Buying a boat in the US

[Sticky Fingers]

When you or your surveyor were doing due diligence before handing over the money and completing the deal.

 

[dunedin]

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.

I assume these were probably all pre-Brexit and/or within the UK for use in the UK, which made life much simpler.
Still should have checked VAT status pre-purchase, though not an issue then for older boats not crossing borders.

Always was an issue importing from USA (or anywhere outside EU when we were within it).

Brexit and potentially buying overseas has hugely increased your issues.

 

[B27]

Brexit has not really had any effect on the problems with importing a boat from the US to the UK.

The whole VAT situation has existed for over 20 years to my personal knowledge and experience..
There were a lot of VAT-not-paid boats in Jersey last century.
There were also boats owned by companies which may or may not have been VAT registered.

There are similarities and differences compared to importing other things like vehicles.
It's all do-able, but not always easy or necessarily worthwhile!

 

[Koeketiene]

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.

It's what the buyer of my previous boat did - avoided having to pay 20K+ in VAT.
And his boat is now both UK and EU VAT paid (was demonstrably in France before the cut-off date).

 

[Fr J Hackett]

It's what the buyer of my previous boat did - avoided having to pay 20K+ in VAT.
And his boat is now both UK and EU VAT paid (was demonstrably in France before the cut-off date).

I don't think you can legally be both, you may even have paid both or by virtue of B paid in one entity but resided in another but you lose one of them.

 

[Koeketiene]

I don't think you can legally be both, you may even have paid both or by virtue of B paid in one entity but resided in another but you lose one of them.

That's not what he was told by HMRC.

 

[Tranona]

I don't think you can legally be both, you may even have paid both or by virtue of B paid in one entity but resided in another but you lose one of them.

Yes the boat can, but the EU status needs to be kept up by visiting the EU every 3 years to apply for their RGR. It will also be lost if the boat changes ownership outside the EU.

 

[Zing]

Yes the boat can, but the EU status needs to be kept up by visiting the EU every 3 years to apply for their RGR. It will also be lost if the boat changes ownership outside the EU.

I don’t believe any EU RGR is needed to be applied for. It’s granted as of right simply by being there.

 

[Sea Change]

When you or your surveyor were doing due diligence before handing over the money and completing the deal.

Ok so all I need to do is find a buyer who is as dilligent as I, and the buyers of my first two boats, were.
If it makes any difference, none of the boats I've bought or sold went through a broker.

 

[Tranona]

I don’t believe any EU RGR is needed to be applied for. It’s granted as of right simply by being there.

See the attached guidance from our government on the subject which is a cut and paste from the original EU except that it does not have the time limitation that is in the EU rules. Note the use of the word "claim" and the conditions under which RGR is granted. www.gov.uk/guidance/sailing-a-pleasure-craft-that-is-arriving-in-the-uk#when-a-returning-vessel-can-claim-relief-on-import-duty-and-import-vat-returned-goods-relief

So "just being there" is insufficient and it requires the owner of the boat to claim RGR on entry.

 

[Zing]

See the attached guidance from our government on the subject which is a cut and paste from the original EU except that it does not have the time limitation that is in the EU rules. Note the use of the word "claim" and the conditions under which RGR is granted. www.gov.uk/guidance/sailing-a-pleasure-craft-that-is-arriving-in-the-uk#when-a-returning-vessel-can-claim-relief-on-import-duty-and-import-vat-returned-goods-relief

So "just being there" is insufficient and it requires the owner of the boat to claim RGR on entry.

Fine, but the UK RGR isn’t necessarily the same subject and likewise RGR may not be relevant in the EU. In your post above you said:

‘ the EU status needs to be kept up by visiting the EU every 3 years to apply for their RGR’

I said I believed you don’t need to apply for EU RGR (in the context of maintaining EU VAT paid status). For example f a French VAT paid yacht in Greece goes to Turkey for a month’s cruise, and goes back to his base in Greece then he doesn’t have to apply for any relief, he just needs to show if asked that it is a VAT paid boat - at least that’s my understanding.

 

[Tranona]

Fine, but the UK RGR isn’t necessarily the same subject and likewise RGR may not be relevant in the EU. In your post above you said:

‘ the EU status needs to be kept up by visiting the EU every 3 years to apply for their RGR’

I said I believed you don’t need to apply for EU RGR (in the context of maintaining EU VAT paid status). For example f a French VAT paid yacht in Greece goes to Turkey for a month’s cruise, and goes back to his base in Greece then he doesn’t have to apply for any relief, he just needs to show if asked that it is a VAT paid boat - at least that’s my understanding.

