First Boat Advice Please (and VAT)

[Tranona]

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.

That is just nonsense. You will need to show it is a "chargeable event" - see the reference in my earlier post. They will just tell you to go away. Anyway, how do you know what the "full amount of VAT" is?

By all means refuse to buy a boat that does not have a VAT invoice. It is clear that there is no way of getting one retrospectively without tracking down the invoice from the last chargeable event, nor is there any legal obligation to pay VAT just because there is no evidence. So it is illogical not to buy the boat for just that reason - but then people often behave in an illogical way!

 

[DAKA]

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?

Someone posted on here a while ago that they were undergoing a standard tax investigation and the tax man had stumbled across the boat details and was attempting to extort cash on the basis the boat couldnt be proven as VAT paid .

not sure the outcome was ever posted, suspect a deal was done to get rid.

 

[neale]

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 doubt it would be that simple. HMRC would not use terms such as 'no VAT due on this vessel' in a letter.

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

The only time I have ever heard even a rumour of a boat in the UK coming to the attention of HMRC is when it is clearly a CI registered boat, ie it has Jersey or Guernsey as the port of registry on the back.

ALl you would have to show HMRC is the bill of sale that took place between two private individuals in the UK and they would be satisfied that a chargeable event didn't occur.

If HMRC wanted to check the VAT status of my boat, how would they do it? The VAT bill paid by Sealine in 1997 probably didn't mention specific hull numbers of boats sold. In any case the paperwork has almost certainly not been kept for 15 years. It just isn't going to happen.

I am happy to take my boat to foreign climes with or without a vAT receipt. I have been boarded by Dutch, Belgium and French customs and never once been asked for VAT paperwork. Passports and boat registration yes, but VAT was not even mentioned.

I keep a bill of sale on board from when I bought the boat but even that has not been requested. They seem happy that the boat is UK registered and therefore I suspect they regard any potential VAT issue is one for the UK tax office.

Now if you didn't have registration documents it might be a different matter because they could decide that you have just bought the boat outside of the EU and are trying to sneak it in.

 

[DAKA]

That is just nonsense. You will need to show it is a "chargeable event" - see the reference in my earlier post. They will just tell you to go away. Anyway, how do you know what the "full amount of VAT" is?

By all means refuse to buy a boat that does not have a VAT invoice. It is clear that there is no way of getting one retrospectively without tracking down the invoice from the last chargeable event, nor is there any legal obligation to pay VAT just because there is no evidence. So it is illogical not to buy the boat for just that reason - but then people often behave in an illogical way!

all someone has to do is sail to CI and complete C1331 form on return declaring boat isnt duty paid and they will get a bill for 20% based on current value.
Its a problem because you might not get a bill for the 20% you have just knocked off the sale price, if the HMR&C think your boat is worth more than you paid for it you could well get a nasty shock !

Knocking 20% off the sale value of a non VAT paid boat isnt adequate safeguard, try 30% but we all know that will not be accepted so we are back to finding a boat with a proven VAT history.



( I cant be bothered to get into an argument over this, if you say its nonsense then Im happy to take your word for it , however from a sellers point of view my post is still valid as it is a reflection of the buyers perception which is more important than your explanation of the law)

 

[Nautibusiness]

( I cant be bothered to get into an argument over this, if you say its nonsense then Im happy to take your word for it , however from a sellers point of view my post is still valid as it is a reflection of the buyers perception which is more important than your explanation of the law)

That is the long and the short of it.
Nonsense or not surely with enough boats with a proper paperwork trail out there to choose from that would be the way to go?...

I am aware of a large Tarquin Trader that was impounded on one of the Spanish Costas as proof of vat couldn't be shown and it did end up in a very large bill for the owner. I only know as I read the paperwork trail for the boat.
EDIT to add: Can't remember if there was a large bill for the owner OR if he found the paperwork, but I do remember the boat was impounded over VAT issues and was eventually (several months I believe) allowed on her way once these issues were resolved.

Buyers get nervous at the word VAT.
The lesson is look after your paperwork or find it harder to sell your boat later.
Even if HMRC never ever come asking questions, if you struggle to sell your boat when it comes to it and your only offers are ballbreakers then... you should have kept all those itty bitty bits of paper.

 

[neale]

What is true is that the perception of a problem is enough for many buyers to justify an offer well below the boats actual value because of a perceived possibility of the boat requiring VAT to be paid on it.

As far as I know it has never happened and I bet you any buyer gaining a circa 20% discount would not go running to HMRC to try and pay them the difference. They would probably also try and sell the boat themselves with the same VAT 'issue' and get all uppity when someone tries to knock 20% off the value.

