Buying a boat in the US

[dunedin]

At this point I'm considering various options.

Buying in the Caribbean is the first preference, with the US as a possible second. We'd prefer to have the option of bringing the boat back to the UK and subsequently selling there, but it may not be a deal breaker.

I'm still thinking that there's a good chance that we could arrive in Ireland, then head back in to the UK for a while with no questions asked. So long as we didn't turn try to sell the boat.

Funnily enough there aren't many people putting their heads above the parapet saying that they've done this, because, well, why would you?

You probably could get away with bringing into the UK and nobody noticing. But whilst failure to do RCR certification might be a slapped wrist sort of thing, not paying VAT if due is tax evasion and has rather more severe penalties.

 

[Baggywrinkle]

When I bought my new boat from Clipper it was them that had the obligation to ensure it complied in the UK. once i bought it I was under no legal obligation to show that, just as there is no legal obligation to show that a light bulb complies. I would only have that obligation if I had bought the boat direct from Bavaria and imported it into the UK myself, using documentation supplied by Bavaria. There is no subsequent obligation to ensure that it continues to comply except a loosely worded section in the RCD about recertification after major modifications. Almost all boats deviate from the original certification as owners make changes and replace equipment. No there no checks as many others have pointed out. CE marking is only relevant at the point initial introduction into the market.

Clipper marine is a different scenario to the OP who wanted to buy a boat abroad and sail it into the UK as owner and importer. If they intend to use it in UK waters then they are "putting it into service" for the first time in the UK as the certification applies to each individual boat, not a design or production run - that's why Tom Cunliffe had to jump through so many hoops and why engines of production boats often need to be replaced on import. If he had not jumped through the hoops, he would not have been legally able to sell it to a new owner in the UK - there is no specified period between import and subsequent sale where this obligation falls away. Section 8, Obligations of private importers linked above applies, and if it isn't followed, the boat can be siezed. If an attempt to sell the boat is made, then the seller-importer-owner opens themself up to additional fines for selling a non-compliant boat. (5K and up to 3 months in prison).

There is no obligation to ensure a boat complies when it changes ownership, and while brokers may insist on always having the original certificate this has no legal backing. the only reason is to assure the buyer that there is no likelihood of the boat being involved in a case of illegal importation. Even then as your last example shows the courts are likely to find in favour of a good faith buyer.

Illegal importation is exactly why surveyers and brokers check these things even though there is no legal requirement to check - especially now the UK is no longer in the EU as illegal importation becomes more likely. A non-compliant boat is a non-compliant boat no matter how many owners it has had.

A surveyor has a duty of care to their client and ought to provide a fair market price estimate - a non-certified boat will be below the normal price for the same boat with all it's paperwork in place.

A broker does not want to be party to the sale of a non-compliant (illegally imported) boat for obvious reasons.

If both buyer and seller are happy to trade a non-compliant boat then that's fine, they are not going to get caught - but it can all unravel very quickly if a good faith buyer buys the boat and then finds out he is sitting on an illegal import.

Lloyds certification was not about fitness for purpose, nor safety, it was a construction standard now replaced by a range of standards that are permitted in the RCD. Lloyds was optional and most production boats were not designed or built to that standard, although many like mine had hulls moulded to Lloyds scantlings and in an approved moulding shop. Before the RCD states had their own "standards" and the purpose of the RCD was to replace those with one certification to encourage single market trade. The RCD was largely developed in the UK so obviously drew on many UK standards, but also US and German.

Despite what you say there is NO requirement for insurance in the UK to show that the boat is RCD/RCR compliant, nor even that it was when it was new. The RCD was never intended to replace a marine survey on an individual boat which the insurer uses as a base for determining whether the boat is seaworthy. This is of course different in some EU states which have local (not EU) laws that use RCD certification and categorisation as a basis for registration and permitted use (and probably insurance, but I don't know for sure) but that is not so in the UK where as you know there are essentially no restrictions or control over the way boats are used.

What insurers specifically ask for to do their risk assessment and offer cover, may well be mainly the condition survey, but this is just one aspect. You are obliged to disclose all material facts relating to your application. As I have already stated, the fact that a boat is imported illegally (without compliance verification) is a material fact that IMO ought to be disclosed to the insurer - if only because it calls the value of the insured item into question, never mind the other possible implications.

When applying for insurance, you will be asked to disclose all material facts that could affect the risk. Why, because the law assumes you know everything about the risk you wish to insure and the insurer does not. For the insurer to be able to select the risks it wishes to insure, at the right price and on the terms and conditions which reflect your risk, you as the only party with that information, have to declare all relevant information to the insurer. This is what is referred to as material facts.

