Does any import VAT liability stay with the boat forever or is it a transaction tax?

[alaska7]

First time buyer here - just seeking some advice from the more experienced In a situation where VAT may be due because a boat has at some point in the past been sold and bought outside the EU who is responsible for paying it? The person who first imports it to the EU or whoever owns the boat when the tax man comes knocking? Does this mean that you should go through all previous sales with a comb to make sure they weren't transacted outside the EU? cheers.

 

[Paragon]

The person who imports the boat (assuming not a transient import) will have to pay VAT on entry to the EU. Proof of that should then be available to subsequent purchasers and accordingly passed on to them.

 

[rob2]

As I understand it (and I may be wrong) although the original importer is liable for the VAT payment due, the strange world of maritime finance follows the boat as a lien and subsequent owners can , in theory at least, be required to cough up or the boat is impounded and sold to cover the payment. It is an archaic system largely unchanged since boats were invented and completely unfair on anyone who innocently falls foul of it. Pretty much the same can be said for the requirement to hold in perpetuity an original document to prove VAT payment has been made and yet it is not proof that a further transaction and VAT liability has not taken place! In a fair and workable system, the authorities would keep records of the payments made but that would require the compulsory registration of all boats for it to be comprehensive and the courts can't even decide what constitutes a vessel - apparently a jetski isn't a vessel... tell me that when one hits me.

Rant over.

In practice, you either have to insist on the original VAT document being included amongst the ship's papers when buying or accept the risk as is the case for probably the majority of pleasure vessels. Because of this situation, older boats tend to be overlooked by the authorites. But perhaps a fresh import would be charged.

Rob.

 

[pandos]

Even with the original vat receipt there is no guarantee without a vouched history to prove that the boat was not outside of the EU for a period of more than 4 years, or 5 if the original exporter imports her again.

Sale outside the EU does not automatically render a boat liable to a vat charge if it had been previously paid,

In short no guarantees, ask the question and get an answer and perhaps retain an entitlement to sue for misrepresentation if ultimately you were conned by the seller or his agent....

But if you are stopped by the authorities the responsibility and headache will be yours.!!

I insisted, prior to buying my boat that it be vat paid again, it having being held out of the EU for many years, it was the safest way as proving ownership/provenance of the boat indicated as much,

Regards

 

[Tranona]

First time buyer here - just seeking some advice from the more experienced In a situation where VAT may be due because a boat has at some point in the past been sold and bought outside the EU who is responsible for paying it? The person who first imports it to the EU or whoever owns the boat when the tax man comes knocking? Does this mean that you should go through all previous sales with a comb to make sure they weren't transacted outside the EU? cheers.

Think I already answered your question on your other thread. Just to expand a bit, the key term is "chargeable event" - that means it is the transaction that gives rise to the tax, not the asset. For most boats there is only one chargeable event and that is when it is supplied new to the first private customer. All subsequent transactions, if between private persons within the EU are not chargeable events. However many boats can be involved in more than one transaction that is classed as a chargeable event, for example transactions between two VAT registered entities. Taking a boat on which VAT has been paid out of the EU creates a potential chargeable event if it comes back into the EU. In many cases this event can be avoided by making use of one of the reliefs, usually the returned goods relief, but this is only available to the person who took the boat out, and may have a time limit. If it changes hands outside the EU that relief is not available, but other reliefs might be, particularly that applying to returning residents.

Where there is a chargeable event the person responsible for accounting for the tax is usually the VAT registered vendor, except in the case of the event being an importation, where it is the person importing that pays direct to HMRC and gets a receipt. The amount payable is based on either cost (including freight) or a valuation. No record of this payment is kept other than by the person paying the tax.

There are many little wrinkles buried in the basic rules, so you can only work out if there is an issue with a particular boat when you have all the history. If there is anything in the history that suggests the boat has been sold outside the EU, or there is any corporate ownership, then extra care is needed. A good broker who deals regularly in higher value boats with complex ownership histories will know how to do the checks, although inevitably given the lack of compulsion in documentation (at least in the UK) there may never be certainty in some cases.

You might find the RYA/HMRC FAQ sheet on the RYA site useful and the HMRC VAT Notice No8 lays out the principles and rules in detail.

 

[snowleopard]

There is one key thing to beware of - VAT can be charged on the same vessel multiple times.

Owner A buys the boat VAT paid

Owner A sells to owner B outside the EU

Owner B comes back to European waters and shows the authorities the original VAT receipt.

The authorities say 'no way mate, pay again'.

 

[zzyyxx]

There is one key thing to beware of - VAT can be charged on the same vessel multiple times.

Owner A buys the boat VAT paid

Owner A sells to owner B outside the EU

Owner B comes back to European waters and shows the authorities the original VAT receipt.

The authorities say 'no way mate, pay again'.

We might as well get properly complex, what if the boat is outside the EU but both parties are EU citizens inside the EU and conduct the transaction inside the EU?

 

[KellysEye]

Our boat was imported from Holland and has a UK VAT certificate received after payment on entry. In fact it already had a Dutch VAT certificate but the UK rate was then a bit higher so a bit more had to be paid.

 

[Stork_III]

We might as well get properly complex, what if the boat is outside the EU but both parties are EU citizens inside the EU and conduct the transaction inside the EU?

HMRC make no distinction on where the "sale" takes place. If the boat is outside and a sale occurs, VAT due on reimportation.

http://customs.hmrc.gov.uk/channels...document&columns=1&id=HMCE_CL_000289#P83_9970