Does this worry those of you who keep boats in spain?

Re: Pardon?

Never said you should not. I do on one of my boats because I bought it last year and have the invoice. However, I also have a 1963 boat, which for obvious reasons never had VAT charged. There are many boats built since 1973 when VAT came in which do not have a VAT invoice simply because it has never been a legal requirement to have one.Therien lies the dilemma for the Revenue - how to enforce their advice when it is practically impossible to do so. Many boats move freely around the EU without a VAT invoice without any problems.

Anyway, what I was commenting on was your assertion that boats without it might be impounded, which as far as I know is not the case. If, however you know of any documented cases, I am sure we would all like to hear about them.
 
Re: Pardon?

Yes, I guess it is for HMRC to decide on the facts of the case what determines whether the boat comes under its jurisdiction as far as VAT is concerned. I would assume that the location of the transaction would be the key factor. So my boat would not be covered because I bought it in Greece (and paid VAT there) even though both owners are UK citizens and residents and the boat is on the SSR.

I may be wrong, but I assume that the only time HMRC is concerned is where there is suspicion of fraud - for example trying to avoid VAT on an imported boat or where a VAT registered trader is falsely claiming back VAT paid.

As to "nationality", I think it is wider than that as a boat in the UK seems to have no independent legal status. It is just an asset belonging to the owner. This seems to be different, for example from Greece where the identity of my boat was defined by its number on the Greek register. When I took formal ownership (previously my interest in the boat was only defined by a contract with the seller) It was taken off the Greek register and I have a certificate saying that the proprietary title has been passed to us and that the boat is free of any "burden". I also have the Bill of Sale from the dealer. Interestingly the VAT invoice only identifies the boat by its (now defunct) Greek registration number.

BTW reference the earlier thread on the subject, have you thought any more about challenging the RYA/HMRC advice?
 
Re: Pardon?

Yes, but for boats built before 1985 the proof required is that the boat was in the EU in 1992 - just as difficult with a boat that may have changed hands several times since.

Despite all that there is no legal requirement that a VAT payment is specifically linked to a boat. Also "You must normally keep your business records for 6 years". Direct quote from the VAT Reminder of Certain Legal Obligations section of my VAT registration documents (as a registered trader).

Good letter in this month's PBO headed "French Customs were pleasant" "The ships' paperwork was scrutinised then returned. There was no mention of VAT status". This would appear to be the norm rather than the doom scenario others would have us believe.
 
Re: Pardon?

Come to think of it, HMRC asked me for the VAT invoice before my boat was loaded on the ship to France. I don't know what would have happened if I didn't have it, but if they ask for it and you don't have it, then presumably it involves some hassle at the very least.
 
Re: Pardon?

Oh yes
I seem to remember Peters and May quoting a price for "VAT clearance" when I enquired about transport. They needed to know if she was registered for VAT - a simple clearance would have been £350 ish. I wonder what they do for their money?
 
Re: Pardon?

[ QUOTE ]
Anyway, what I was commenting on was your assertion that boats without it might be impounded, which as far as I know is not the case. If, however you know of any documented cases, I am sure we would all like to hear about them

[/ QUOTE ]


Tranona I cited an example of being asked for proof of VAT payment by Dutch police in Holland. What do you think would have happened if I had not been able to show a VAT invoice? Do you think they would have sent me on my way with a cheery 'mind how you go, sir'? There have definitely been cases also of Dutch police requesting proof of VAT payment on red diesel in the tanks of UK boats and temporarily impounding them although I believe that the Dutch now accept that UK red diesel in UK boats is duty and VAT paid
 
Re: Apologies for repeating myself, but...

[ QUOTE ]
the French owner of the boat said the boat was VAT paid....

[/ QUOTE ]PY, I would bet that formally it wasn't a "French owner" selling the boat.
I mean, if a French resident and citizen, who personally owns a boat, sells it to another EU resident and citizen, there is no way on earth that the buyer can be held VAT liable. And that's such a basic principle that even the worst lawyer or court can't get it wrong.
BUT!
If the buyer is purchasing a boat from a non-EU company (as I suspect in this case), then he sure IS liable for VAT upon import in the EU.
And the fact that such company might be owned by a French gentleman obviously has no relevance at all.
 
Re: Pardon?

Well, yes I think they would have sent you on your way - unless they suspected that you were involved in a VAT fraud. They would not have "impounded" your boat because they do not have any authority to do that. As I have said there seems to be no concrete evidence that failing to produce a VAT invoice has aver resulted in any adverse consequences.

The Red diesel issue is entirely separate so I don't know why you are bringing it in to this discussion. (I was going to say Red herring, but I won't).