That is correct, but the scenario painted here was buying a boat in the EU, importing into the UK and paying VAT so making the boat VAT paid status in both UK and EU and my answer was in response to post#125. Rather different from the scenario you suggest, although in principle RGR is what enables the boat to visit Turkey and return where the act of reporting on re-entry confirms RGR. However the boat has not acquired a status in another customs area.

The key here is that the dual status is only maintained if the boat and owner claims it every 3 years. That status is only of value if the boat is sold in the EU but it then loses its UK VAT status. Equally if it is sold in the UK it loses its EU status.

The RGR rules are essentially the same in the EU and the UK except for the time limit but the dual status is a product of Brexit which created 2 distinct customs areas. The number of boats that have this status is probably small but for many which do have it, potentially very valuable. For example the UK owner is not limited for time the boat spends in the EU as TA is not required and can return to the UK at any time with no restrictions provided it stays in the same ownership. The boat can also be sold freely in either jurisdiction.

 

[Beneteau381]

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.

Market forces always prevail, it’s human nature.
Protectionism, because that is what the CE mark is, goes against market forces.
It always fails.

 

[Beneteau381]

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?

Not if you “buy it in the UK”

 

[Sea Change]

Not if you “buy it in the UK”

That might be possible to arrange when both parties are UK residents...

 

[Baggywrinkle]

Market forces always prevail, it’s human nature.
Protectionism, because that is what the CE mark is, goes against market forces.
It always fails.

Sorry, but it's not that simple.

CE protectionism is just an anti-EU talking point favoured by people that don't understand the complexities of product standardisation.

I've worked in Automotive all my life so far and the drive has always been towards global standards - which is where the market forces will drive us eventually. Manufacturers want global standards because variance costs money. We need standards, because without them products would make it to market that are not fit for purpose or dangerous.

You must understand that global agreement on these standards between all the expert bodies in the world is not exactly easy - and it's generally far more complicated than people think. I gave the airbag example earlier - we need different airbags for the USA compared to europe - nothing to do with protectionism, but because the USA has states that have no compulsory seatbelt laws so the airbags have to be bigger as they are a primary restraint rather than a secondary one as in all countries with seatbelt laws. So because this one country holds a belief that it's citizens must not be forced to wear seatbelts, the standard is different - and to sell in the market, you need to comply. To converge we either have to force a cost increase on customers in countries with seatbelt laws by fitting more expensive US airbags globally, or persuade the americans to legislate seatbelt use. Nothing to do with protectionism.

In Japan we have to provide a reverse gear warning because a Japanese politician ran his child over and decided to make it the law.

In automotive, countries exercise protectionism with either tariffs or insistence on local content, local factories etc. I don't know of a case where a standard was changed to specifically exclude products from a certain market. Perhaps you do?

CE is a step along the path towards global standards, it created a single standard for 28 countries which enabled free movement of goods that wasn't there before. There are global standards bodies working on standardisation, and when a global standard is created, EU will adopt it because the EU is represented in these bodies and it works on consensus and agreement.

What you see as protectionism, others see as allowing inferior, unsafe, or unethical products into our home market. Sure, from a laymans perspective, if you can buy and sail a boat in the US why can't you use the same boat in Europe? .... the devil is almost certainly in the detail of the standards, not in deliberate protectionism.

Perhaps you could identify the differences between the EUs RCD and the US ABYC and USCG standards and give us some detail on where and why they differ - then we can drill down and decide if it's a market protection mechanism or not. I suspect that the differences are driven by local laws and differences of opinion by the relevant expert bodies. Until the laws are alligned, and the experts agree, the standards will differ. Manufacturers are lobbying for global standards and the tendency is convergence rather than divergence (with the obvious exception of the UK and Brexit).

 

[Beneteau381]

Sorry, but it's not that simple.

CE protectionism is just an anti-EU talking point favoured by people that don't understand the complexities of product standardisation.

I've worked in Automotive all my life so far and the drive has always been towards global standards - which is where the market forces will drive us eventually. Manufacturers want global standards because variance costs money. We need standards, because without them products would make it to market that are not fit for purpose or dangerous.

You must understand that global agreement on these standards between all the expert bodies in the world is not exactly easy - and it's generally far more complicated than people think. I gave the airbag example earlier - we need different airbags for the USA compared to europe - nothing to do with protectionism, but because the USA has states that have no compulsory seatbelt laws so the airbags have to be bigger as they are a primary restraint rather than a secondary one as in all countries with seatbelt laws. So because this one country holds a belief that it's citizens must not be forced to wear seatbelts, the standard is different - and to sell in the market, you need to comply. To converge we either have to force a cost increase on customers in countries with seatbelt laws by fitting more expensive US airbags globally, or persuade the americans to legislate seatbelt use. Nothing to do with protectionism.

In Japan we have to provide a reverse gear warning because a Japanese politician ran his child over and decided to make it the law.

