Buying a boat when VAT proof receipt has been lost.

[sharpness]

When buying a boat dating late 80s, early 90s i understand ideally as part of the paperwork i should be shown VAT paid proof in the form of original VAT receipt, but on a couple of boats i have viewed (listed with brokers, they are not imports and have always been based in the uk) this is missing. All other documentation is in place, previous bills of sale, and even part1 registration showing free of all encumbrances is present.

My question is, should the lack of VAT paid proof document be a deal breaker ? I wouldn't expect the broker / vendor to drop the price by the figure the VAT would amount to, but it seems getting hold of any evidence to show that VAT has been paid once the original has been lost is like getting hold of rocking horse sh*t.

If not intending to cross the channel, then i guess the major issue would be when it came to resale, and the lack of VAT proof scaring off potential buyers (bit like me asking about it in this instance !). If we go back 10 years nobody even asked about this bit of paper.

Appreciate your advice/opinions, and i assume you all have your VAT paid proof nicely laminated along with the other documents.

 

[neale]

This has been covered indepth very recently. The answer as to if it matters is yes and no, depending upon who you listen to

IMO on a boat from the 80's or early 90's with a bill of sale history the answer is no, it doesn't matter.

 

[Tranona]

No, forget about it. No different from hundreds of other boats.

 

[PCUK]

The only time you will be asked for VAT proof is if you go abroad.

 

[Tranona]

The only time you will be asked for VAT proof is if you go abroad.

And then, almost never - unless they think your boat is smuggled. Having all your paperwork to show the boat was bought in UK and UK based helps avoid questions.

 

[gjgm]

The only time you will be asked for VAT proof is if you go abroad.[/QUOT
It would be more accurate to say that other than by a following owner being anal about
a VAT doc, there is only a tiny tiny chance that you might get asked abroad, and even then it almost certainly wont matter if you have some other docs, on a boat this age.
So to OP, buy the boat and dont worry.

 

[Nick_H]

they are not imports and have always been based in the uk

In that situation, you can't ever be liable for unpaid VAT anywhere in the chain of sale and purchase, provided of course that you're acting in good faith.

 

[Deleted User YDKXO]

Yes this has been covered ad nauseam on this forum before but as a serial buyer of secondhand boats, I know what I would do. Either don't buy the boat or demand that the seller reduce the asking price of the boat by an amount equivalent to the VAT. I do agree that in theory you will not be liable for the VAT in the UK but there are a number of other reasons for this. First, as I understand it, finance companies usually ask for proof of VAT documentation as they believe it helps them establish the value of the boat and obviously lack of it may make it more difficult for you or subsequent owners to get finance on the boat. Second, as you say, future buyers of your boat might demand it from you, rightly or wrongly. Third, whilst it is very rare for customs authorities in Europe to demand to see proof of VAT documents, who knows how this might change in the future. So, my opinion FWIW is why give yourself the potential hassle of buying a boat without proof of VAT documentation especially when there are loads of other boats out there on the market with full documentation

 

[MapisM]

First, as I understand it, ....
Second, as you say, ...
Third, ...

Yeah, and fourth (but most important!), if given a good excuse for bargaining, hey, why not use it?

 

[jonic]

No-one can give you the right answer and the choice is yours. The reason no-one can give you an answer is because times are changing and who knows if the light touch currently in place will change.

Technically you must have VAT paid evidence to use a boat in the EU. As noted in customs notice 8

"EU residents should only use a vessel in the Community if it is VAT paid or ‘deemed’ VAT paid.
Documentary evidence supporting this should be carried at all times as you may be asked by customs officials to provide evidence of your vessel’s VAT status, either in the UK or in other Member States. Documentary
evidence might include:

original invoice or receipt
evidence that VAT was paid at importation
invoices for materials used in the construction of a ‘Home-Built’ vessel."

I asked an HMRC officer about this recently and he said that they are unlikely to be interested, if it really is just a case of missing documents, but they could not comment on another member state. But he did say that if foul play was suspected they could seize the goods to pay the VAT irrespective of ownership, and a civil case would have to ensue in the aftermath. As far as I know this has never been tested in the courts.

So if you have good history and it is likely that it is not a VAT unpaid boat, HMRC are unlikely to be interested. If the rest of the history is suspect then that could change.

Going abroad with no VAT documents, especially if going out of the EU and back in again may cause problems with the wrong official on the wrong day. We have heard stories of fines and being asked to leave the country.

Ironically re-sale is more likely to cause an issue, especially if the purchaser is financing the boat. In recent years lenders have refused to lend if there is no VAT paid evidence or they have written VAT riders into the contracts.

The boat should have the document, but lots don't and there seems to be no appetite from the powers that be to come up with a solution.