I would be quite OK if I was proved wrong by you finding a documented case where an owner has suffered any penalty solely as a result of being unable to produce a VAT invoice. I am pretty sure such an incident would be reported in the boating mags. I have read most of them for the last 30 years and never seen a case - and indeed most of the reports and letters seem to be in a similar vein to the one I quoted above from this month's PBO.

There are plenty of real problems to worry about in owning a boat, particularly keeping it in Euroland, without creating ones that don't exist.
 
Re: Apologies for repeating myself, but...

Ref your last paragraph. You do not seem to understand what the UN convention is about. Put simply, it allows foreign flagged vessels to navigate in other states' territorial waters without having to comply with local registration requirements. This is a a legal principle known as "comity" where states recognise the registration requirements of another state.

However, the freedom is only strictly related to passage in the normal course of the ship's business, for example to get to a port or into international waters. It does not automatically extend to other activities such as passages within those territorial waters from one port to another, or basing the boat permanently in another state's territorial waters. However, in practice most states allow all of these things and more, which is why I can keep my boat in Greece permanently even though it is British registered and would not now meet Greek registration requirements in a number of respects.

Where people get mixed up is because they think this is to do with the EU, which it is not, and in the particular case of Spain - which started this thread, they seem to see a link with the requirement for matriculation and Spanish registration. As many have pointed out, this is to do with the owner's status as resident in Spain for tax purposes. There is no connection with the UN convention and freedom to navigate.

And, no, from what he says Mike is not breaking any law in Spain. But equally the Spanish authorities are not making life difficult for him. If, however, he gets into a position, like so many Brits of being subject to Spanish tax law, then he may well decide that the costs outweigh the benefits and move elsewhere.

As I pointed out in an earlier post, the individuals who might be affected by the enforcement of matriculation are those who either failed to find out the consequences of their actions, or knew and chose to ignore it! If one becomes a Spanish resident for tax purposes, then your boat ceases to be considered as a foreign flagged ship and is therefore not covered by the UN convention. It has to be registered as a Spanish ship, and one of the registration requirements is that the skipper has to have a Spanish licence. They do, however accept an RYA Yachtmaster as equivalent provided it is current (normally less than 10 years).

Confusion does arise because the law has not been enforced at all in some regions and variably in others. In just the same way that the law requiring a skipper of a Greek registered boat to demonstrate competence is enforced with varying levels of rigour in different ports and at different times

I hope that clarifies the situation.
 
Re: Apologies for repeating myself, but...

exactly how you say it
I am not giving all precise details here first of all I am not the lawyer of the case, second it is not fair without consent from the buyer in this case...
myn was just an example showing in principle what the RYA is saying is not really correct and should be modified
to make things clear
1) Owner 1 had boat on his name he paid VAT and registed on UK flag to be exact London
2) Owner 2 changes registry to Gibraltar owned by Gibraltar Company
3) the boat always stayed in EU waters
so if the RYA was correct in what it says on the site this boat is VAT paid, but it happens it was proven it is not....
 
Re: Apologies for repeating myself, but...

[ QUOTE ]
but it happens it was proven it is not....

[/ QUOTE ]

PY I dont think it was. your case was a contractual dispute about return of deposit. The reason for requesting return of deposit might have been connected with VAT but the case didn't prove the boat wasn't VAT paid. All it proved was that the contractual conditions for return of deposit were satisfied
 
Re: Pardon?

[ QUOTE ]
Yes, I guess it is for HMRC to decide on the facts of the case what determines whether the boat comes under its jurisdiction as far as VAT is concerned.

[/ QUOTE ]

Like hell it is. If HMRC decide something that is not correct under the law then you just put them straight

[ QUOTE ]
I would assume that the location of the transaction would be the key factor.

[/ QUOTE ]

What's the "location" of a transaction? Where the asset is located? Where the parties live? Where contracts were exchanged? Where the contract was completed? There isn't a location of a transaction. There might be countries whose laws regulate it but that doesn't affect VAT. VAT is mostly governed by where the asset is located

[ QUOTE ]

I may be wrong, but I assume that the only time HMRC is concerned is where there is suspicion of fraud - for example trying to avoid VAT on an imported boat or where a VAT registered trader is falsely claiming back VAT paid.

[/ QUOTE ]

No, they're also interested in underpaid tax thru innocent error, incorrect application of the law (like those dumb leasing schemes), etc.

