Nick_H
Active member
Was this SoF? There are specific VAT provisions in France applying to charter boats which don't exist in UK, so they will ask to see VAT receipt if you look like a charter boat.
First Boat Advice Please (and VAT)
- Thread starter Andymap
- Start date
Was this SoF? There are specific VAT provisions in France applying to charter boats which don't exist in UK, so they will ask to see VAT receipt if you look like a charter boat.
jrudge
Well-known member
No la rochelle. A great big cutter parks up and over the course of about an hour in their rib does the rounds of every boat in the anchorage. When they are done they give you a ticket to say you have even checked. About 6 months later we were boarded again, gave them the ticket they said merci and were off.
Quest
New member
Andy,
I've recently acquired a 2007 P34 so am interested. Where are the P34's you are looking at? FWIW have been really pleased with the P34 to date. The most we have had overnight so far is 4, though had 8 out on day trips and very comfortable at these numbers.
Andrew
D
Deleted User YDKXO
Guest
I don't think it matters a jot what the actual risk of being forced to pay VAT on a boat without VAT documentation is. The point is that some future buyers might perceive there is a risk and mark the selling price of the boat down accordingly. Because of that, the current buyer of the boat has to recognise that risk and mark his offer down accordingly. IMHO it is perfectly sensible for the current buyer to recognise that risk and hedge against it.
Then there is the very real issue of a finance company not lending as much or not lending at all on a boat without VAT documentation. They perfectly sensibly make the same assumption that there is a risk that a boat without VAT documentation is less valuable than the same boat with VAT documentation and reduce their valuation accordingly. This may affect the ability of any future buyer to buy the boat and hence reduce it's value.
I understand and accept what you are saying with regard to the legal situation on VAT liability but there is more to this issue than just the legal situation
Tranona
Well-known member
La Rochelle is one of those ports where they might be a bit more enquiring as it is a landfall port for boats coming from outside the EU (including the Channel Islands). However, once they know you are a UK registered boat and everything looks normal nothing will happen.
See my next post for more general observations.
Tranona
Well-known member
Just in case folks think that I am making things up or seeking to dismiss the genuine concerns many have about this subject, might I suggest you read the RYA/HMRC FAQ sheet on the RYA website. While it is general advice and not necessarily the specific law, it is sound advice from the "horses mouth".
In particular in relation to specific issues raised here the following may be of interest
With regard to individuals being able to pay VAT when they have no proof of VAT payment
"No. A chargeable event must occur in order for a private individual to pay VAT" (answer to question D3).
The only chargeable events are when you buy from a VAT registered business and that business is responsible for collecting VAT and providing you with an invoice, OR if you are importing a boat and are the person responsible for paying VAT (and duty if applicable).
With regard to foreign officials requesting evidence of payment
"The Bill of Sale between two private individuals in the UK is useful as it indicates to a foreign official that the VAT status is the business of HMRC, as the transaction involving the vessel took place in the UK" (answer to question D21)
Also worth reading the answer to question D22 which explains that there is no evidence that UK boat owners have experienced any difficulties in Europe in respect of VAT issues. That does not mean that there are not potential issue, just not related specifically to the lack of evidence of VAT payment on privately owned boats bought from private individuals.
There is much more in the document that clarifies most of the misunderstandings about VAT and boats. Unfortunately it does not do enough to dispel the perceptions held by many, as Deleted User explains above.
It would be good if HMRC came clean and dealt with the ambiguities that lead to these perceptions, but they won't, for all sorts of reasons, so guess we will have to live with it.
In particular in relation to specific issues raised here the following may be of interest
With regard to individuals being able to pay VAT when they have no proof of VAT payment
"No. A chargeable event must occur in order for a private individual to pay VAT" (answer to question D3).
The only chargeable events are when you buy from a VAT registered business and that business is responsible for collecting VAT and providing you with an invoice, OR if you are importing a boat and are the person responsible for paying VAT (and duty if applicable).
