Buying a UK boat with (knowingly) no VAT paid

[volvopaul]

I think you might struggle with Question 1 on the C384 - In what Country did you purchase the vessel - when you answer UK. This might generate the question why, and HMRC could view their entitlement as being 20% of its prior sale value (at import), plus as suggested interest and even a fine for non declaration.

I wonder if they could even impound the boat.

Anyway HMRC laminated my C384 after they had stamped it following receipt (I imported Boadicea from Jersey).

If you do end up paying the VAT make sure you keep the receipt - I had to prove it was paid to the Marine Pleasure Craft unit as this was considerably swifter than their internal system.

I doubt hmrc would ask that , plenty of boats around the solent not vat paid that are owner charter boats . What country it’s in doesn’t matter .
I considered buying a V48 a few years back from Jersey and running it as a business .

 

[lost_in_a_sea_of_boats]

I doubt hmrc would ask that , plenty of boats around the solent not vat paid that are owner charter boats . What country it’s in doesn’t matter .
I considered buying a V48 a few years back from Jersey and running it as a business .

But the point is it’s completely legal to register for VAT, but a yacht from Jersey, import it to the UK, declare it, pay the VAT bill and then claim the VAT back. Obviously when you came to sell it again, you would charge the VAT again. You would have a paper trail to prove it’s all ok. HMRC would have no interest as you say.

They may have much more of an interest if they realised a private individual had bought a yacht in Jersey and smuggled it back in without declaring it...

I notice the boat has been pulled from all the websites this morning ?

 

[Seastoke]

It’s a very unusual boat, as in probably the only one in Europe. Hence why I remain interested in it. Only other option would be an import from the US. But if it’s not to be it’s not to be.

I don’t think the seller is knowingly a fraudster, I think he’s just oblivious to what he has done. Bought a non vat paid boat outside the EU, sailed it home and said nothing to no one.

He almost thinks it’s non vat paid status is a ‘feature’ when selling it...

I basically said much the same to the broker this morning. He needs to go and tell HMRC what he has done and get the VAT paid on whatever was due back in 2017. Then show me a signed C384 form.

If he can’t afford the VAT bill a financial arrangement may be possible...

What ever you do dont give him the money to pay the vat.

 

[superheat6k]

It’s a very unusual boat, as in probably the only one in Europe. Hence why I remain interested in it. Only other option would be an import from the US. But if it’s not to be it’s not to be.
...

Possibly a second can of worms has just been opened !

So not only is this boat smuggled into the UK / EU, it might be of US build and thus also not compliant with the RCD, even though the opening post suggests this, was it really put through proper RCD scrutiny ? I understand obtaining RCD status for a US boat is the nightmare of nightmares and applies even for boats built in the US pre RCD.

I appreciate you like this boat, so perhaps time to move on, although you could give HMRC Small Craft unit a call for advice, BUT be aware if you do the blip that you place on their radar will take a very longtime to fade away. When I first enquired about a possible purchase in Jersey they were like a dog with a bone, and I would receive an occasional call asking how my purchase was proceeding, until I properly declared my purchase and duly rendered the C384 and of course VAT payment of 20% of the boat's value (excluding the secondhand inventory and Jersey Broker's fees). I even expect had I bought a UK VAT paid boat they would have paid me a visit to verify its VAT paid status, such was their interest.

In regard to the linked thread comments by JFM, who is a City VAT Lawyer, will be highly accurate.

 

[lost_in_a_sea_of_boats]

Possibly a second can of worms has just been opened !

So not only is this boat smuggled into the UK / EU, it might be of US build and thus also not compliant with the RCD, even though the opening post suggests this, was it really put through proper RCD scrutiny ? I understand obtaining RCD status for a US boat is the nightmare of nightmares and applies even for boats built in the US pre RCD.

I appreciate you like this boat, so perhaps time to move on, although you could give HMRC Small Craft unit a call for advice, BUT be aware if you do the blip that you place on their radar will take a very longtime to fade away. When I first enquired about a possible purchase in Jersey they were like a dog with a bone, and I would receive an occasional call asking how my purchase was proceeding, until I properly declared my purchase and duly rendered the C384 and of course VAT payment of 20% of the boat's value (excluding the secondhand inventory and Jersey Broker's fees). I even expect had I bought a UK VAT paid boat they would have paid me a visit to verify its VAT paid status, such was their interest.

In regard to the linked thread comments by JFM, who is a City VAT Lawyer, will be highly accurate.

As you can maybe imagine, I didn’t get very far with the boat yet. I’ve never even had a viewing. The moment the broker said the boat was not vat paid I started probing, and it didn’t take very long to figure out what had happened.