[ QUOTE ]
As to "nationality", I think it is wider than that as a boat in the UK seems to have no independent legal status. It is just an asset belonging to the owner. This seems to be different, for example from Greece where the identity of my boat was defined by its number on the Greek register. When I took formal ownership (previously my interest in the boat was only defined by a contract with the seller) It was taken off the Greek register and I have a certificate saying that the proprietary title has been passed to us and that the boat is free of any "burden". I also have the Bill of Sale from the dealer. Interestingly the VAT invoice only identifies the boat by its (now defunct) Greek registration number.

[/ QUOTE ]

Not sure what your point is. The greek registry sounds v similar to UK part 1.

[ QUOTE ]
BTW reference the earlier thread on the subject, have you thought any more about challenging the RYA/HMRC advice?

[/ QUOTE ]

Nope, Ive no intention of doing it alone! It needs to be taken up by a representative organisation like RYA or MBY. I'd happily help them, but I don't plan to challenge any published advice (which has no legal force anyway...) on my own!
 
With apologies to Dr Johnson. IF your tired of...............

This post proves finally what some of us have suspected for years,that if your tired of boating in UK,you are either tired of life or actually enjoy spending hours in grubby airports with the enjoyable prospect of a smallish mountain of rules and regulations totally absent form home waters,awaiting you on arrival.
Ps. and as for what your pound will now buy you in the marina restaurant........ /forums/images/graemlins/laugh.gif
 
Re: Pardon?

Just a couple of observations.

I did not mean that HMRC is the arbiter. In a dispute it would take its position, but it could be open to challenge through the courts. There no doubt are cases where it decides that it would be unsuccessful so does not pursue.

Location of asset. What you say somewhat contradicts earlier opinions that VAT is not a tax on the asset, but on the transaction. Therefore, I assume (but don't know) that if I had bought my boat from a UK charter company which owned the boat in the UK then I would have paid VAT to the UK company even though the boat was located in Greece.

I can see if the boat is in France as in Poweryachts case and it changed hands in a way that meant it was subject to VAT as an import, the French revenue would be responsible because it was the state of entry.

My comments on reasons for investigation were in answer to those who think that a boat could be "impounded" solely because one could not produce an original VAT invoice. As far as I know (but again I could be wrong) HMRC (or their equivalent in other EU countries) does not randomly try to collect VAT from individuals - there has to be some suspicion of irregularlity for it to investigate - and fraud is the obvious one.

Yes, the Greek registry is similar to Part 1. The difference I was highlighting was that in Greece registration is compulsory so a boats identity is defined by its registration number. As there is no compulsion to register in the UK there is no definitive identity for a boat. I know that recent boats have an HIN and a Certificate of Conformity, but these do not seem to be recorded anywhere except the builder's records. And of course there are thousands of older boats that have nothing except possibly Bills of Sale.

My VAT invoice only uses the Greek registration number to identify the asset, as does the Certificate of Proprietary Title. The only connection with the HIN is the Bill of Sale which has both identities on it.
 
Re: Apologies for repeating myself, but...

[ QUOTE ]
Owner 1 had boat on his name he paid VAT and registed on UK flag

[/ QUOTE ]By "on his name", do you mean as a private individual?
Naah... If so, he couldn't have recovered the VAT paid.
Much more likely to be as per my first guess in post #2117916!... /forums/images/graemlins/grin.gif
 
Re: Apologies for repeating myself, but...

Yes Owner 1 was Private Indivual infact he did not recover the VAT
the VAT paid status was lost by owner 2 when he changed flag
JFM the case was for VAT paid status of the boat which shows is not paid
 
Re: Apologies for repeating myself, but...

Hi Guys, new to the site but had my fair share of VAT problems with both private and charter yachts. Whilst I'm no expert or qualified to give a binding opinion I have a very good knowledge of the basics... which are loosely described below...

VAT is a complicated issue, and even the HMRC are at a loss at times...!