With regard to foreign officials requesting evidence of payment
"The Bill of Sale between two private individuals in the UK is useful as it indicates to a foreign official that the VAT status is the business of HMRC, as the transaction involving the vessel took place in the UK" (answer to question D21)
Also worth reading the answer to question D22 which explains that there is no evidence that UK boat owners have experienced any difficulties in Europe in respect of VAT issues. That does not mean that there are not potential issue, just not related specifically to the lack of evidence of VAT payment on privately owned boats bought from private individuals.
There is much more in the document that clarifies most of the misunderstandings about VAT and boats. Unfortunately it does not do enough to dispel the perceptions held by many, as Deleted User explains above.
It would be good if HMRC came clean and dealt with the ambiguities that lead to these perceptions, but they won't, for all sorts of reasons, so guess we will have to live with it.
gjgm
Active member
In fairness, Mike, I think that is what was said. Given there are hardly any boat finances companies left
, maybe the concern of their behaviour needs balancing.Given plenty of boaters do not spend hours on these forums, I do wonder how many boat buyers/sellers are concerned by this, and how much of the issue is actually being inflamed by brokers.
I think a missing doc on £000's boat that is a few years old would give many people reason to pause, but it seems a bit nuts that , say. 5+ year old boats of a more modest value are getting caught up in this. If people accepted that there are very very few circumstances where HMRC would come a-knocking- and you have a chance of identifying I think the higher risk cases- maybe the issue would calm down a bit.
It is a bit silly that the original invoice doc should be worth up to 20pct of the value of the boat, when, lets be honest, the doc doesnt prove anything about the current VAT status of the boat, and you could possibly type one up yourself and no one would ever know anyway.
Just look at how many of these invoices go missing.. clearly many people dont realise the perceived importance of it.
The very fact that HMRC dont see any need to clarify or get involved seems to indicate their level of interest in the boat VAT issue, (though JFM with his experience of HMRC might disagree with that assumption, I guess !).
DAKA
Well-known member
I agree with most of that but not so sure about this bit
In my opinion that bit is the misperception.
When you look how many boats have been sold by Sunseeker/Princess/Fairline/Sealine between say 2008 and 2012 , a mere 30% will have paid VAT in full and not recovered it one way or another.
Now look at second hand boats for sale over 5 years old and you will note 98% of them claim to be VAT paid, yeh right !
VAT is being reclaimed on huge amounts of boats, somehow these boats end up back on the market as VAT paid , one way is for a UK company to resell a boat after VAT has been reclaimed but to do the exchange in CI, as long as the purchaser says he is not re importing to EU country no VAT is due, boat is laundered as easy as that.
Technically the original VAT receipt should have been retained by the company who reclaimed the VAT hence many have 'gone missing' , since many are now PFD files the laundering scam is much easier as duplicate originals are easer to print but these are of course technically ' forged ' and if the culprits are caught they will end up in prison , anyone who types up their own VAT receipt is also at risk , agreed not much chance of being caught but the prisons are full of people whop thought they would get away with their crime.
In my opinion that bit is the misperception.
When you look how many boats have been sold by Sunseeker/Princess/Fairline/Sealine between say 2008 and 2012 , a mere 30% will have paid VAT in full and not recovered it one way or another.
Now look at second hand boats for sale over 5 years old and you will note 98% of them claim to be VAT paid, yeh right !
VAT is being reclaimed on huge amounts of boats, somehow these boats end up back on the market as VAT paid , one way is for a UK company to resell a boat after VAT has been reclaimed but to do the exchange in CI, as long as the purchaser says he is not re importing to EU country no VAT is due, boat is laundered as easy as that.
Technically the original VAT receipt should have been retained by the company who reclaimed the VAT hence many have 'gone missing' , since many are now PFD files the laundering scam is much easier as duplicate originals are easer to print but these are of course technically ' forged ' and if the culprits are caught they will end up in prison , anyone who types up their own VAT receipt is also at risk , agreed not much chance of being caught but the prisons are full of people whop thought they would get away with their crime.
Tranona
Well-known member
Do you really think that it is as easy as that? or that HMRC are not aware of that possibility, so might just pay more attention to that kind of transaction. There are many ways in which a boat can be owned without being "VAT paid" that are perfectly legal - just not easy for a private individual owner of a pleasure boat to exploit.