Should you fail to disclose (called a non-disclosure) or misrepresent a fact, then you risk the insurer only paying part of a claim, declining to pay all of the claim and possibly, declaring the policy invalid.

What is a “material fact” and why is it so important? - Horner Blakey

Material fact | ABI

They will look at the boat details entered onto your application form and assume it is a comparable boat to all the other legally imported ones with CE markings and RCD compliance, and base their premium and offered cover on that assumption. If you tell them you have just imported it from Thailand and it isn't RCD compliant or CE marked, and that you haven't re-certified it, you will get a barrage of additional questions/requests to help them determine their risk - they may even decline cover. Some material facts are explicitly asked for - previous claim history for example - the rest are up to the insured to disclose. My attitude is always, if in doubt, ask.

Insurance companies will assume standards compliance unless you disclose otherwise - if you know your boat has not been certified as compliant, then this is a material fact that may well enable the insurance company to refuse a claim - and the bigger the claim, the more likely they are to try and contest it.

 

[Sea Change]

Earlier in the thread it was mentioned that if a boat changed hands outside of the EU, it would lose its EU VAT paid status.
Is this a universal rule? If I buy a UK flagged/VAT boat in the Caribbean, does it lose its VAT and paid status?

 

[st599]

Earlier in the thread it was mentioned that if a boat changed hands outside of the EU, it would lose its EU VAT paid status.
Is this a universal rule? If I buy a UK flagged/VAT boat in the Caribbean, does it lose its VAT and paid status?

It loses it's status a fixed time after export. It can regain it's status if the original exporter reimports it

 

[Baggywrinkle]

Earlier in the thread it was mentioned that if a boat changed hands outside of the EU, it would lose its EU VAT paid status.
Is this a universal rule? If I buy a UK flagged/VAT boat in the Caribbean, does it lose its VAT and paid status?

If the boat is VAT paid and abroad then when you bring it back you can use Returned Goods Relief (EU and UK) .... there are rules relating to returned goods relief however, and the one that applies here is that it needs to be the same person claiming the relief as originally exported it. If it is sold and changes hands outside the customs area then the new owner is not eligible for RTR.

To claim the relief on the import VAT, the exporter and importer must be the same person.

The goods must be re-imported in an unaltered state, apart from any work that may have been carried out to maintain the goods in working order, the goods cannot have been upgraded to increase their value.

The goods must also:

• have been in free circulation in Great Britain or Northern Ireland when they were exported, unless they were originally declared to inward processing or end-use
• not have been exported to be repaired or processed, if they were but the repair or process was not carried out, relief may still be available
• be re-imported within 3 years of their export, shorter periods apply to goods which benefitted from agricultural measures at export

Pay less import duty and VAT when re-importing goods to the UK

 

[doug748]

The social contract is one thing but the CE stuff or the UK equivalent is a beaurocratic pile of manure. Devised imho as a manufacturer protectionist device pure and simple. It distorts market forces. Do you really believe that diesel engines fitted in the states to boats are not fit for purpose because they come across the altlantic? Really? That boats built for the most litigous market in the world are not fit for purpose here?

True enough, the Continentals have an industry to protect. In general we don't or not one that would be much impacted by imported used boats.
The CE import problem is just a piece of baggage left over from our days in the EU. If is difficult to see why keeping that aspect of it benefits the UK much. On the one hand it does prevent the outflow of £ sterling, on the other hand the Treasury is denied a 20% piece of the action on any deal.

I am guessing we are stuck with it because nobody much considers it a problem or not a pressing problem + they don't care / inertia / other priorities / lack of Parliamentary time. It will probably persist unless some Elon Musk type character decides to take it on.
When the RYA was a organisation speaking for yachtsmen they may have taken an interest but we can kiss that goodbye.

.

 

[Zing]

If the boat is VAT paid and abroad then when you bring it back you can use Returned Goods Relief (EU and UK) .... there are rules relating to returned goods relief however, and the one that applies here is that it needs to be the same person claiming the relief as originally exported it. If it is sold and changes hands outside the customs area then the new owner is not eligible for RTR.



Pay less import duty and VAT when re-importing goods to the UK

For the OP I suspect this is not the most appropriate relief. ‘Transfer of residence’ relief may be more suitable. It allows expats to bring back things they bought overseas tax free on becoming a UK resident and tax payer again. Not without its obvious downsides though.

 

[Sea Change]

For the OP I suspect this is not the most appropriate relief. ‘Transfer of residence’ relief may be more suitable. It allows expats to bring back things they bought overseas tax free on becoming a UK resident and tax payer again. Not without its obvious downsides though.

I have remained a UK resident and tax payer (not that I have enough income for tax to really be a big expense!)

