Buying a UK flagged, UK Vat paid boat which is currently in Portugal

[RMD]

Hi All,

I am UK resident and I am considering purchasing a 10m yacht which is currently in Portuguese waters.

The yacht is UK flagged and UK vat paid.

My initial plan was to keep the yacht in EU waters once the purchase goes through. I am trying to understand what are my tax obligations if I leave the yacht in Portuguese or EU waters. From what I can see no further EU/Portuguese tax will be charged if VAT was paid to an EU country. However the yacht is UK VAT paid – does anyone know what this means?

Alternatively if I decide to return the yacht to UK waters – will I also have to pay UK VAT again? Is there no relief for a VAT paid yacht?

Finally is there any benefit to moving the yacht to Gibraltar or reflagging to a polish flag?

Many thanks in advance.

 

[Tranona]

If the boat was in Portugal on 31/12/2020 it is no longer "UK VAT paid" but EU VAT paid. The flag is irrelevant (and if you qualify for UK registration, no need to change). Polish registration does not alter where you keep or use the boat within the EU. You are correct, if you bring it back to the UK and you are UK resident then you will have to pay VAT and get it recertified. You can take the boat out of the EU for up to 3 years and return under the Returned Goods rules without paying VAT again in the EU. You cannot come to the UK even for a short visit without paying VAT

There is really no point in buying a boat in the EU unless you intend keeping it there permanently. If the current owner is the person who took the boat out of the UK s/he can bring it back without paying VAT under the current concession within the UK RGR, and then sell it to you if you wat to use it in the UK. In that case it may also retain its EU VAT paid status provided it returns to the EU periodically.

 

[Graham376]

If the boat was in Portugal on 31/12/2020 it is no longer "UK VAT paid" but EU VAT paid. The flag is irrelevant (and if you qualify for UK registration, no need to change). Polish registration does not alter where you keep or use the boat within the EU. You are correct, if you bring it back to the UK and you are UK resident then you will have to pay VAT and get it recertified. You can take the boat out of the EU for up to 3 years and return under the Returned Goods rules without paying VAT again in the EU. You cannot come to the UK even for a short visit without paying VAT

There is really no point in buying a boat in the EU unless you intend keeping it there permanently. If the current owner is the person who took the boat out of the UK s/he can bring it back without paying VAT under the current concession within the UK RGR, and then sell it to you if you wat to use it in the UK. In that case it may also retain its EU VAT paid status provided it returns to the EU periodically.

Unfortunately, same RGR relief rules as UK so the boat would only keep it's EU status if returned there under same ownership as when it left. It would of course qualify for 18 months TA (temporary admission) under any ownership.

Keeping a UK registered boat in Portugal doesn't present any problems if it's VAT paid as said above, in country on 31/12 20. There are two taxes to be paid, light dues and circulation tax but few of us pay the latter. Rather than a marina berth, quite a few people dry sail out of boat yards such as Bruce's, just have boat launched when they arrive, then haul out again when leaving.

 

[Tranona]

I did say "may" and perhaps should have expanded the point a bit more, and had explained the RGR rules in the first para.

 

[j24jam]

A UK VAT not paid boat, can come into the UK for refit works (strictly not for enjoyment) under the Inward Processing Relief scheme without paying UK VAT. You also then save paying VAT on these works.

We currently have a motoryacht in refit in Hamble, under our IPR scheme. So if you had some planned works it may be easier/ simpler/ cheaper to bring it back for the refit then return to the EU.

 

[greeny]

A UK VAT not paid boat, can come into the UK for refit works (strictly not for enjoyment) under the Inward Processing Relief scheme without paying UK VAT. You also then save paying VAT on these works.

We currently have a motoryacht in refit in Hamble, under our IPR scheme. So if you had some planned works it may be easier/ simpler/ cheaper to bring it back for the refit then return to the EU.

Interesting and maybe worth exploring a bit more.
What happens when you return to EU with the newly refitted boat with new equipment fitted. Is there any tax liability in the EU country on the new equipment that has been fitted in UK?

 

[j24jam]

Interesting and maybe worth exploring a bit more.
What happens when you return to EU with the newly refitted boat with new equipment fitted. Is there any tax liability in the EU country on the new equipment that has been fitted in UK?

Technically on arrival back in the EU you are meant to declare any items over a certain value (very similar process to at the airport) and customs will work out any duty/ taxes due.

In reality a lot of people dont do this, but at the risk of being caught for smuggling.

