kept in Greece although I was resident in UK. Then sailed to UK and kept here. Now sold to another UK citizen and currently kept in Spain. Logically post Brexit it can continue in Spain (or any other of the 27 remaining members) even though the owner would then be living in a third country.

So, your simplistic belief in reversion to the current third country rules simply won't happen as it will leave many boats and owners both from UK and EU in limbo.

BTW the current rule on second liability for VAT is very specific as it was established for the specific circumstances in 1992 which did not allow for a member leaving the EU. So it will only apply if it is specifically stated in the new treaty that covers our exit - along with all the other new rules that will need to be established to cover the new situation - some of which I have identified above.

Lets hope your optimism is valid. But again this thread was trying to understand the baseline if nothing extra is agreed (ie if EU do not allow a "pick and mix" deal).

It is valid to speculate on the range of options, but perhaps for simplicity not here till we have understood the baseline.

 

[dunedin]

No, carnet not a viable option.
K

Useful experience, thanks. But is the carnet the default option unless / until anything else agreed? Sounds a nightmare!