There is no obligation on a company to keep the original invoice, or indeed any record, for more than 6 years. Even within the 6 years they only have to demonstrate that they have properly accounted for VAT, which can be satisfied without the original VAT invoice from the purchase, although it might be prudent to have a good audit trail as support.
This VAT regime has been in place for a long time, but there is little evidence of "ordinary" people having any difficulties with either HMRC or foreign officials - unsurprising given the number of boats that do not have a VAT invoice and as a result difficult for either party (owner or authorities) to provide any proof of wrong doing. On the other hand there is no doubt that there are many irregularities in accounting for VAT relating to boats, simply because there are many potential loopholes open to people who have an incentive to minimise their tax payments and the means to exploit the loopholes. This is where the authorities concentrate their efforts, not in trying to catch out "ordinary" people where they have no chance of proving any wrong doing.
Nick_H
Active member
Pete
That's blatant scaremongering. I think your 30% and 98% are way off, but regardless, do you really think all these people who can afford to buy new boats are going to risk going to prison just to save the VAT? That's just nonsense.
neale
Active member
The thing is that if you buy a boat in the CI and bring it back without declaring the import then you as the boat owner have avoided VAT and are liable anyway so you should know the risk. If you buy a secondhand boat in the UK this is not an issue unless you buy it from the smuggler. A paper trail of bills of sale is a way to avoid a potentially smuggled boat without the VAT invoice.
DAKA
Well-known member
Very few Brand New boats over £400k sold from UK boat shows pay full VAT without some form of recovery in place.
30% of boats may be over egging it, it could be less !
Look at any Brokerage sheet or internet web page for boats over 5 years old and tell me how many boats you spot as VAT outstanding , an odd one in Jersey perhaps.
Its an internet forum and I cant go in to specific details but you accuse me of scaremongering, I feel thats a bit unfair seeing as the topic has been raised apparently as a genuine question, VAT paid status on a boat is a known serious issue that affects 20% of the boats value, the thread appeared to be going in the direction of..............
A few forum members have persuaded the idiots reading this forum VAT status doesnt matter so the only concern now is fooling everyone else who doesnt read the nonsense on this forum
I accept that 68% of second hand boats are not laundered through CI, I was just giving one example , just in an attempt to demonstrate that a boat without a VAT or duty paid status history may not be all it seems.
Hi Neal,
If the boat only visits CI for the sale , there will not be much of a paper trail to follow.
Only evidence would be a fuel receipt /over night berthing fee perhaps as you would expect to find on all our boats following a holiday.
D
Deleted User YDKXO
Guest
Who's going to do that 'rebalancing'? They're entitled to look at finance applications any which way they please. Anyone got any idea what proportion of boat purchases are financed anyway?In fairness, Mike, I think that is what was said. Given there are hardly any boat finances companies left
I suspect brokers will say that they have a duty to inform buyers of every possible risk and if one of those risks is that the future value of the boat they are about to buy is going to be reduced by lack of VAT documentation, then they are duty bound to inform the buyer
Even if HMRC came out and unequivocally clarified the situation on VAT as far as they are concerned, they cannot speak for other EU countries' customs but yes, I think it would be helpful if the RYA prodded HMRC into clarifying the issue
Well, yes that thought has crossed my mind. Even a transfer from one company to another within a group would create a VAT invoice and not cost the group a penny so yes, I guess there are a few ways you could create a VAT invoice. However, EU tax authorities do talk to each other and presenting a dodgy VAT invoice to French or Spanish customs could potentially open a can of worms although I accept the risk is small
As I say it's not about the actual risk but what the buyer perceives as a risk. In the end its all about the market being a buyers market. For every boat out there without VAT documentation, there are a dozen other similar boats on the market with VAT documentation so buyers will be asking themselves why they need to take the risk, however miniscule that risk is
Nick_H
Active member
You wrote "VAT is being reclaimed on huge amounts of boats, somehow these boats end up back on the market as VAT paid , one way is for a UK company to resell a boat after VAT has been reclaimed but to do the exchange in CI, as long as the purchaser says he is not re importing to EU country no VAT is due, boat is laundered as easy as that."
