Buying a Boat: VAT not paid

Tried Customs and Excise, received a polite letter back saying they do not do this anymore.

At the time spent many frustrating hours/days going into this and thus it is a sore point with me. RYA were sympathetic but could not help. This was a while ago but from their website nothing seems to have changed.

Until something comes up I am resigned to carrying a history my boat's previous owners and locations to prove age related exemption.

My boat has never left the EU, but it was built in UK, sold as new in Holland than later re-imported to UK and name changed, also, fortunatly or unfortunatly, she does not look 30 years old.
 
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But in uk it could have been reclaimed later - after getting a vat paid stamp too.


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Yeah, I forgot about this. /forums/images/graemlins/blush.gif

But FWIW I would be happier with a receipt from the UK Vatman when confronted by French Customs, than having a sales / vat invoice..........or nothing at all!

From what you have said maybe the route is to pay the VAT somewhere that their is no VAT reclaim possible, if enuf folk do this then (and the UK loses the VAT money) we all might find that the UK Vatman finally get's his finger out and creates a system that works to keep a track of VAT paid boats.
 
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My understanding of Spanish VAT is that they are fairly flexible on second-hand price

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That used to be my understanding but my previous boat was ex VAT and when I sold it on, the new owner paid the VAT to the Spanish customs and he paid pretty much 16% of the purchase price so no flexibility there. It might be different if you've owned the boat for a long time and there is no recent transaction to confirm its value
I'm not sure about the boat having to be in Spain to pay VAT there but, knowing how bureaucratic the Spanish can be, I would be surprised if they didnt require a survey
 
I only have the one experience to draw on, but I have a copy of the VAT certificate in front of me.

The boat was then 10 months old. The VAT at 16% was based on a value which was about 60% the new list price (ex-VAT). I bought it some 10 months later for more than the Spanish valuation plus VAT, and I thought I got it for a very good price.

The boat had never visited Spain, is stated on the VAT certificate as British registered and the VAT was paid to the Banco Exterior de Espana and stamped in Madrid.

Things may have changed, but that seems like a good deal to me.
 
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Say someone buy a boat, and pays he vat. Nips over to vat office toget a stamp saying "vat paid". Hurrah. But then, they get the boat coded and start doing a bit of charter work, get some contracts etc. They can then apply for vat refund and they'll get it too. In fact, this is precisely what happens to all boats chartering in uk - the vatisn't exempt - the mechanism that you pay it, and *then* you reclaim it.

This cannot hapen in france frinstance - there is no mechanism for reclaiming the vat. It is either vatpaid ornot vat paid tostart. So a vat invoice proves vat has ben paid in france,and it proves the same in the uk. But in uk it could have been reclaimed later - after getting a vat paid stamp too.

There's no register of which boats have and haven't had vat reclaimed, all buried in various vat offices, so all probly fine imho.

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It's a bit of a misconception to say that a boat is not "VAT paid" if VAT was paid by the purchaser (say a charter business) and subsequently reclaimed.

As long as VAT has been paid at some point in the EU, then goods (including boats) are regarded as "in the free traffic of the EU" and no further VAT is due (unless it leaves the EU and returns later). That doesn't change any liability of a seller to account to the relevant authorities for VAT due on a subsequent sale.

Let's take a boat purchased in the UK by a charter company. VAT was paid and subsequently recovered. That boat is "VAT paid" in the EU. However, when it comes to sell the boat, the charter business must account for tax on the selling price and must issue a VAT invoice to the purchaser. However, if the charter business goes bust before paying the VAT on the selling price, that doesn't affect the tax paid status.

If the seller doesn't issue a VAT invoice, it is still liable to account for VAT (deemed) included in the selling price. However, a purchaser should insist on a VAT invoice if he is aware that the boat was used for business purposes.

Once a boat has been purchased by a person who doesn't recover VAT paid on the purchase price, all subsequent purchases and sales of that boat made for business purposes will usually be made on the second-hand goods scheme ("margin scheme") where the seller only accounts for VAT on the profit margin. Where the margin scheme has been used, the seller will not issue an invoice with VAT shown separately but will included a statement "VAT has not been reclaimed by us in respect of the goods sold on this invoice". It is these boats which are usually advertised as "VAT paid".

Sometimes a boat is advertised as "VAT unpaid" in circumstances where the seller is a business who is obliged to issue a VAT invoice and account for VAT included in the selling price. This may or may not (strictly) be VAT unpaid. What is intended, often, is that the seller will issue a VAT invoice so VAT included in the selling price can be recovered by a business purchaser. However, if the seller had previously paid VAT in the EU (and the boat hasn't left the EU), it is nevertheless a VAT paid boat, the crusial point being that it is the seller who is liable to account for any VAT due on the sale, not the purchaser. This is to be contrasted with a "VAT unpaid" boat purchased from outside the EU. In this case, the purchaser is liable for VAT when the boat is brought into the EU.
 