On the basis the owner has been quite so brazen about his actions, I’m kind of hoping he genuinely did not realise the seriousness of his actions.
Surely if his aim was to defraud the the taxman and get away with it, he’d have done something a bit more inventive. Even just ‘losing’ all paperwork.

With regard to the RCD status, yes good question. The broker said it’s RCD CE plated but why would he have bothered to RCD plate it when he didn’t bother to VAT reg it.

My mind boggles.

I agree the sensible thing to do would be to walk away.. but someone will have to buy it.

 

[Antony Collis]

OP i think you are trying to engineer this situation to how you want to see it.
I will give you 2 examples of when VAT is due in similar circumstances to your issue that show VAT is a bitch..

1, You go to B&Q and buy £100,000 worth of materials. you take it home and in your back garden you knock up one of the ugliest boats ever to be put into water. This counts as a boat that is put into service after the VAT date (31 DEC 1992) you then go to Belgium for a jolly up and get boarded. you have no VAT cert and so get a massive fine. In order to prevent this you are able to exchange the B&Q receipts for at least 75% of the building materials in exchange for the VAT status of the boat. This is because you already paid the VAT to B&Q when you bought the gear. Now supposing you accidentally chucked all the receipts in the bin each time you left the shop, Hey presto Mr HMRC now requires you to pay 20% of the value of the boat even though you didn't even buy a boat!!

2, You buy a boat with a VAT cert in the UK. eventually you move to Jersey because of your job and take the boat to a port over there. 10 years later you're relocated to an office in Southampton. you move the boat back. The vessel was exported outside the EU and therefore lost its VAT status. Mr HMRC will be calling once again asking you to pat VAT on your 'imported' boat even though you owned it all along!!

As i said VAT is a bitch. In UK waters no one gives a damn but if you go to another country and are boarded it will be down to you to prove the boats VAT status. What you can do in this situation is show proof that the VAT is liable in the UK and they might not follow it up because VAT is payable in the first country you arrive in so showing proof that the boat was in the UK may put them off.

I didn't see when you say the boat arrived in the UK, if it was before 1992 the no VAT should apply

 

[lost_in_a_sea_of_boats]

OP i think you are trying to engineer this situation to how you want to see it.
I will give you 2 examples of when VAT is due in similar circumstances to your issue that show VAT is a bitch..

1, You go to B&Q and buy £100,000 worth of materials. you take it home and in your back garden you knock up one of the ugliest boats ever to be put into water. This counts as a boat that is put into service after the VAT date (31 DEC 1992) you then go to Belgium for a jolly up and get boarded. you have no VAT cert and so get a massive fine. In order to prevent this you are able to exchange the B&Q receipts for at least 75% of the building materials in exchange for the VAT status of the boat. This is because you already paid the VAT to B&Q when you bought the gear. Now supposing you accidentally chucked all the receipts in the bin each time you left the shop, Hey presto Mr HMRC now requires you to pay 20% of the value of the boat even though you didn't even buy a boat!!

2, You buy a boat with a VAT cert in the UK. eventually you move to Jersey because of your job and take the boat to a port over there. 10 years later you're relocated to an office in Southampton. you move the boat back. The vessel was exported outside the EU and therefore lost its VAT status. Mr HMRC will be calling once again asking you to pat VAT on your 'imported' boat even though you owned it all along!!

As i said VAT is a bitch. In UK waters no one gives a damn but if you go to another country and are boarded it will be down to you to prove the boats VAT status. What you can do in this situation is show proof that the VAT is liable in the UK and they might not follow it up because VAT is payable in the first country you arrive in so showing proof that the boat was in the UK may put them off.

I didn't see when you say the boat arrived in the UK, if it was before 1992 the no VAT should apply

Thanks for your reply, and on the whole I agree, the whole VAT paid thing is a bit daft.

I don’t think I am engineering the situation though. Both of your examples above are simply the way the law works. The first example is worked around by keeping the receipts as you suggested, and the second example can be avoided by bringing the boat back to the UK every 18 months.

However, the situation I’m dealing with is when someone has illegally smuggled a boat into the UK within the last couple of years. It’s quite simply a fraud and the boat is contraband until it’s sorted. They’re a no grey area at all.

 

[z1ppy]

As the OP for the linked thread I have just seen all this. The advise given at the time was good and the resolution was very simple and trouble free. we have since sold the boat with full disclosure to all parties (through a UK broker) and no issues whatsoever.

The recreational VAT boat team over in Portsmouth were very very helpful to both me as the buyer at the time and to the vendor who was in contact with them to pay VAT as necessary.

We took the view that under no circumstances would we buy the boat until we had clear proof of VAT paid status. Once this was provided to the original owner, we were happy to proceed in buying it clear of any encumbrances. perhaps the difference here is the vendor was very open about what had taken place and was very upfront in sorting it correctly with HMRC. everyone was happy in the end.