Dutch Customs

[Tranona]

You are right that itis preferable to have the evidence, and your aswer as to whether you know or not is to produce the Bill of Sale which says the boat is free of all encumbrances.

If you read the RYA paper as I suggested you will find the answer to many of your concerns, direct from HMRC.

Customs cannot charge a private individual VAT if no chargeable event has occured.

If a foreign official asks to see documents you dont have, then show them your Bill of Sale that shows the last chargeable event took place in the UK and is therefore under the jurisdiction of UK authorities.

HMRC will only take action for any offence against the person responsible for VAT when the chargeable event took place.

These are all paraphrased answers from a FAQ sheet jointly produced by the RYA and HMRC and which is available on their website. You will also find an explanation as to why HMRC no longer issues certificates of opinion related to VAT status and many more little nuggets of information.

You are correct if a boat arrives from outside the EU. Customs have every right to take action to collect VAT - the process is described in the same leaflet and will no doubt be similar in Holland as it is an EU wide process.

However, it is not this situation we are talking about but boats moving within the EU, and I think you will find my explanation is consistent with both official advice and is what happens in practice.

 

[jonic]

Every body is correct here to a degree. It is sometimes difficult find actual law and even HMRC notices re VAT are marked as being their interpretation of the law.

That is the problem, although we are in the EU, different customs authorities and sometimes different ports in the same county will interpret the law inconsistently.

It is unlikely that you as a private individual will be pursued for non payment of VAT by a previous owner because as Tranona has said no chargeable event has occured. If you have a boat with no VAT papers you can not go to HMRC in the UK and offer to pay the VAT for the same reason. You would have to create a chargeable event.

But you could well be harassed or refused entry by a foreign customs official for not having the correct paper work and possibly fined.

I have been told by an HMRC officer that member states will now collect on behalf of other states if they think VAT has not been paid, so a Bill of Sale showing the boat was bought in the UK is not an automatic release from an overseas investigation.

Again it is unlikely you would be investigated but not impossible, especially if you are in a port with a boat that looks like it may have come in from outside the EU.

I have also been told of boats being asked to leave Dutch waters because they had no evidence of VAT being paid.

I believe it is a requirement to have satisfactory VAT paid evidence on board for a boat to have free movement between countries in the EU.

Because this evidence is being interpreted differently the only advice that is 100% foolproof is that the evidence should be in the form of an original VAT invoice or original customs receipt.

 

[TiggerToo]

.....Because this evidence is being interpreted differently the only advice that is 100% foolproof is that the evidence should be in the form of an original VAT invoice or original customs receipt.

which in our case is a simple sheet of A4 typed up by the previous owner who had a VAT registered charter business and a VAT number...

 

[BlueSkyNick]

There have been a lot of threads here about members experiences of being boarded by British Customs.

However it seems that the Dutch are starting to get awkward, the following was posted in our Club weekly newsletter this week.

<<
Ships Paperwork – Good Advice for All

The following tale from a member who recently visited Holland is worthy of dissemination for the benefit of others:

“I have just returned from a cruise to the Netherlands and was chatting to Tony Cross about my encounter with Dutch Customs. He asked me to relate the experience to you in order to emphasise to the yachting community the importance of carrying the correct papers.

I was stopped and boarded by a Dutch coastal patrol about two miles offshore, in Dutch waters.

Two Customs officers scrutinised the ship's papers with exceptionally close and detailed attention. First, they demanded that I present a VAT receipt for red diesel in my tank. Fortunately, I was aware of this requirements and had such a receipt in my possession. I was left in no doubt that the yacht would have been impounded had this not been so. They explained that possession of red diesel is illegal in Holland. They also required evidence that I had paid VAT on the yacht. A satisfactory bill of sale from a well known, reputable, yacht broker was insufficient. On my return to the UK I was greeted by a formal letter from the Dutch Customs authorities with a further demand for evidence that VAT had been paid on the purchase of the yacht”.

Obviously, it is vital that every yachtsman is aware that VAT receipts for red diesel must be carried and that all other ship's papers must be in absolutely perfect order.

>>

I think most are aware of the problems re red diesel, however this demand for VAT evidence is not something I have heard of previously. It would also present a major problem for many older yachts as AFAIK there is no way of getting proof that VAT was paid on original purchase, or even due if pre 1984 ( I think?)

