First Boat Advice Please (and VAT)

[SailorBill]

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.

You repeatedly write off any examples given and continue to beat the same drum over and over again. The fact remains that buying a boat with no proof of VAT being paid is risky (finance companies aren't daft) and could lead to problems in foreign ports and on subsequent re-sale.

I also note that you avoid answering my question relating to your current or past connection to the marine industry.

 

[Deleted User YDKXO]

Wow. Didn't expect so many responses!

Whenever the subject of VAT is raised on this forum the same old egos come into land
Yes you've got it right. Don't go there unless the boat has VAT documentation or if it hasn't, unless it's a bargain

 

[SailorBill]

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.

Thank you for clarifying.

 

[gjgm]

Got to ask you Mike.
You decide you want a 6m rib for £25k or so, and find one , five years old, full service etc, everything above board. Now, you wont but it bcz the VAT doc is missing?

 

[therealmrprice]

A few points to throw into the pot.

1. With one proviso I would have thought that the only VAT invoice that should be relevant to a private buyer is the one on first sale - as once the boat has entered the VAT "chain" there will either be no more VAT invoices issued if it changes hands between individuals who are not VAT registered or if it has gone through the hands of registered businesses it's will have been picked up by HMRC audits. And seeing a boat in non-marine business will get the VATman excited about all sorts of VAT issues, never mind just the buying and selling of it. The proviso would be if buying from a non-UK based individual I might want to do a bit more investigation on the chain of ownership.

2. Whilst no doubt many expensive boats are bought by UK registered businesses they will still pay VAT on first purchase, it's just that they will be able to reclaim it against their output VAT.

3. If this boat is 5 years old I think the administrators of the broker who went bust would have to have broken the law on retention of records to have incinerated them - which I therefore doubt very much they will have done, so that is bull****.

 

[Deleted User YDKXO]

Got to ask you Mike.
You decide you want a 6m rib for £25k or so, and find one , five years old, full service etc, everything above board. Now, you wont but it bcz the VAT doc is missing?

No, gjgm, I really wouldn't care too much about the VAT document when buying a £25k RIB but I would certainly ask for it. But we're not talking about £25k RIBS, we're talking about a 34 footer which I'm guessing is worth some £200k so the potential risk is much higher. I'm a serial used boat buyer (13 and counting) and, rightly or wrongly, I do insist on getting either the original of an invoice showing VAT or a notarised copy. There are plenty of other used boat buyers who, rightly or wrongly, think like me. Now we may all be wrong but we sleep better at night

 

[Nick_H]

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.

Given your earlier uncertainty on what had happened, and the documents being in a foreign language, are you sure that the owner was able to provide a bill of sale and a receipt from the private individual in the UK that he purchased the boat from, and that Spannish customs ignored this and impounded the boat anyway, because the only document they were interested in was a VAT receipt? Are you also sure that there were no other issues surrounding matriculation tax, duty free fuel, VAT on chartering, or bilges full of narcotics that contributed to the boat being impounded?

If you're not sure of these things, then it's not "exactly the reason we are discussing".

 

[gjgm]

No, gjgm, I really wouldn't care too much about the VAT document when buying a £25k RIB but I would certainly ask for it. But we're not talking about £25k RIBS, we're talking about a 34 footer which I'm guessing is worth some £200k so the potential risk is much higher. I'm a serial used boat buyer (13 and counting) and, rightly or wrongly, I do insist on getting either the original of an invoice showing VAT or a notarised copy. There are plenty of other used boat buyers who, rightly or wrongly, think like me. Now we may all be wrong but we sleep better at night

Well, you know the question was loaded.
I think it might be more fair to say the the OP asked about a (£200k ?) boat and as usual the whole topic became territorial, as always !
I would guess the majority of boats sold are not worth £200k, yet , I suggest, the "statements" on VAT on threads like this are infecting boat sales that neednt be.
FWIW, yes, I would be uncomfortable with missing docs on a higher value boat. I only suggest that people should be aware of the potential problems (and in 99pct of the cases, that is where we are), and make a sensible judgement. Statements along the lines of "run a mile" (I am not saying from you) I dont think are reasonable or constructive.

 

[Nautibusiness]

3. If this boat is 5 years old I think the administrators of the broker who went bust would have to have broken the law on retention of records to have incinerated them - which I therefore doubt very much they will have done, so that is bull****.

Doesn't help get them though!
If they couldn't give a flying wotsit about supplying them, they won't.

They tell you they have been incinerated to try to get you to stop asking... they can't be bothered.

 

[therealmrprice]

Doesn't help get them though!
If they couldn't give a flying wotsit about supplying them, they won't.

They tell you they have been incinerated to try to get you to stop asking... they can't be bothered.

Threaten to dob them in to HMRC and you might get a reaction!