In automotive, countries exercise protectionism with either tariffs or insistence on local content, local factories etc. I don't know of a case where a standard was changed to specifically exclude products from a certain market. Perhaps you do?

CE is a step along the path towards global standards, it created a single standard for 28 countries which enabled free movement of goods that wasn't there before. There are global standards bodies working on standardisation, and when a global standard is created, EU will adopt it because the EU is represented in these bodies and it works on consensus and agreement.

What you see as protectionism, others see as allowing inferior, unsafe, or unethical products into our home market. Sure, from a laymans perspective, if you can buy and sail a boat in the US why can't you use the same boat in Europe? .... the devil is almost certainly in the detail of the standards, not in deliberate protectionism.

Perhaps you could identify the differences between the EUs RCD and the US ABYC and USCG standards and give us some detail on where and why they differ - then we can drill down and decide if it's a market protection mechanism or not. I suspect that the differences are driven by local laws and differences of opinion by the relevant expert bodies. Until the laws are alligned, and the experts agree, the standards will differ. Manufacturers are lobbying for global standards and the tendency is convergence rather than divergence (with the obvious exception of the UK and Brexit).

Protectionism pure and simple. Big picture, manufacturers in the most litigious country in the world don’t dare sell a bad product. Any thing else is noise!

 

[Baggywrinkle]

Protectionism pure and simple. Big picture, manufacturers in the most litigious country in the world don’t dare sell a bad product. Any thing else is noise!

Utter bollox!

You are aware that compliance to US ABYC standards for boats is voluntary? You can sell a totally shit product if you want to, and just sign off your boat to the standard because there is no legal requirement to get a 3rd party to check, the sign-off can be done in-house. The litigious nature of the US means that it is in the boatbuilders interest to follow the standards, do the training, and have the paperwork to show proper compliance, but it is not mandatory. The litigious nature of the US is also only effective for the home market - so selling abroad it's not the same legal system - how likely is an american company to screw over a foreigner compared to a US citizen on US territory?

The EU simply shifts the compliance checking to a 3rd party and requires compliance by law. Problem solved - all boats placed on the market meet the standard. The RCD is only a collection of international standards issued by ISO so no one market controls it.

You only find out if a US boat really meets US standards after the fact - when something goes wrong. If a company turns out to be dishonest, it gets sued, goes into liquidation, and the directors walz off into the sunset to live off the profits they made while the going was good.

As it is, most of the standards are either the same or have a large overlap, manufacturers adapt their systems to cope anyway, it's not rocket science. As I said earlier, it's the legal systems and the cultural approch to law and government that causes the difference - not protectionism. Why bother engineering a standards change, which your own market manufacturers will also have to comply with, when you could just put up a tarrif barrier?

Anyway ... here's how Nordhavn approach the US/EU standards. Have a read and see if you think they are complaining about protectionism. Spoiler: they don't, they actually don't have a problem.

Welcome to Nordhavn.com - Power That Is Oceans Apart

 

[B27]

I think if I were serious about this kind of thing, I'd get advice about the boat being owned by a company.
A company can be in a different country from the boat and can change hands itself or sell the boat.
DYOR as they say!

 

[Beneteau381]

Utter bollox!

You are aware that compliance to US ABYC standards for boats is voluntary? You can sell a totally shit product if you want to, and just sign off your boat to the standard because there is no legal requirement to get a 3rd party to check, the sign-off can be done in-house. The litigious nature of the US means that it is in the boatbuilders interest to follow the standards, do the training, and have the paperwork to show proper compliance, but it is not mandatory. The litigious nature of the US is also only effective for the home market - so selling abroad it's not the same legal system - how likely is an american company to screw over a foreigner compared to a US citizen on US territory?

The EU simply shifts the compliance checking to a 3rd party and requires compliance by law. Problem solved - all boats placed on the market meet the standard. The RCD is only a collection of international standards issued by ISO so no one market controls it.

You only find out if a US boat really meets US standards after the fact - when something goes wrong. If a company turns out to be dishonest, it gets sued, goes into liquidation, and the directors walz off into the sunset to live off the profits they made while the going was good.

As it is, most of the standards are either the same or have a large overlap, manufacturers adapt their systems to cope anyway, it's not rocket science. As I said earlier, it's the legal systems and the cultural approch to law and government that causes the difference - not protectionism. Why bother engineering a standards change, which your own market manufacturers will also have to comply with, when you could just put up a tarrif barrier?

Anyway ... here's how Nordhavn approach the US/EU standards. Have a read and see if you think they are complaining about protectionism. Spoiler: they don't, they actually don't have a problem.

Welcome to Nordhavn.com - Power That Is Oceans Apart

Resorting to infantile swearing. Lost the argument matey. Also have you read the rules about what is permissible to be discussed here?