Buying a UK boat with (knowingly) no VAT paid

[lost_in_a_sea_of_boats]

What happens in this situation?

Boat imported to Jersey from outside EU in 2007 and RCD CE plated.

Boat sold to another owner in Jersey a few years later.

Boat bought by UK resident a few years ago and motored from Jersey to UK. Paperwork all present.

Boat current value circa 60 grand.

To be legal, I assume the current owner should have paid VAT when he bought it into the EU? And therefore the VAT would have been calculated on his original purchase price?

The broker suggests the seller is now happy to pay VAT at whatever he sells it for now, but that has to be wrong.

- How does one even pay VAT when the transaction is between two private sellers?

- More importantly who’s liability is it?

 

[volvopaul]

Broker is correct , he sells the boat and send the 20% to HMRC .
Its the previous owner to you that ma6 have broken the law, it depends how and why he did with the boat in his ownership , he may have used it for his business , he may have chartered it , therefore quite within his rights to be ex vat .

I assume the boat is older than 1985 ?

 

[lost_in_a_sea_of_boats]

Broker is correct , he sells the boat and send the 20% to HMRC .
Its the previous owner to you that ma6 have broken the law, it depends how and why he did with the boat in his ownership , he may have used it for his business , he may have chartered it , therefore quite within his rights to be ex vat .

I assume the boat is older than 1985 ?

How can the seller pay VAT when he’s not VAT registered? He’s just a private seller.

The boat was new in 2007. The current owner flew to Jersey, paid the previous owner for the boat, and motored it home. No business use involved.

 

[john_morris_uk]

How can the seller pay VAT when he’s not VAT registered? He’s just a private seller.

The boat was new in 2007. The current owner flew to Jersey, paid the previous owner for the boat, and motored it home. No business use involved.

You’re importing a boat into EU (or UK if it’s after Dec 31). You fill in the forms, get it valued, and pay HRMC IIRC.

 

[volvopaul]

How can the seller pay VAT when he’s not VAT registered? He’s just a private seller.

The boat was new in 2007. The current owner flew to Jersey, paid the previous owner for the boat, and motored it home. No business use involved.

Anyone can pay vat to HMRC there is an online form to pay the vat based on your purchase price , the seller says he is going to pay the vat , sometime great areas can be made by means of for example the seller pays the vat based on what he actually receives from the broker after commission fees which is obviously less than the true sale price , I know this for a fact , in fact purchase prices can be tweaked to favour the seller , all hearsay of course .
At the end of the day I’ve not heard of revenue chasing people for vat unless it’s a business owned boat , of which there are always legal loopholes .

 

[Seastoke]

One thing get it sorted before you buy , or it may come back to bite you. You could knock 12k off the price and pay it yourself or not.

 

[lost_in_a_sea_of_boats]

I appreciate what you are both saying if I was simply buying the boat from Jersey and importing it. A chargeable event occurs and the VAT gets paid.

However, in this scenario the seller effectively ‘smuggled’ the boat into the UK a number of years ago. That’s when the chargeable event happened.

So presumably the only way of doing this is the seller paying the VAT based on the original invoice value from an number of years ago, plus all the fines and interest etc?

The VAT surely can’t be declared on my transaction with the seller because no chargeable event has happened?

 

[lost_in_a_sea_of_boats]

One thing get it sorted before you buy , or it may come back to bite you. You could knock 12k off the price and pay it yourself or not.

But on what basis would I be paying the VAT? HMRC would need to give me a certificate of import as proof I had paid but I haven’t imported anything. So I don’t see how I could pay it.

 

[volvopaul]

I appreciate what you are both saying if I was simply buying the boat from Jersey and importing it. A chargeable event occurs and the VAT gets paid.

However, in this scenario the seller effectively ‘smuggled’ the boat into the UK a number of years ago. That’s when the chargeable event happened.

So presumably the only way of doing this is the seller paying the VAT based on the original invoice value from an number of years ago, plus all the fines and interest etc?