Can a yacht be impounded because of non payment of VAT (or no proof of payment)? Simple answer - yes - if you are in any country within the EU it is a requirement that the skipper / owner can prove VAT status when asked... and trust me, guys if a mean greenie from the Guarda Civil askes you for proof of VAT with his hand on his pistol, are you going to argue that it is not a lawful request? and there are many boats rotting away in Spanish security compounds after being seized for non payment.
VAT status can change depending the use of the vessel - for a private purchase VAT has to be paid on a new yacht built in the EU unless it it to be exported immeadiately, once paid the yacht retains its status whilst in the same ownership, however if the yacht leaves the EU and is sold to a non european national then the yacht looses its VAT status, and should the yacht be re-imported to the EU then VAT would need to be paid by the importer, however the imported can specifie the country they wish to pay the VAT in. If the yacht is sold within the EU to another EU national then the yacht still retains its VAT paid status. The flag of the yacht does not effect this status, unless the yacht is reistered in a non EU country and sold in that country.
For charter or ex charter yachts then the rules change (and can change by the minute if the HMRC feel that way inclined!)... for a bare boat charter yacht the place of the business is the official VAT location - so if the yacht is owned by a British company whose office is in the UK and the charter transactions are executed in the UK then UK VAT is due on the charter, even if the yacht is in another country. Should the yacht be sold then the VAT due on the yacht will be UK VAT and the place of the sale will be the UK, unless the yacht is sold to a non EU person for export. If the yacht is a crewed charter yacht, then the place of the contract changes to 'where the yacht is' as far as charter fee VAT is concerned, but the sale and VAT on the sale of a charter yacht will usually be concluded in the country of original VAT payment. For Example (hang on to you hats for this one...) I owned a UK registered and VAT paid crewed 20mtr charter yacht that was based in Turkey for 2 seasons, she was sold by a Spanish based broker to a German charter company who paid UK VAT on the purchase and then re registered the yacht in Germany, then they moved her to South America. Because the transaction was inter EU company no VAT actually changed hands, but the yacht kept her UK VAT paid status -which I understand is still in place and if & when the yacht returns to the EU then all that needs to be done is the showing of the VAT invoice on entry.
As far as flagging is concerned if the yacht is registered in the UK on Part 1 or SSR then the yacht is offically a 'British Ship' and governed by British shipping regulations which you have to abide by, rather than local requirements in other EU countries, however local requirements can be requested of the owner and sometimes non compliance can make the owners life difficult! But remember that whilst the yacht might be 'British Territory' it can still be boarded buy officials and non compliance with local fiscal or legal requirements delt with locally, so make sure you have all of the right paperwork with you all of the time. Also remember we live in a world of computerisation & IT and you would be amazed at the info even the basic marinas in Europe will have on you and your yacht!
As for Spanish taxes and requirements, we have kept 2 charter yachts in Spain... to get a Spanish charter license for a UK flagged yacht is near impossible on the mainland, and a gift from God if in the Valancia region!

My advice to anybody is to get expert advice on the specific question at the time... and after 10 years of keeping yachts in Spain, we have moved to Turkey... fantastic cruising, and marina fees a quarter of thoses in Spain, plus food is at least half the price, and we've kept the yacht VAT paid!
 
Re: Apologies for repeating myself, but...

From what I read on these forums and what makes sense to me - I still think that the concept of a "VAT Status" per se doesnt exist.

All examples that have been cited here seem to me to be connected with importing an asset from a non EEC country. If you buy a boat outside the EU and bring it in then, yes, you will have to pay VAT - but thats nothing to do with a vessel having a "VAT status".

Several posts on this thread have said and I agree - VAT is a tax on a transaction and all these examples can be explained if thought of this way.

[ QUOTE ]
As for Spanish taxes and requirements, we have kept 2 charter yachts in Spain... to get a Spanish charter license for a UK flagged yacht is near impossible on the mainland, and a gift from God if in the Valancia region!

[/ QUOTE ]

Indeed, this is the way I saw chartering in Spain but I was interested when Deleted User said that there are lots of UK registered charter vessels larger than 15m in Mallorca. Maybe its easier to get a licence in the islands than on the mainland.
 
Re: Apologies for repeating myself, but...

Useful summary - most of the points you raise have already been covered and there is agreement, particularly about importing/re-importing into EU. However, you are, I think incorrect in stating that you can "choose" where to pay VAT. The rules are that it is the state of first entry. Therefore you cannot, for example, legally stop in the Azores on the way from the US, not pay VAT and then pay VAT in UK. So your choice is limited to the first state of entry, which, of course you may be able to choose - and UK would be the obvious one with 15% VAT.

I think many would take issue with your assertion that local police can impound a yacht solely because the owner is not able to show a VAT invoice. I am happy to be proved wrong by a clear reference to the source of legal power and/or documented examples where a court has ordered a yacht to be impounded. This does not mean that an official might not threaten to take such action, but I have never heard of a case where it has happened for real. So this risk currently exists only as an urban myth.

There may well be cases where a yacht is seized by the Revenue, but it is likely to be because of an irregularity such as fraud or incorrect accounting for tax by the VAT registered trader. An individual, non VAT registered person cannot by definition commit an offence under VAT law (except in relation to importation), nor can his legally owned asset be seized. I suspect that the boats you claim are rotting away in Spanish compounds are there for reasons other than non production of evidence of VAT payment. Perhaps you have documented evidence to the contrary that you can share with us.
 
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