The bottom line is that VAT worried buyers have a smaller market from which to buy a boat and VAT paperworkless sellers have a smaller pool of buyers to sell to.

Ultimately I would be more than happy to buy a VAT paperworkless boat with the right due diligence and, if I could get it for 10% less than its value because everyone else was offering 20% less, I would be very happy indeed.

 

[Tranona]

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.

You could not be more wrong. "They" are legally unable to take your money. Please read the reference I gave earlier. You will also find in there that they state quite clearly they will not give any written advice on the status of a boat. How can they as they simply do not know. There are no records of payment apart from the original invoice.

Are you seriously suggesting that you would willingly give 20% of the value of another person's assets to the government when there is no legal obligation to do so to try and get a piece of paper you are not legally required to have?

Sorry to keep on, but I hope you see the illogicality of what you are saying.

 

[Nautibusiness]

Sorry to keep on, but I hope you see the illogicality of what you are saying.

Completely illogical, but it doesn't stop it frightening off potential buyers and leading to dreadful offers...

 

[SailorBill]

all someone has to do is sail to CI and complete C1331 form on return declaring boat isnt duty paid and they will get a bill for 20% based on current value.
Its a problem because you might not get a bill for the 20% you have just knocked off the sale price, if the HMR&C think your boat is worth more than you paid for it you could well get a nasty shock !

Knocking 20% off the sale value of a non VAT paid boat isnt adequate safeguard, try 30% but we all know that will not be accepted so we are back to finding a boat with a proven VAT history.



( I cant be bothered to get into an argument over this, if you say its nonsense then Im happy to take your word for it , however from a sellers point of view my post is still valid as it is a reflection of the buyers perception which is more important than your explanation of the law)

Daka, thank you for your post.

Tranona, I think Daka has sufficiently responded to your post directed at me.

You seem hell-bent on maintaining the status quo with several aspects of the marine industry (remember the various discussions about brokers?) I wonder why? What is your current or past connection to the marine industry?

 

[SailorBill]

I am aware of a large Tarquin Trader that was impounded on one of the Spanish Costas as proof of vat couldn't be shown and it did end up in a very large bill for the owner. I only know as I read the paperwork trail for the boat.

Buyers get nervous at the word VAT.
The lesson is look after your paperwork or find it harder to sell your boat later.
Even if HMRC never ever come asking questions, if you struggle to sell your boat when it comes to it and your only offers are ballbreakers then... you should have kept all those itty bitty bits of paper.

Thank you for that example of what can happen if proof of VAT being paid is not available. As I said earlier, buying a boat without proof of VAT being paid can lead to problems.

 

[Nautibusiness]

Thank you for that example of what can happen if proof of VAT being paid is not available. As I said earlier, buying a boat without proof of VAT being paid can lead to problems.

I would be out of my depth if I said with 100% certainty and this was a number of years ago, but I believe in this instance the boat was impounded for some period of time.
On talking with my colleague, we (she - she's half my age and has a far better memory!) believe the actual events were different from my suggestion in the earlier post (earlier post edited accordingly). We believe that the owner had to go and find proof of vat payment in order for the boat to be released with the "threat" being that it would fall due if this was not the case.

 

[SailorBill]

I would be out of my depth if I said with 100% certainty and this was a number of years ago, but I believe in this instance the boat was impounded for some period of time.
On talking with my colleague, we (she - she's half my age and has a far better memory!) believe the actual events were different from my suggestion in the earlier post. We believe that the owner had to go and find proof of vat payment in order for the boat to be released with the "threat" being that it would fall due if this was not the case.

I would not want to take the risk of my boat being impounded for any length of time. Period. It is not unheard of for foreign officials to interpret rules and regulations differently, and in any case they may have different rules, regulations and even agendas (especially in this age of revenue raising by near bankrupt nations). I would not want to get involved in a dispute with foreign officials in a foreign language, as I said earlier in this discussion. Therefore I would not buy a boat without a VAT receipt(s) unless an appropriate price reduction was made. Anyone that does so is taking a risk of problems somewhere down the line.

 

[SailorBill]

I am aware of a large Tarquin Trader that was impounded on one of the Spanish Costas as proof of vat couldn't be shown and it did end up in a very large bill for the owner. I only know as I read the paperwork trail for the boat.
EDIT to add: Can't remember if there was a large bill for the owner OR if he found the paperwork, but I do remember the boat was impounded over VAT issues and was eventually (several months I believe) allowed on her way once these issues were resolved.