The VAT surely can’t be declared on my transaction with the seller because no chargeable event has happened?

No , your making your own can of worms there , either buy the boat and make the seller pay the vat out the proceeds and write the contract that reads exactly that . Or offer him 20% less and you pay the vat , believe me all you will get is an online receipt for your 20% nothing more .

 

[volvopaul]

If a broker is involved in this he should be giving you the correct advice, if he doesn’t know the protocol he not be involved in the transaction let alone be a broker .

 

[lost_in_a_sea_of_boats]

No , your making your own can of worms there , either buy the boat and make the seller pay the vat out the proceeds and write the contract that reads exactly that . Or offer him 20% less and you pay the vat , believe me all you will get is an online receipt for your 20% nothing more .

What “online form” exactly are you referring to?

As far as I can tell, the only (legal) way of importing a vessel into the UK is with a C384 form:

Apply for release of a private vessel on payment of customs duty and VAT (C384 (Vessels))

As regards relying on the brokers advice, I think this is way above his pay grade. I’m going to get proper legal advice, but just wondered if anyone had been here before.

And as for relying on the seller to pay the VAT ? he’s already illegally smuggled it into the UK...

 

[jrudge]

I think you are over thinking this.

vat is due that is not in dispute. You will buy a vat unpaid boat. It has been declared as such. You will then pay the vat.

you are fine.

whatever the seller has done is his issue not yours. You have no proof of when the boat entered the U.K. and where he has been keeping it and have no reason to ask.

where are you going to keep it? If not the U.K. keep it in jersey until 1/1/21 then keep in eu under temp import

 

[superheat6k]

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.

 

[lost_in_a_sea_of_boats]

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.

Thanks, you get it. The boat appears to be in a total limbo status, and pretty much unsellable until the seller squares things up with HMRC.

 

[dunedin]

Thanks, you get it. The boat appears to be in a total limbo status, and pretty much unsellable until the seller squares things up with HMRC.

Watch out for a boat trying to sneak back to Jersey in the dark?

 

[lost_in_a_sea_of_boats]

I think you are over thinking this.

vat is due that is not in dispute. You will buy a vat unpaid boat. It has been declared as such. You will then pay the vat.

you are fine.

whatever the seller has done is his issue not yours. You have no proof of when the boat entered the U.K. and where he has been keeping it and have no reason to ask.

where are you going to keep it? If not the U.K. keep it in jersey until 1/1/21 then keep in eu under temp import

The only way of paying the VAT is with a C384 though. And I cannot see HMRC accepting it when I wasn’t the importer, the country of purchase was the UK and the whole thing happened 4 years ago... it just seems ridiculous.

 

[lost_in_a_sea_of_boats]

Watch out for a boat trying to sneak back to Jersey in the dark?

The more I think about it the more I’m convinced this is just clear cut fraud and the seller and broker are too dumb to realise what they have admitted to...

 

[Portofino]

Ask them to present the paperwork for a Imported vat paid boat before proceeding.
Push for a reason why not ?
The seller must be able to short term access funds say on Monday do the online payment ( if it’s that easy ) , You pay Tue Pm , on a VAT payed boat , he has the funds by Wednesday to square up the short £12K facility from Monday .

Is the make, model , price that important to you ?

 

[lost_in_a_sea_of_boats]

Ask them to present the paperwork for a Imported vat paid boat before proceeding.
Push for a reason why not ?
The seller must be able to short term access funds say on Monday do the online payment ( if it’s that easy ) , You pay Tue Pm , on a VAT payed boat , he has the funds by Wednesday to square up the short £12K facility from Monday .

Is the make, model , price that important to you ?

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...

 

[lost_in_a_sea_of_boats]

I found this thread which basically confirmed what I thought all along - it’s dodgy as hell

VAT paid status?

I’m a bit surprised by some of the advice in this thread if I’m honest :O