Its a similar scenario to buying a Rolex on holiday, throwing the box away and wearing it on your wrist when coming back through customs without declaring it.

If you want more information, feel free to PM me.

 

[nortada]

Not the same scenario - we have just sold a SSR boat that was in Portugal on 31/12/20 so it retained it’s EU vat paid status.

To be safe, RMD, if you buy this boat make sure the previous owner gives you proof that the boat was in Portuguese Waters on 31/12/20 - a letter from a marina will suffice.

Ironically, our purchaser, who is Portuguese, wanted our boat removed from the SSR so that it could be registered in Portugal.

If anybody needs details on how to formally remove a vessel from the SSR, please PM me.

 

[Tranona]

If anybody needs details on how to formally remove a vessel from the SSR, please PM me.

Nothing special - you just notify the registry.

 

[syvictoria]

SSR registration isn't actually transferable and so it automatically expires upon a change of ownership in fact. The UKSR will however also remove the current registration if asked (as indicated by Tranona above).

 

[[3889]]

Not quite that simple with a boat as you are required by law to contact Yachtline before entering UK waters and make a declaration regarding its VAT status. This will be pursued with requests for documentary evidence.
Edit: Sorry, replying to j24jam

 

[[3889]]

Unfortunately, same RGR relief rules as UK so the boat would only keep it's EU status if returned there under same ownership as when it left. It would of course qualify for 18 months TA (temporary admission) under any ownership.

Keeping a UK registered boat in Portugal doesn't present any problems if it's VAT paid as said above, in country on 31/12 20. There are two taxes to be paid, light dues and circulation tax but few of us pay the latter. Rather than a marina berth, quite a few people dry sail out of boat yards such as Bruce's, just have boat launched when they arrive, then haul out again when leaving.

Graham , I sought RYA legal advice on entering UK waters as a UK resident with a non-UK Vat paid boat. There is no leeway whatsover. As soon as a boat enters UK waters under ownership of a UK citizen, even if transiting through the 12 mile limit for 5 minutes, it is liable for UK VAT regardless whether it makes landfall. Obviously RGR exemptions still apply but TA does not apply to UK residents.

 

[[3889]]

One solution adopted by a friend was to 'pay' the future owner to deliver the boat to the UK then transact the sale there. Requires quite a high degree of trust though.

 

[ean_p]

Nothing special - you just notify the registry.

Is registration retained regardless of time?

 

[Tranona]

Is registration retained regardless of time?

No. 5 years renewable. but as said SSR lapses when the boat changes hands, unlike Part 1 which is a register of title where the seller has to notify the registry to either remove from the register or transfer to the new owner. The SSR confers no rights other than that the owner can use the ensign to signify the flag state of the boat and is not transferrable - the new owner has to register himself.

 

[j24jam]

Not quite that simple with a boat as you are required by law to contact Yachtline before entering UK waters and make a declaration regarding its VAT status. This will be pursued with requests for documentary evidence.
Edit: Sorry, replying to j24jam

yes that’s the standard process these days. Our inward processing relief scheme has to be arranged prior to arrival in UK waters, but it is simple to organise.

 

[Graham376]

Graham , I sought RYA legal advice on entering UK waters as a UK resident with a non-UK Vat paid boat. There is no leeway whatsover. As soon as a boat enters UK waters under ownership of a UK citizen, even if transiting through the 12 mile limit for 5 minutes, it is liable for UK VAT regardless whether it makes landfall. Obviously RGR exemptions still apply but TA does not apply to UK residents.

Yes, I agree. My reference to TA was regarding a boat returning to EU. I'm told it may be possible to bring a boat back to mainland UK via Ireland and Northern Ireland and avoid VAT but haven't looked into that so far as I've no plans to return.

I'm a bit puzzled about the post advising boats can come to UK for refit without paying VAT. While this is no doubt the case, it's an unlikely scenario for most posters here and of no help to an owner buying in EU and wanting to base the boat in UK.

 

[jamescarlyle]

[QUOTE="j24jam, post: 7972776, member:

We currently have a motoryacht in refit in Hamble, under our IPR schem

 

[jamescarlyle]

Please can you contact me on 07576 076428 about your inward processing relief scheme? I'm a UK resident considering buying a Norwegian VAT paid boat for a circumnavigation and would like to undertake some refit work in the Hamble..

 

[j24jam]

Please can you contact me on 07576 076428 about your inward processing relief scheme? I'm a UK resident considering buying a Norwegian VAT paid boat for a circumnavigation and would like to undertake some refit work in the Hamble..

Ive sent you a text