 

[Tranona]

Yes, change of ownership outside the customs area (EU or UK) means loss of VAT status and has been since 1992. RGR which allows owners to bring boats back was originally limited to a nominal 3 years but UK has removed this limit because of the problems Brexit created for many who keep their boats in the EU and may wont to return to UK. Likewise Change of Residence relief has always been there but is of very limited use.

 

[Zing]

I have remained a UK resident and tax payer (not that I have enough income for tax to really be a big expense!)

It’s easy to change that situation if you mostly live overseas and you want to benefit from the relief.

 

[dunedin]

Earlier in the thread it was mentioned that if a boat changed hands outside of the EU, it would lose its EU VAT paid status.
Is this a universal rule? If I buy a UK flagged/VAT boat in the Caribbean, does it lose its VAT and paid status?

In simple terms - yes (AFAIK)

 

[Baggywrinkle]

There needs to be a standard or a manufacturer could sell you a boat that would kill you. This was the case in the 18th century - boats were built based on what had worked before and testing in the field weeded out the good designs from the bad, life was cheap, people died.

So countries started applying standards and certification or inspection, which was needed before you could sell your contraption to the unsuspecting public .... cars, busses, trains, boats .... they all ended up being built and assessed against various standards. Deaths went down, overall quality went up.

Great if your country never imports or exports anything, but we trade with each other, so what do you do when the standards of your trading partners differ from your own?

Due to human nature, every country thinks their own standards are the best, and all your home-grown industries don't want to change, they also complain like hell if you just accept foreign goods which can be produced more cheaply because their standards are lower. They lobby government and persuade voters. The inevitable result is that politicians (in order to keep their jobs) insist on compliance to their own countries standards before a foreigner is allowed to sell into the home market. Job done.

All well and good when there are only a few trading partners, but scale international trade up and you end up certifying to an ever increasing number of slightly different and sometimes contradictory standards, this adds cost, constrains your design, and creates variants for different markets. Manufacturers costs go up, consumers pay, trade is constrained.

Inevitably an industry or international trade body tries to define a Global Standard, this takes years and years and it is the holy grail of every industry, but there are so many different parties with differing views and vested interests that it usually stagnates .... over time standards align but there are always red lines, or reasons why one size fits all doesn't work for someone. This is where we are today globally.

The EU, with CE/RCD .... by some miracle managed to define a single standard for multiple countries - which in itself is quite a feat. It was essential for the free movement of goods in the EU and this alignment has to be done for every industry trading in the EU - regardless of what you think of the content of EU standards, they currently enable 27 countries to certify once and sell to 26 trading partners.

The UK chose to leave the single market. Less said about that the better, but one of the things leaving promised to deliver was "sovereignty" ... and as the majority of EU directives were actually about standards, in order to demonstrate this new sovereignty to the public, our politicians decided we have to have our own UK standards .... soooo .... they cut and pasted all the EU standards into UK standards as a starting point for asserting sovereignty.

As they are now spiffy new UK standards, they need new certifying bodies and new certification marks - even though the content is identical to EU standards, the UK now requires manufacturers to pay for a second UK certification over and above the EU certification any exporters are currently doing. Isn't sovereignty glorious?

Unfortunately, we still trade with the EU27, so what happens when sovereignty is properly exercised and the standards diverge?

The landscape is different now compared to the time when the RCD was conceived. The 27 we left behind enjoy an economy of scale the UK can't match, and EU companies are weighing up if the UK market is worth the effort or not, the more standards diverge, the worse the business case gets. While the rest of the world is trying to align standards to enable smoother trade, the UK is asserting their sovereignty and stifling trade.

If there is a business case, then EU manufacturers will UK certify, like they did last century, and the cost will be carried by UK consumers ... but .... UK producers who exported to the EU don't have this choice, they now have to certify for their home market and the EU - bearing in mind they all came from the position of being EU certified anyway, so the UK changes are now an added cost for the ability to trade in their own home market. Crazy isn't it?

If the UK standard deviates to the point where it is starting to become unviable for the EU companies to trade in the UK, then they'll stop and concentrate on more viable export partners, but for the UK exporters, exporting to the EU gets more and more expensive because UK businesses are saddled with complying with their diverging home and EU market standards - the EU being a close neighbour is always the easiest and most efficient trading partner.

The pragmatic answer is, as has happened with the RCR/UKCA compliance ... that the UK government just quietly decided to accept RCD and CE indefinitely, and as a result, are accepting a standard they no longer have any influence over - the polar opposite of sovereignty - ironic isn't it?

.... but it's not over. If as @Beneteau381 argues, if it's good enough for the US then it's good enough for the UK ... should we just accept import of US certified boats too?