As long as the rest of the history with the boat is good you can fall back on this from HMRC:

"If you are unable to provide any of the above for used vessels kept in the UK you should, whilst cruising within the EU, carry a Bill of Sale (if applicable and between two private individuals in the UK). Whilst this is not
conclusive proof that VAT has been paid, it does indicate that the tax status is the responsibility of UK customs authorities. It is also advisable to contact the relevant authorities in the Member State you intend to visit, or
their Embassy in the UK, to confirm what documentation will be required in advance of your voyage."

So to sum up, you are unlikely to have a problem with a customs official but no-one can guarantee it 100%.

You are more likely to have a problem with a lender.

 

[Deleted User YDKXO]

Yeah, and fourth (but most important!), if given a good excuse for bargaining, hey, why not use it?

Why not indeed? You can be sure that when you sell the boat on, the next buyer will be thinking exactly the same

 

[neale]

I would just like to add that I have lost count of the number of times I have taken a boat overseas, both inside and outside of the EU. These trips have been on many different boats both new and old, with and without VAT documentation available. I have been stopped by French, Belgium and Dutch customs and the subject of VAT has never ever been raised.

I understand the subject does sometimes get raised around the Med, but I have not heard of anyone being asked in Northern climes.

The only time VAT was raised was by British Customs when I had my own boat shipped back from outside of the EU after it had broken down. I did not have any VAT paperwork and was asked about VAT before they would release the boat to me, I guess in case I had just bought it and was importing it into the UK. All I could provide was the SSR cert, which they were happy with and I was on my way. We all know that the SSR certificate proves nothing but I guess it showed that I had owned the boat for a while so my story about the breakdown checked out.

By all means make a reduced offer but don't expect the seller to accept. If it is of a certain age the chances are the next one you find and like will also be lacking the original VAT paperwork.

 

[jonic]

I would just like to add that I have lost count of the number of times I have taken a boat overseas, both inside and outside of the EU. These trips have been on many different boats both new and old, with and without VAT documentation available. I have been stopped by French, Belgium and Dutch customs and the subject of VAT has never ever been raised.

I have been asked in France (med side), Portugal, Mallorca and UK on re-importation from the Caribbean.

 

[neale]

I have been asked in France (med side), Portugal, Mallorca and UK on re-importation from the Caribbean.

Well I did say that I thought the Med was different, and I would expect it to come up when actually importing, as it sort of did with me, but for UK boating with a trip across the Channel, it is highly unlikley to be asked for and if it is I doubt it would come to anything if you didn't have it, as long as you some other paperwork such as bills of sale, registration documentation etc etc.

 

[DAKA]

I have been asked in UK on re-importation from the Caribbean.

Thats an interesting topic in its own right, if the boat had been outside the EU for over 3 years then VAT is due for a second time anyway.

How long had the boat been away and did they accept VAT previously being paid years ago was an adequate reason not to charge it again (as technically they should have done).

VAT proof older than 3 years old is technically useless unless a complete history of annual EU berthing accompanies the proof.

How many 1980-2008 boats have that as well as VAT paid status ?

 

[jfm]

Technically you must have VAT paid evidence to use a boat in the EU.

That is a wholly incorrect statement of the law. I appreciate it is written on various official pronouncements, but you find it written in any laws passed by any actual parliaments (which are the only fat ladies whose singing actually matters when making such statements)

So if you have good history and it is likely that it is not a VAT unpaid boat, HMRC are unlikely to be interested.

Agreed. Though I still agree with Deleted User's and MapisM's realpolitik comments above

you can fall back on this from HMRC:

"If you are unable to provide any of the above for used vessels kept in the UK you should, whilst cruising within the EU, carry a Bill of Sale (if applicable and between two private individuals in the UK). Whilst this is not
conclusive proof that VAT has been paid, it does indicate that the tax status is the responsibility of UK customs authorities. It is also advisable to contact the relevant authorities in the Member State you intend to visit, or
their Embassy in the UK, to confirm what documentation will be required in advance of your voyage."

No you cannot. It is manifestly mistaken analysis of the law and it is ultra vires the HMRC guy who said that (on RYA Q+A iirc) to have said it. You can place no reliance on it. Even if it were correct, which it isn't, they wouldn't let you rely on it on grounds you haven't contascted the embassy etc (which in practice no-one will have done). I've said many times that folks (RYA included) are very naive if they think the way to get a definitive answer to a complex VAT question is to ask an HMRC front line officer.