Edit noted. Boat impounded for several months with maybe/maybe not a large VAT bill before the boat was released. A very scary prospect.

 

[Nautibusiness]

Real Risk or Nonsense - Does it matter?

I think that is the point Bill.
Regardless of if the risk is real or completely imaginary as Tranona suggests, why even worry about it when there are enough good boats on the market with keen sellers who have all the correct documentation?

 

[SailorBill]

I think that is the point Bill.
Regardless of if the risk is real or completely imaginary as Tranona suggests, why even worry about it when there are enough good boats on the market with keen sellers who have all the correct documentation?

Agreed.

 

[Tranona]

Daka, thank you for your post.

Tranona, I think Daka has sufficiently responded to your post directed at me.

You seem hell-bent on maintaining the status quo with several aspects of the marine industry (remember the various discussions about brokers?) I wonder why? What is your current or past connection to the marine industry?

Well I am afraid DAKA is wrong. It is not as simple as that. HMRC will want to see the Bill of Sale that showed you bought the boat outside the EU from a non EU resident, or that the boat had been out of the EU for some significant time and was not eligible for returned goods relief. Why do you think that HMRC are stupid and do not know the law?

As for boats being impounded by Spanish Customs - happens all the time as smuggling through Spain is a big problem. You (nor anybody else) knows the FACTS surrounding any seizure so just because you heard third hand that a boat was seized means absolutely nothing. There would be a perfectly valid reason why it had been seized.

As to why I keep on pointing out things is not because I am somehow supporting a "status quo" but just pointing out what the law is and where people are wrong in their understanding - as you have amply demonstrated. Just read the information that is freely available and then maybe you won't have to make up your own half baked ideas about what is going on.

 

[DAKA]

Well I am afraid DAKA is wrong. .

Just for clarity, I am happy to agree that Tranona knows more about the Law in this case than I do .

Its ironic really as in the past Tranona and I have argued for days on the Law knowing I was accurate and Tranona was arguing that the technical law wasnt a problem as no one took any notice of it.

Ironically this time the tables have turned in that Tranona is quoting the actual Law which in this case (from a boats Value point of view) is irrelevant because most buyers arnt prepared to look at a boat with questionable VAT history.

Tranona , I am happy to accept you are right regarding the Law on VAT.

Unfortunately that doesnt mean I am any more likely to buy a boat with dodgy VAT history than I am to import wacky backy .

I view both as possibly lucrative but an unnecessary risk easily avoided.

 

[Andymap]

Wow. Didn't expect so many responses!

The real issue here is one of resale value. My guess is that most first 'boaters' (or whatever the technical term is) would want some sort of finance. There aren't many players left in the market as we all know. Also, the main lender (with the best rates) are I guess, the most picky. If they refuse to lend because of a missing piece of paper, that will ring alarm bells. What looks like a good deal now, could be an expensive mistake if I decide to sell and have to reduce my price by 20%. It seems totally unfair that a single 5 year old piece of paper holds so much value. Even HMRC agree (but won't do anything to help).

Catch 22 I guess.

 

[DAKA]

Wow. Didn't expect so many responses!

The real issue here is one of resale value. My guess is that most first 'boaters' (or whatever the technical term is) would want some sort of finance. There aren't many players left in the market as we all know. Also, the main lender (with the best rates) are I guess, the most picky. If they refuse to lend because of a missing piece of paper, that will ring alarm bells. What looks like a good deal now, could be an expensive mistake if I decide to sell and have to reduce my price by 20%. It seems totally unfair that a single 5 year old piece of paper holds so much value. Even HMRC agree (but won't do anything to help).

Catch 22 I guess.

The really daft bit (as mentioned above for all sorts of reasons) is the scruffy 5 - 20 year old bit of paper doesnt even prove that VAT or Import duty isnt due a second or third time !

 

[Nautibusiness]

As for boats being impounded by Spanish Customs - happens all the time as smuggling through Spain is a big problem. You (nor anybody else) knows the FACTS surrounding any seizure so just because you heard third hand that a boat was seized means absolutely nothing. There would be a perfectly valid reason why it had been seized.

Not strictly true.
I heard first hand from the owner.
I was aboard the boat with the vendor, his skipper and his entire folder/s of paperwork.
I found a whole folder that was clearly relating to Spanish Revenue, the boat being impounded and through my Spanglish and the owner explaining the situation I say they did suffer a lot of spent time and discomfort for exactly the reason we are discussing.

First hand, not third hand.