Yes, that's one way, but it's illegal, like robbing banks or cheating on your tax return. The inference in your post was that this happens frequently (hence the scaremongering comment), but i'm suggesting it's extremely rare, because people who can afford to spend £400k on a discretionary luxury item, wouldn't risk going to jail to save just £80k. They may well spend lots of time and money trying to legally avoid the VAT, but that's completely different and doesn't create a risk for the buyer.
Don't forget also, that jfm's considered opinion is that HMRC would be unlikely to pursue a good faith buyer who had purchased a boat with reasonable diligence, that later turned out to be smuggled. The risk for honest buyers is minimal if they carry out some basic checks, so why suggest that it's not?
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DAKA
Well-known member
All fair comment Nick but please note.......
I didnt say they were all laundered in that way, just that some are.
Others may be laundered in other scams.
Its not the first time owner who commits the scam.
The second user can avoid VAT in this way, the first time buyer just sells his boat in CI, no crime in that !
Some of the 68% of the VAT free boats may well be duty paid by the second user to the first buyer but how many receipts are seen by the Brokers like that .............. .
Most will just mingle their way into the marinas.
I wasted enough time, I've shared my thoughts , right or wrong I'm with Mike and thousands of others
I would want to see
original VAT receipt
EU Berthing consistency.
If VAT reg company / charter owner second proof that VAT was charged.
I also want to see how the boat was paid for in order to check outstanding finance and just who the owner is.
Tranona
Well-known member
If you read the FAQ sheet I referred to, you will find that it is pretty clear. The problem is that HMRC are in a pickle because the law is poorly conceived and not tested so they fall back on the usual official line of never committing themselves. You and I would probably do the same if we were in their position. Because there are always actual and potential loopholes that can be exploited they need to show that they are prepared to pursue any situation where they believe the law has been broken.
However, as I pointed out above, they are clear in their advice about the two main fears people seem to have - that they might be faced with a demand for tax if they do not have "proof" or that they may encounter difficulties with foreign officials. The latter, of course has the proviso that they can't speak directly for the actions of other states, but the evidence seems to support their stance.
The issue of finance houses is the thorny one that might affect a small minority of buyers and sellers. Difficult to say how many people it affects, but logic suggests that most finance deals will be related to newish, high value boats where the lack of documentation would ring alarm bells anyway. Guess there will always be unusual cases, for example a recent one on another forum where the documents were lost in a house fire. Given the risky nature of secured boat finance it is not surprising that finance houses demand to see a clean set of documents, but pity that this small sector of the business influences the rest of the market.
SailorBill
New member
+ 1
No VAT receipt = no deal.
OR:
A reduction in purchase price for the full amount of VAT. You could then approach HMRC and say you believe the boat has been out of the EU and you wish to import it and pay the VAT.
neale
Active member
And they will say, 'who did you buy it from', and you will say 'a private individual in the UK' and they will say, 'that transaction is not a chargeable event'. And then?
SailorBill
New member
And then you have a record of having approached HMRC and a letter from HMRC saying that no VAT is due. So win/win.
I suspect the reality would be that they would happily take your money because you believe the boat has been imported from outside the EU without VAT being paid.
Quest
New member
I have read the thread with interest gents.
My question is what are the circumstances under which the VAT status of my boat is likely to be investigated? There is mention here of authorities in other EU Countries wishing to be satisfied regarding the VAT statusof the boat if I were to venture abroad with the boat, but what about here in the UK?
HMRC carry out investigations and inspections into business affairs, but it is rare for individuals to be randomly investigated in this way, is it not? Do the tax authorities in the UK ever carry out spot checks around the UK coastline to find the VAT dodgers? In practice how would this issue come to light and become a problem?
VAT paid on my boat by the way
My question is what are the circumstances under which the VAT status of my boat is likely to be investigated? There is mention here of authorities in other EU Countries wishing to be satisfied regarding the VAT statusof the boat if I were to venture abroad with the boat, but what about here in the UK?
HMRC carry out investigations and inspections into business affairs, but it is rare for individuals to be randomly investigated in this way, is it not? Do the tax authorities in the UK ever carry out spot checks around the UK coastline to find the VAT dodgers? In practice how would this issue come to light and become a problem?
VAT paid on my boat by the way