I'm with MapisM and Deleted User. Price chip a bit, perhaps 2/3rd of the theoretical VAT amount

 

[jonic]

That is a wholly incorrect statement of the law. I appreciate it is written on various official pronouncements, but you find it written in any laws passed by any actual parliaments (which are the only fat ladies whose singing actually matters when making such statements)


Agreed. Though I still agree with Deleted User's and MapisM's realpolitik comments above


No you cannot. It is manifestly mistaken analysis of the law and it is ultra vires the HMRC guy who said that (on RYA Q+A iirc) to have said it. You can place no reliance on it. Even if it were correct, which it isn't, they wouldn't let you rely on it on grounds you haven't contascted the embassy etc (which in practice no-one will have done). I've said many times that folks (RYA included) are very naive if they think the way to get a definitive answer to a complex VAT question is to ask an HMRC front line officer.

I'm with MapisM and Deleted User. Price chip a bit, perhaps 2/3rd of the theoretical VAT amount

Agreed. I have tried 100's of times to get definitive answers but HMRC always refer to those documents/statements.

This is why we as brokers can never say, without documents you won't have a problem.

Two things interest me here.

1. With regard to the requirement to have VAT paid evidence in the EU as stated on notice 8.

EU residents should only use a vessel in the Community if it is VAT paid or ‘deemed’ VAT paid.Documentary evidence supporting this should be carried at all times .

If, as you say, this is not law. Could someone refuse to show evidence if challenged?

This is the Law section of the notice, I have always wondered about the last statement.

What law covers this notice?

The legislation upon which this notice is based is:

The Customs and Excise Management Act (1979) (CEMA)
The Pleasure Craft (Arrival and Report) Regulations made under CEMA sections 35(4) and 42(1)(a)
Commissioner’s Directions made under CEMA sections 35(1) and 64(2)
Council Regulation (EEC) 2913/92 establishing the Community Customs Code
Commission Regulation (EEC) 2454/93, which lays down the provision for implementation of the Community Customs Code
EU law on import VAT and VAT on vessels leaving the UK is contained in Council Directive 2006/112/EC, which is interpreted into UK law in the Value Added Tax Act 1994 and Value Added Tax Regulations 1995. Other VAT directives may also apply.

This notice is not the law. It is HMRC’s view of the law and nothing in this notice takes the place of the law.


2. I have been told by a senior official that as member states can now collect on behalf of each other, in theory having a bill of sale between two UK citizens does not mean another state will automatically refer back to UK Customs. So does that statement they gave to the RYA become even more unreliable?

Note to JFM. I will not take on a boat without VAT history because of the lack of clarification.

 

[jfm]

If, as you say, this is not law. Could someone refuse to show evidence if challenged?

No one will ever be challenged for the mere offence of not having VAT docs in possession while using a pleasure boat because no such offence exists. If a requisite notice has been served requiring showing of docs that are in your power or possession (to use the UK/English term; other similar rules in other countries languages) it is THEN an offence not to hand them over, but there is still no offence of using a boat and failing to possess docs. And such "hand
em over notices" are not servable in UK by an officer in the field. Now, to get back to realpolitik, if a customs officer has grounds to suspect a boat has been smuggled then of course producing docs (voluntarily) to show it hasn't would be helpful, and not showing them would be dumb.

This is the Law section of the notice, I have always wondered about the last statement.
The legislation upon which this notice is based is:
The Customs and Excise Management Act (1979) (CEMA)
The Pleasure Craft (Arrival and Report) Regulations made under CEMA sections 35(4) and 42(1)(a)
Commissioner’s Directions made under CEMA sections 35(1) and 64(2)
Council Regulation (EEC) 2913/92 establishing the Community Customs Code
Commission Regulation (EEC) 2454/93, which lays down the provision for implementation of the Community Customs Code
EU law on import VAT and VAT on vessels leaving the UK is contained in Council Directive 2006/112/EC, which is interpreted into UK law in the Value Added Tax Act 1994 and Value Added Tax Regulations 1995. Other VAT directives may also apply.

Yup. None of those laws contains or creates an offence of using a boat without VAT docs.

I have been told by a senior official

You're kidding yourself jonic. You spoke to a front line guy, not a senior official. The front line guys work from manuals like car mechanics; they cannot actually do the engineering calcs needed to design the car. Even if you had reached a very senior official, like said the head of HMRC or the Chancellor of the Exchequer, you'll generally find that there are people on internet forums who are vastly more qualified in and knowledgeable on tax law

Note to JFM. I will not take on a boat without VAT history because of the lack of clarification.

Jonic I admire and respect your posts and reckon you are a proper yacht broker with integrity and a smart guy, so please forgive me that what follows looks like a fight-pick. It isn't, I'm just saying it as I see it. I think this soi disant VAT policeman status of yours is a bit high handed. You're free to do it of course; it's your choice. But it would stop me working with you. My point is, your service for which I'd pay a commission is to sell my boat. The fact you might not like my peach velour sofa or my missing VAT docs is frankly nowt to do with it. Sure, I'll take a price haircut for the VAT (and the sofa) and that £££ loss is for me to bear, but for you to refuse even to list the boat is high handed. I cannot for the life of me see why you do not list the boat, earn a commission, and explain to all the parties that the soafs are peach and the VAT paperwork is missing hence the price will be lower than if the boat had pukka VAT paperwork and beige leather.