Firstly, I really doubt our remaining home-grown boat producers (Princess, Sunseeker etc.) would be very happy with that, and secondly, if it turns out that a US certified boat is cheaper to produce than an EU boat, then all the EU manufacturers will switch and sell their US variants into the UK instead of their EU variants.

Generalising this approach, accepting multiple foreign standards in your home market (over which you have no influence) allows foreign exporters to pick the lowest common denominator from the standards you accept, and it's a race to the bottom for the standards in your home market. It also allows foreign governments to set standards for products in use in your home market.

Neither of these are a good idea.

 

[Baggywrinkle]

It’s easy to change that situation if you mostly live overseas and you want to benefit from the relief.

AFAIK the OP is UK resident, so will need to add in the time required to obtain a VISA, move etc.

12 months foreign residency before transfer to the UK, 6 months of ownership of the goods before transfer to the UK and no sale of the goods for 12 months after the move.

All in I reckon it would take 18 months to 2 years in total, and depending on the boat, just paying for the import might be cheaper.

https://www.gov.uk/guidance/transfer-of-residence-to-great-britain

 

[Sea Change]

The boat in question is pretty similar to my own, and pretty badly damaged. But crucially it's in a different and more reasonable yard, and the parts needed to bring it up to spec can likely be taken from the old boat.

The actual sale price would be very low value indeed (4 figures £). Could I present this figure for VAT purposes? Or would 'they' (HMRC?) smell a rat?

 

[Baggywrinkle]

The boat in question is pretty similar to my own, and pretty badly damaged. But crucially it's in a different and more reasonable yard, and the parts needed to bring it up to spec can likely be taken from the old boat.

The actual sale price would be very low value indeed (4 figures £). Could I present this figure for VAT purposes? Or would 'they' (HMRC?) smell a rat?

If you are fixing it up before bringing it to the UK then they will assess the value on entry, the sales contract is one part of that. I had to send multiple photos of my boat when I imported it, and I'm pretty sure if the photos don't match the sales contract then they'll ask questions about it having been re-fitted abroad after you bought it.

 

[Tranona]

VAT is based on market value. Sometimes that is easy to determine - for example if you bought a boat today in France and imported it almost certainly HMRC would accept your purchase price as the value. However they may also include any transport costs, for example shipping from US as this is part of its "value". In other situations the value might include major expenditure on repairs and enhancements between purchase and import or reduction due to usage since purchase that results in loss of value (depreciation). In other situations where there is not a sound base a surveyor's valuation of UK market value may be acceptable.

 

[st599]

The boat in question is pretty similar to my own, and pretty badly damaged. But crucially it's in a different and more reasonable yard, and the parts needed to bring it up to spec can likely be taken from the old boat.

The actual sale price would be very low value indeed (4 figures £). Could I present this figure for VAT purposes? Or would 'they' (HMRC?) smell a rat?

You can present any figure you want, HMRC decide the value you're paying VAT on.

 

[westernman]

If you import a boat after buying and repairing it, then the value will be obvious. It will be the purchase price plus the cost of repairs.
However, my boat was built in Canada with the intention of importing it to the UK. It was build to the RCD in vigour at the time. It was certified and surveyed that it met the standards required (which apparently was a major hassle and had signficant cost).

The boat, after a couple of shakedown sails was then sailed across the Atlantic to Cowes where it was directly imported. The paperwork for RCD was all in order, and VAT was paid on the valuation. The valuation was about 1/3 of the cost of the build as it was a used boat in superficially poor condition. i.e. it was not cleaned up, the washing up was not done, the heads were dirty and none of the varnish or paintwork had been touched up before inspection.

Of course one week later it was immaculate and in better than new condition.

 

[B27]

The boat in question is pretty similar to my own, and pretty badly damaged. But crucially it's in a different and more reasonable yard, and the parts needed to bring it up to spec can likely be taken from the old boat.

The actual sale price would be very low value indeed (4 figures £). Could I present this figure for VAT purposes? Or would 'they' (HMRC?) smell a rat?

Generally you can use the transaction cost of the goods.
But that includes the price you've actually paid, plus costs including shipping, any work you've had done on the goods,, any services you've paid for in acquiring the goods etc. Basically the full cost of having the goods turn up at the UK port.
You also pay VAT on any import duty.
There are other methods of assessing the value which can be used if the item hasn't been bought solely to import it.

 

[Sea Change]

Just thinking...
I've purchased three yachts (and a bunch of dinghies) over the years.
At what point in the process should I have been checking for VAT status, RCD compliance, and anything else? Because from memory I don't recall these issues ever arising in the past.