Putting aside the issue of VAT on the boat, the issue on the fuel is not whether VAT has been paid, it is about additional excise duty. VAT is paid on all fuel transactions, duty is still 'optional'.

I know of a Dutch couple who bought a big Halberg Rassy in the UK, filled it up before they left, paid 60% duty and upon arrival at home were told to pump it all out. They got round it by calling the UK marina and paying the remaining duty over the phone, and having a suitable receipt faxed to them.

 

[jonic]

which in our case is a simple sheet of A4 typed up by the previous owner who had a VAT registered charter business and a VAT number...

Thats fine, the name of the firm, a VAT number and the amount accounted for are all that are required

 

[Tranona]

But you could well be harassed or refused entry by a foreign customs official for not having the correct paper work and possibly fined.

I have been told by an HMRC officer that member states will now collect on behalf of other states if they think VAT has not been paid, so a Bill of Sale showing the boat was bought in the UK is not an automatic release from an overseas investigation.

You can't be "fined" because there is no offence they can charge you with. Even if you are responsible for paying VAT and have not, then all they can do is take action to recover the VAT.

You are correct in that other states may collect unpaid VAT - but only on behalf of HMRC after referring it to them if the chargeable event took place in the UK.

If you read the RYA/HMRC document (which I am sure you have) you will find they make no mention of any action they might take if you fail to produce an invoice as evidence - because they can't. They do, however make it quite clear that they will take action against the person responsible for accounting for VAT which is almost certainly not the current owner (but may be).

So failure to produce evidence may cause them to start an investigation, may be a PITA for the current owner, but will only result in legal action against the person responsible. They cannot impound boats, issue demands for unpaid VAT etc without getting authority from the courts after due legal process.

We know they don't like that constraint as many officers come from a Customs and Excise background where they did have far more power (and still do in relation to duty offences) so have difficulty in coming to terms with their real powers under VAT legislation. C&E only got the job of adminsitering VAT because they would otherwise have been largely redundant when the Common market effectively abolished duty on over 50% of imports. Hopefully now C&E is merged with IR into HMRC a more realistic attitude will prevail.

 

[EdWingfield]

To answer the original post. I was boarded last year by customs on arrival at Den Helder (0600) and gave them everything I had. They left happy.

Later I was again boarded in Friesland. I asked them to check with Den Helder. They did, and again left happy.

 

[jonic]

Really the problem at the moment is not so much HMRC but overzealous officials in Portugal and Holland. I have had recent reports from both.

The issues have not been for non-payment of VAT but for not carrying the correct VAT documents.

Yachts seem to have become an easy target again, with the French also targeting yachts for carrying out of date flares and life-rafts.

 

[toad_oftoadhall]

Really the problem at the moment is not so much HMRC but overzealous officials

What problem? In the incident the OP reports the sole outcome was that someone received a letter. Nobody has presented any examples of anyone being prosecuted over VAT docs in Europe. (Which is not surprising since it's blatently impossible for any private individual to prove that a business they have no connection with paid their VAT bills in full in years past. ) Even if a receipt could prove VAT had been paid is it really practical to carry a receipt for every item you carry? If you gave them a receipt for the boat what's to stop them immediately demanding a receipt for your socks, or watch or stereo or phone?

The Dutch are wonderful people and if their revenue people wish to send letters to UK citizens that's ok by me.

Yachts seem to have become an easy target again, with the French also targeting yachts for carrying out of date flares and life-rafts.

According to the RYA mag yet another myth:

 

[Tranona]

Really the problem at the moment is not so much HMRC but overzealous officials in Portugal and Holland. I have had recent reports from both.

The issues have not been for non-payment of VAT but for not carrying the correct VAT documents.

Yachts seem to have become an easy target again, with the French also targeting yachts for carrying out of date flares and life-rafts.

You are correct about over zealous officials in general and recently in Portugal in particular. Long threads on Liveaboard forum on th subject.

Also a very misleading article in YM month before last about visiting France which suggested the authorities there could impose the French safety equipment requirements on visitors (as the Portuguese navy is alledgedly trying to do). There is no basis for this suggestion and no evidence that policy in France has changed.