 

[Nautibusiness]

Given your earlier uncertainty on what had happened, and the documents being in a foreign language, are you sure that the owner was able to provide a bill of sale and a receipt from the private individual in the UK that he purchased the boat from, and that Spannish customs ignored this and impounded the boat anyway, because the only document they were interested in was a VAT receipt? Are you also sure that there were no other issues surrounding matriculation tax, duty free fuel, VAT on chartering, or bilges full of narcotics that contributed to the boat being impounded?

If you're not sure of these things, then it's not "exactly the reason we are discussing".

In answer to that... apart from Narcotics... no! LOL!

I can't be sure as I can't actively remember.
But the boat was not on charter at the time or had been previously. The individual had bought it to charter then decided he needed to sell to raise funds which was why I was onboard looking through the paperwork that was there.
The paperwork was all correct and the large revenue folder ended with a figure amounting a total of the VAT value of the boat was declared as paid.

Please forgive the slight inaccuracies and fumbling... I am going from memory and not from a document in front of me. But it happened and caused the then owner a royal pain in the rear and a few sleepless nights.

I am not a legal eagle or pretend to understand tax law any more than a proactive UK broker of (generally) small to medium sized boats will do, but I can tell you what has happened in my experiences to the best that I can recall them.

AGAIN, this is all arbitrary as there are enough boats with good clean title and proof of vat payment to choose from. OR go and give the guy who doesn't give a stuff about paperwoirk a darn good kick in the maracas. Nonsense or not, it is the way it is.

 

[Nautibusiness]

Threaten to dob them in to HMRC and you might get a reaction!

All the administrator is interested is the creditors and debtors of the company. They don't give a stuff about a client that once upon a time bought a boat from the company that they are now (or already have) winding up.
They won't understand the filing system of that company and even if they did, they won't gain anything by going to the file and getting you the answer... it isn't anything to do with them.

 

[Deleted User YDKXO]

FWIW, yes, I would be uncomfortable with missing docs on a higher value boat. I only suggest that people should be aware of the potential problems (and in 99pct of the cases, that is where we are), and make a sensible judgement. Statements along the lines of "run a mile" (I am not saying from you) I dont think are reasonable or constructive.

No you're right and I'm probably a bit guilty of being black and white on this issue. If you do buy a boat without VAT documentation or other title documentation, with a bit of legwork, it is possible to reconstruct the document trail. I once bought a Princess 470 in Germany and I made the mistake of completing on the sale on a promise by the broker that the documentation would be forwarded after the sale. Of course when the documents came, they were incomplete and photocopies. To cut a long story short, I ended up engaging the marine lawyors, Ward & McKenzie to sort it out. One of their lawyors had to travel to Germany, visit the 2 previous owners of the boat in order to extract the remaining documents and where originals weren't available, go to a local lawyor to notarise the photocopies. Took several months and cost a few bob but I did get a notarised copy of the original invoice showing VAT paid in Germany and sufficient documentation to register the boat in the UK. My purpose in doing all this, rightly or wrongly, was because I thought it would maximise the value of the boat when I eventually sold it in the UK. This is not a process I want to go through again though which is why I'm so picky about documentation now

 

[therealmrprice]

All the administrator is interested is the creditors and debtors of the company. They don't give a stuff about a client that once upon a time bought a boat from the company that they are now (or already have) winding up.
They won't understand the filing system of that company and even if they did, they won't gain anything by going to the file and getting you the answer... it isn't anything to do with them.

Sorry but that is incorrect. Administrators are regulated and have to give a stuff about retaining records, not least for HMRC purposes. I don't disagree that they will not be helpful, my point was simply that they will not have incinerated the documents. Depending on when the administration happened the odds are the documents will by now have been passed on to a liquidator but they will still exist in deep storage somewhere, they will be logged and so, in theory and no doubt for a fee, they should be accessible.

But life's too short!

 

[Nick_H]

The individual had bought it to charter then decided he needed to sell to raise funds

So, to re-cap, it was a charter boat, the owner was short of money, the documents were in a foreign language, and you don't remember what happened, but none the less it's proof that foreign customs routinely impound boats from innocent owners purely because they don't have a VAT receipt!

Sorry, I know you were only trying to help by recounting a situation you'd been involved in, but the devil's in the detail with all this stuff, and offering up hazy recollections as proof isn't going to help anyone.

 

[Tranona]

You repeatedly write off any examples given and continue to beat the same drum over and over again. The fact remains that buying a boat with no proof of VAT being paid is risky (finance companies aren't daft) and could lead to problems in foreign ports and on subsequent re-sale.

I also note that you avoid answering my question relating to your current or past connection to the marine industry.

As the subsequent posts from Nautibusiness show, it is not as straightforward as you seem to think - partly because he can't remember the details and then it appears it was a charter boat. That is why you need to know the FACTS of the case. There will be a reason why the authorities investigated and it will create problems if there are things that need investigating to establish the facts. Boats are impounded every day of the week all over Europe, mostly for good reason. However that reason is unlikely to include a straight forward UK owned boat where the Bill of Sale clearly shows that the transaction took place in the UK, which is what we are talking about here.