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My understanding of Spanish VAT is that they are fairly flexible on second-hand price

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That used to be my understanding but my previous boat was ex VAT and when I sold it on, the new owner paid the VAT to the Spanish customs and he paid pretty much 16% of the purchase price so no flexibility there. It might be different if you've owned the boat for a long time and there is no recent transaction to confirm its value
I'm not sure about the boat having to be in Spain to pay VAT there but, knowing how bureaucratic the Spanish can be, I would be surprised if they didnt require a survey

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If you (as a business seller) sell goods to a private individual based elsewhere in the EU, and the place of supply is in that other country, you should either account for UK VAT on the selling price or (depending on the value of the transaction) register for VAT in that country.
 
Thanks for that explanation, Observer.
What about a situation in which a VAT registered UK company purchases an ex VAT boat located in the EU from a private seller who is a non EU resident? The seller cannot account for the VAT
Then if the seller is a VAT registered company in one EU country selling to a VAT registered company in another EU country, then under EU rules, no VAT is required to be added to the invoice so in that case neither seller nor purchaser is liable for the VAT??
 
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Thanks for that explanation, Observer.
What about a situation in which a VAT registered UK company purchases an ex VAT boat located in the EU from a private seller who is a non EU resident? The seller cannot account for the VAT

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How is it ex-VAT? If it was imported into the EU by a non-resident under a temporary importation relief, the conditions for relief are no longer satisfied when (a) it changes ownership; and (b) it is brought into the UK by the registered owner. If he is a registered business, he must declare and pay tax. Same if he is an unregistered person.

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Then if the seller is a VAT registered company in one EU country selling to a VAT registered company in another EU country, then under EU rules, no VAT is required to be added to the invoice so in that case neither seller nor purchaser is liable for the VAT??

In this situation, the purchaser has to report the 'arrival' on his VAT return and pay input tax. However, he can simultaneously recover the input tax paid (if for business purposes) so no net payment is due. Of course he also has to account for output tax when the boat is sold.
 
This discussion has gone on for 4 days, and still seems open.

When you have little French, and a pair of French custom chaps, (with little English but wearing guns) are standing in your cockpit saying 'tax papers si vous plait'; you have to work it out a little quicker.
 
I think I've opened a can of worms here. It doesn't appear as simple as I thought, so the clarifications are useful.

dv.
 
This has become too technical for me too but IF you experts still have time/energy, please advise on the Channel Islands situation, where boats like mine often appear on brokers' lists as "tax unpaid" - presumably VAT not sorted. And should I be upsizing that's where I'd look.

In your dreams CJ . . .
 
I am not a VAT expert, cos' we don't need it down here! so treat the following with a degree of caution!!

Whatever the difference between a boat advertised as VAT free / Tax unpaid (if any), basically you will find that it boils down to if someone in England wants to buy the boat from Jersey then they will need to pay the VAT when it arrives in England. At 17.5% of the market value (usually the amount on the Bill of Sale).

In many respects this makes life easy. you <u>know</u> the boat has no VAT paid, you <u>know</u> that VAT <u>needs</u> to be paid and then you pay the VAT........and get a nice HM Customs reciept to waive at Johnny Foreigner Customsman (or a subsequent purchaser). IMO, job done. (and IMO you are then in far better position in practice when it comes to proving the VAT Paid position than someone with or without (??!!) a manky old VAT Invoice on a boat that has never left England).

IMO the more difficult situation is where a Jersey Boat is advertised as "VAT Paid" or "VAT Paid Status", where the vendor (or broker) <u>genuinely</u> thinks the boat will not need VAT paying on it when it goes to England........but is wrong.

My understanding (from a few years ago - so stand to be corrected) is that if a Boat had VAT paid on it in England, then was sold <u>IN</u> England to someone in Jersey and <u>then </u> the boat moved to Jersey that the VAT paid status <u>is</u> retained on the vessel. (and a few years back you could get a Certificate from the UK VATMAN saying this (which my Father got on his Boat), but that the VATMAN has now stopped doing this).

However if the boat is subsequently sold entirely <u>within</u> Jersey that the boat will lose it's VAT paid status, without anyone actually getting any money back from the VATMAN! The way around this being to move the vessel to the UK (or I believe France) and then buy / sell the vessel. If I was buying a VAT Paid vessel from Jersey I would do so only on the sale being 100% conditional that it <u>was</u> accepted as such by the UK VATMAN, not just cos' the Broker / Owner <u>thought</u> it was...........even if this involved insisting that the vessel going to England before all the money had changed hands.
 
A few 'simple' observations from someone who has researched a little, JFM knows more than me if he's around;-

1) VAT/TVA is an EC-wide tax, hence the consistency ( yes, I'm having a laugh!) of treatment across Europe.

2) I know a few brokers who don't understand 'VAT status' and their lack of understanding is sometimes reflected in their 'VAT not-paid' adverts, having said that they know more than many 'individuals' selling them

3) The treatment and transactions relating to the sale of boats which are VAT-reclaimed or VAT not -paid dependends upon which boat, where and between whom the transaction takes place ( possibly the most meaningless 3 lines ever written on this forum)

4) Spain tightened up its VAT/TVA rules ( and started enforcing some they already had) about 2 years ago from memory. ??

5) I guess if you want to save a few pennies on a £300,00 boat by a bit of falsification on value then you should have bought a £290,000 one ?

6) I could make a few bob if I did this professionally ..
 
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