I have exchanged correspondnce with YM and RYA on the subject and no doubt when they have finished investigating the real situation there will be an update - hopefully similar to the recent RYA notice clarifying (at least in part) the situation re registration documents.

The VAT thing is a different scenario. There is much more activity in areas where EU and non EU states are close together - CI and France, Spain and Gibraltar, Italy and Croatia, Greece and Turkey and the possibility of boats entering or being used in the EU without paying VAT, but there should be no reason why a state should show any interest in a boat that was bought legally in another EU state, unless the authorities in the state where the boat was bought had suspicions and asked their colleagues to investigate. Experience seems to show that this is indeed the case as there seem to be few reports of action such as the Dutch one that started this thread.

Of course we do not know why the Dutch were suspicious, nor what sort of information they have asked for - so it might be nothing, or there might be suspicion of a "proper" offence. Maybe the OP can enlighten us.

 

[jonic]

Also a very misleading article in YM month before last about visiting France which suggested the authorities there could impose the French safety equipment requirements on visitors (as the Portuguese navy is alledgedly trying to do). There is no basis for this suggestion and no evidence that policy in France has changed.
.

That would be good news.

I had a similar experience with local safety laws in the USA. We anchored to watch a space shuttle launch at Canaveral. I lent my dinghy to a fellow cruiser ( a German policeman).

He wanted to go ashore and pick up some friends. After a while he called me on the VHF and said he had been busted for speeding (6kts) and they were going to impound the dink and also fine him for having no life jacket or whistle in the dinghy.

We argued with the officer that we didn't know the speed limit and that I really needed the dink. Eventually they relented on the dink but would not give in on the fine for the lack of life jacket and whistle. They were not in the least bit interested that we were foreign flagged and said in their waters we had to comply with their safety legislation. My friends plea for clemency because he was a German policeman fell on deaf ears too!

Regarding VAT, paperwork inspections have been on the increase. I have also had issues when selling used boats with finance companies who will not lend or insist on a VAT waiver clause if there is no original VAT receipt.

 

[Tranona]

Regarding VAT, paperwork inspections have been on the increase. I have also had issues when selling used boats with finance companies who will not lend or insist on a VAT waiver clause if there is no original VAT receipt.

Yes, I can't understand what feeds this paranoia about VAT documents. It is very clear from HMRC that they can only pursue people who were responsible for VAT when a chargeable event took place. This rules out the vast majority of transactions once the boat has been sold by a VAT registered entity to a private individual in the EU, and subsequent transactions are between private citizens.

As they say themselves the transactions that are of most concern are imports into the EU and those involving VAT registered entities. This gives them more than enough to worry about as although the numbers may be small the potential for tax avoidance is huge - which is why they concentrate their efforts in those areas. However, they are then dealing with clever professional people whose job it is to exploit loopholes for the benefit of their clients. Much harder to intimidate that kind of person than the innocent yottie who legally buys a boat that is a bit short on paperwork.

 

[Leighb]

Of course we do not know why the Dutch were suspicious, nor what sort of information they have asked for - so it might be nothing, or there might be suspicion of a "proper" offence. Maybe the OP can enlighten us.

I am afraid I am unable to enlighten you, what I posted had been sent in by a club member with the suggestion that it was sent out as a warning to members who might be voyaging abroad. I don't know any more detail about the original encounter with Customs.

I seem to have stirred up something of a hornet's nest.

 

[jonic]

I am afraid I am unable to enlighten you, what I posted had been sent in by a club member with the suggestion that it was sent out as a warning to members who might be voyaging abroad. I don't know any more detail about the original encounter with Customs.

I seem to have stirred up something of a hornet's nest.

No its not just you, we (yacht brokers) have recently had a report that the Dutch have been getting very officious with visiting Yachts over VAT papers and in some cases may restrict entry or length of stay.

It could be due to the fact that the British registration system is so lax (in their eyes). Most other states have a much more robust and compulsory registration system where you cannot even be registered without proof of the yacht being VAT paid.

Here you can choose to be on part 1, the SSR or nothing at all, with VAT not even considered at the registration stage.