 

[jonic]

No one will ever be challenged for the mere offence of not having VAT docs in possession while using a pleasure boat because no such offence exists. If a requisite notice has been served requiring showing of docs that are in your power or possession (to use the UK/English term; other similar rules in other countries languages) it is THEN an offence not to hand them over, but there is still no offence of using a boat and failing to possess docs. And such "hand
em over notices" are not servable in UK by an officer in the field. Now, to get back to realpolitik, if a customs officer has grounds to suspect a boat has been smuggled then of course producing docs (voluntarily) to show it hasn't would be helpful, and not showing them would be dumb.


Yup. None of those laws contains or creates an offence of using a boat without VAT docs.


You're kidding yourself jonic. You spoke to a front line guy, not a senior official. The front line guys work from manuals like car mechanics; they cannot actually do the engineering calcs needed to design the car. Even if you had reached a very senior official, like said the head of HMRC or the Chancellor of the Exchequer, you'll generally find that there are people on internet forums who are vastly more qualified in and knowledgeable on tax law


Jonic I admire and respect your posts and reckon you are a proper yacht broker with integrity and a smart guy, so please forgive me that what follows looks like a fight-pick. It isn't, I'm just saying it as I see it. I think this soi disant VAT policeman status of yours is a bit high handed. You're free to do it of course; it's your choice. But it would stop me working with you. My point is, your service for which I'd pay a commission is to sell my boat. The fact you might not like my peach velour sofa or my missing VAT docs is frankly nowt to do with it. Sure, I'll take a price haircut for the VAT (and the sofa) and that £££ loss is for me to bear, but for you to refuse even to list the boat is high handed. I cannot for the life of me see why you do not list the boat, earn a commission, and explain to all the parties that the soafs are peach and the VAT paperwork is missing hence the price will be lower than if the boat had pukka VAT paperwork and beige leather.

JFM

I don't feel it's a fight-pick at all <-Look smiley. It's a good and interesting discussion.

It also shows how internet posting can lose so much of the body language and extra comment there would be, if we were discussing this on the bridge of your boat somewhere warm with a glass of something cold.

First off, it's intensely frustrating for me that the area is so grey. I would prefer it to not be, but it is and I have to deal with it.

I can't reveal my customs fellow, but he is more than what we call in the trade "one who has swallowed the VAT manual". Lets just call him a spokesman. In fact lets just forget him because I may need him again.

But I have no doubt that some on internet forums have a superior understanding.

I don't police the VAT document issue. (I bloody hate it) That note to you was meant to convey, that unlike some brokers, I don't ignore it.

My brokerage by it's very nature involves boats that have come from outside the EU and will most likely be traveling outside the EU again or at least extensively through the EU. My clients (buyers) take some comfort in the fact I will have researched the vessels title and VAT status as a matter of course. I'm often dealing with boats of 1/4 million and up and they want minimal risk when traveling from say the EU to the Caribbean and back.

I will sell boats without the documents, but only after I have researched them and if, as far as I can see, they do not appear smuggled or trying to evade VAT through dubious charter operations and leasing schemes etc. Both seller and buyer will get as much information as I can give them. We have one going through today in fact. (There has been a haircut to take into account the lack of documentation.) There is other documentation missing too. But I have pulled as much history as I can from other sources, spoken with HMRC and the Registry and every-one knows where they stand.

But generally people buying from me, know that nearly all the boats I sell will have the required paperwork. What I will often do is find the missing paperwork or obtain certified copies for them as part of the service, prior to listing.

So if you wanted me to sell your peach sofas, I'd try and get them re-covered for you first in a colour that would fetch you a better price.

In fact I also do it (for a fee) for private buyers and sellers and will often solve the document problem, thus saving them a haircut. It's not always easy and it's very time consuming, but it can be done.

But trust me. I would much prefer there to be a better system in place.

 

[jfm]

OK, all understood. I get your point Respect to you then for digging into the boat's history so as to provide best possible package of info to buyers and sellers.

The awkward case for brokers is when the vendor is colourblind. He insists his sofas are beige leather and his Westerly Pembroke is therefore worth $1million, yet you can see the peach velour with your own eyes. He is in denial. In that type of case, I can see that you might well choose to decline to list the boat becuase you know he will misrepresent it to any buyers and you'll look like his accomplice. You gotta maintain your reputation and goodwill

You ought to get into power boats too jonic. Many folks on here can see that you're good at this stuff. Whaddya reckon?? (scuse the thread drift)