So, I am not "writing it off" - just saying that on the information given such cases are not relevant. If somebody posted that their boat had been impounded when it was a UK boat, owned by a private EU resident, purchased in the UK from another private UK resident then it would be of interest.

In the case of Nautibusiness example we don't know who owned the boat, who it was bought from, where the transaction took place, what the problem was, and how it was resolved. From the information given not even sure it was a private pleasure boat as it was used for charter. So, please tell me how any of this case is relevant to what we are discussing here? The only common factor is that it was a boat and there was a problem with VAT.

Don't know why you keep on about my "connections" with the marine industry as if I somehow are trying to say things that are not true. If it helps you I own a boat that I bought new in 2001 for charter. It was run through a Greek management company which reclaimed the VAT as it was a business asset. When I finished chartering it and title was transferred to me personally I paid VAT on the value agreed with the Greek customs, and have a VAT receipt from the management company showing the VAT I paid. The boat is UK registered and is now in the UK. Any VAT issues will be the responsibility of the Greek customs, not HMRC.

I spent a lot of time and effort ensuring that I understood the VAT rules, because before 2002 the Greek rules were different from the rest of the EU, but brought in line in that year. So, important for me to know what was what to ensure that I kept within the law. I much prefer to do things based on sound knowledge and advice rather than make things up.

I know you can't do anything about the misperceptions that exist, but at least in the aspects of the problem where it is quite clearcut please stick to the facts. If you don't know what they are, don't guess, but read the two sources HMRC VAT notice No8 and the RYA/HMRC FAQ sheet which explains in more detail how the rules operate in respect to privately owned pleasure craft. However, don't expect to see much about VAT in respect to non private boats or schemes which are designed to enable people to minimise or avoid paying VAT, although it is these (along with imports) that give rise to the disputes. You are into territory that does not normally concern "ordinary" people and where VAT experts earn their crust.

 

[shaunksb]

Oh dear...

Oh dear...


this thread has got me worried now.

I recently bought a second hand car but I have not got the original VAT receipt just the registration document and a bill of sale.


I know that the rules on VAT apply to cars as well as boats.


I was planning to go to France next summer too!


First thing in the morning I'm off to HMRC to 'fess up and pay them off...




________________________

 

[SailorBill]

From the HMRC website: http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&id=HMCE_CL_000289&propertyType=document#P155_19668

Section 4.2 :

What documents will be required to provide proof of the VAT status on a used vessel?

EU residents should only use a vessel in the Community if it is VAT paid or ‘deemed’ VAT paid. Documentary evidence supporting this should be carried at all times as you may be asked by customs officials to provide evidence of your vessel’s VAT status, either in the UK or in other Member States. Documentary evidence might include:

original invoice or receipt
evidence that VAT was paid at importation, and/or
invoices for materials used in the construction of a ‘Home-Built’ vessel.

And in the last paragraph :

If you are buying from a business that does not charge VAT on the transaction or from a private individual in the EU and the seller states that VAT has previously been paid on the vessel, you should obtain evidence from the seller that VAT has previously been accounted for.

 

[Nautibusiness]

So, to re-cap, it was a charter boat, the owner was short of money, the documents were in a foreign language, and you don't remember what happened, but none the less it's proof that foreign customs routinely impound boats from innocent owners purely because they don't have a VAT receipt!

Sorry, I know you were only trying to help by recounting a situation you'd been involved in, but the devil's in the detail with all this stuff, and offering up hazy recollections as proof isn't going to help anyone.

Lol!
Pretty much... realised how hazy the more I tried to remember, but by which time I had well and truly opened my gob.

Suffice to say that at the time of the Spanish customs involvement it was privately owned and not yet coded for charter... that was done at a later date and in the uk so irrelevant.
And suffice to say the boat was impounded until "whatever"the authorities were looking for had been resolved at the time and hassle of the innocent owner.
....wasn't narcotics though... got a different equally hazy story there, but that is for a different thread!

 

[SailorBill]

Further to my previous post #98, from the same HMRC document :

4.4 VAT Avoidance Schemes

HMRC are aware that VAT avoidance schemes are marketed in the pleasure craft sector. The schemes typically involve artificial leasing or chartering arrangements under which the user acquires a new pleasure craft which is claimed to have ‘VAT paid’ status while, in reality, paying no VAT (or a minimal amount of VAT).

If there is evidence to suggest a vessel has been purchased through such a scheme, HMRC may investigate with a view to recovering any unpaid VAT. It is also possible that interest and penalties may be charged in relation to any unpaid VAT.

Evidence might be what - lack of a VAT receipt perhaps?