Perhaps they see British yachts as being more open to VAT avoidance as there is no compulsory check at registration.

 

[Tranona]

I am afraid I am unable to enlighten you, what I posted had been sent in by a club member with the suggestion that it was sent out as a warning to members who might be voyaging abroad. I don't know any more detail about the original encounter with Customs.

I seem to have stirred up something of a hornet's nest.

Thanks for coming back. Suspected that would be the answer. That is the trouble with these sorts of stories, all you get is bald facts - stopped by customs recieved a letter in this case with no detail of what the encounter was really about. Everybody (probably including me!) jumps to the conclusion they want to draw. The story then takes on a life of its own.

Often when the full facts come out one finds that there was a legitimate concern or a misunderstanding and the encounter does not signify any real and general problem that would affect others.

As you have no doubt seen VAT and overzealous "foreign" officials are contentious subjects, both individually and particularly put together! However, when you get down to it and try and find real evidence of problems (as the RYA has tried to do), you find that they are really not there.

Personally I think this is a result of the myth put out that yachts are somehow special in relation to VAT. For example using the misleading phrase of "VAT status" which is a contradiction in terms. VAT is not a tax on yachts or any other goods, but on the transaction - and in many transactions involving yachts (as well as many other goods) there is no VAT involved. In my view, the authorities have never come to terms with this distinction and it serves their purpose to maintain a myth that suggests they have powers they simply don't have. You can see this very clearly if you read their responses to the FAQs on the RYA site.

Anyway the subject has probably been done to death now!

 

[Leighb]

I will see if I can find out more at the Club, there may be a something known about the original encounter, and about why the yacht attracted Customs attention. If so I will update the thread.

 

[Tranona]

No its not just you, we (yacht brokers) have recently had a report that the Dutch have been getting very officious with visiting Yachts over VAT papers and in some cases may restrict entry or length of stay.

It could be due to the fact that the British registration system is so lax (in their eyes). Most other states have a much more robust and compulsory registration system where you cannot even be registered without proof of the yacht being VAT paid.

Here you can choose to be on part 1, the SSR or nothing at all, with VAT not even considered at the registration stage.

Perhaps they see British yachts as being more open to VAT avoidance as there is no compulsory check at registration.

The lack of registration is indeed an issue. What other states seem to forget is that VAT is NOT a tax on boats. As HMRC says there is no central record of VAT payments that can be linked up to individual boats. Inded even if you pay direct when for example you import a boat, they make it clear that the only record is their invoice. VAT is administered and collected by commercial enterprises, so they can only rely on commercial documentation as evidence. You also have to remember that VAT on boats in the UK predates harmonistaion by more than 20 years, and in that time there was no suggestion that you needed to keep any record of payment to be able to take your boat to Europe. As you know the law (which is the same EU wide) only requires records to be kept for 6 years - even if you pay VAT direct, so it would be impossible to construct any form of register based on confirmation that VAT has been paid.

Some states (including Holland) have constructed documents that satisfy them that VAT has been paid, but they are not robust. HMRC used to do this, but no longer do so because they are not a substitute for the commercial document. Rock and a hard spot.

I would suspect any action by the Dutch authorities to place restrictions on visitors simply on the basis of lack of VAT evidence is open to challenge - unless they have passed a speficic law making it an offence. It is quite clear it is not an offence in EU VAT law.

 

[jonic]

It causes so may unnecessary difficulties when brokering. I had a deposit in excess of £20,000 taken on a large yacht and the owner did not have the original VAT receipt. But I had proved beyond doubt VAT had been accounted for. We had ledger entry records, sworn affidavits and audited accounts. But still the buyer pulled out as there was no original VAT invoice. (It later turned up!).

 

[Leighb]

I have made further enquiries in the Club office.

Apparently the originator was a member of another East Coast club, and reported his problem at a meeting of HASA (Harwich Area Sailing Association) Our representative thought this was of interest to our members and asked for it to be posted in a weekly newsletter.

So I can't provide any further details about the original incident.

 

[Cantata]

If you want to go to Holland, go to Holland. And enjoy it. Just spent 5 weeks over there, more than a dozen boats there from our club, nobody troubled one iota by any form of officialdom. It remains a most welcoming country so far as I'm concerned.