Grrr VAT Certificate...

macd said:
The issue would be whether the vessel had ever been exported from the EU. If so, VAT would be due on the 'event' of its reimportation.
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Ok, yes that's inline with my understanding. My boat was owned along its chain, by an Australian.... he did however, buy her in Spain, and kept her there, so it remains VAT paid! (not that its a big deal as a 1978 boat, and with the VAT receipt for purchase from new by the original owner, i'd be pretty unlucky if anyone tried to push their luck on VAT status!)
 
We recently bought a Gibsea 33, built in 2001 and sold to it's first owner by Dufour importers, Portway Marine of Totnes, a long defunct company. We have a complete paper trail of original Bills of Sale from new, plus original Certificates of Conformity, original Warranty cards etc. The boat was never exported to my knowledge. No-one though, has been able to turn up the original invoice proving VAT paid, though one of the Bills of Sale when sold second hand, states "VAT has been paid and is included in the purchase price". Nevertheless, the boat was in fantastic condition, had an outstanding surveyors report, and we went ahead regardless, paying £32K (new price in 2001 was £64K). This may be a mistake and may limit it's saleability, but we'll cross that bridge when we get to it., I have tried various routes to find the original invoice raised in 2001, but it seems Portway closed years ago, and we cannot raise the early owners. The boat was bought through a broker, and the vendor, who has owned the boat since 2005, has sailed it many times to France, Holland and the Baltic without any problems. We will be sticking to the South Coast, so will have no problems, but as I say, it may put off any buyer down the line. Any chance we might get VAT proof confirmed by the VAT people this far on, or is it that necessary?
It seems there are many owners of older boats that don't have proof of VAT, but I would be interested to know if there is another route to try.
 
nicho said:
Any chance we might get VAT proof confirmed by the VAT people this far on, or is it that necessary?
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Doubtful. HMRC used sometimes to issue such papers, but hasn't done so for years.

One problem is that there is really no such thing as proof -- as opposed to evidence -- of VAT status. Just because it was paid once does not mean is wasn't reclaimed (by, say, a VAT-registered entity or on export). Equally, HMRC will almost certainly possess no papers showing that VAT has been paid on a particular boat (or a particular anything else): VAT is paid to them on the bottom-line figure of a VAT return; the transactions that lead to this figure are not itemised. (It's also relevant that VAT is never paid on things but on VATable events, such as purchase.)The main exception to this would be in the case of a vessel on which VAT was paid on import, which would generate a HMRC receipt. But, yet again, this is evidence rather than proof, since the VAT could conceivably have been claimed back again.

Great system, eh?
 
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This has come up time and again, despite a number of scare stories no magazine or forum its has ever been able to point to a single case of a private individual ever being asked for VAT. There have been a few cases of almost new very high value yachts being caught when deliberately trying to avoid VAT. My hunch is that as well as it being an urban myth, a number of brokers try to use it as a reason for using them rather than a private sale, it gives them a USP.
 
sailorman said:
built 1979in GB, no vat paid
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Not exempt - but "deemed VAT paid" under the 1992 transition arrangements. Different things and you would need to show its age and proof that it was in the EU in 1992. Some states issued formal paperwork to confirm this status as did HMRC for while until they realised that a boat can become liable for VAT in certain circumstances even if it met the transition requirements at the time.

Important to remember that VAT is not an asset tax that is one off, but a transaction tax to liability is primarily based on the nature of the transaction involving the asset, not the asset itself.
 
Tranona said:
Not exempt - but "deemed VAT paid" under the 1992 transition arrangements. Different things and you would need to show its age and proof that it was in the EU in 1992. Some states issued formal paperwork to confirm this status as did HMRC for while until they realised that a boat can become liable for VAT in certain circumstances even if it met the transition requirements at the time.

Important to remember that VAT is not an asset tax that is one off, but a transaction tax to liability is primarily based on the nature of the transaction involving the asset, not the asset itself.
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the wording on my letter from Oyster Brokerage
[That non-VAT boats that were in the EU waters on 01/1993 are counted as VAT Exempt]
i have a sworn statement from a Notar that she was in Zealand on that date
 
Lazy Kipper said:
This has come up time and again, despite a number of scare stories no magazine or forum its has ever been able to point to a single case of a private individual ever being asked for VAT. There have been a few cases of almost new very high value yachts being caught when deliberately trying to avoid VAT. My hunch is that as well as it being an urban myth, a number of brokers try to use it as a reason for using them rather than a private sale, it gives them a USP.
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Agree with that, but it is not brokers that are the problem as they have no special way of proving VAT. The only benefit of using a broker in this respect rather than buying privately is that the broker may make more effort to trace the original documentation and advise buyers of the possible consequences of not having it. However it is the owner's responsibility to keep the documents and if he does not have the original invoice (or HMRC receipt for a private import) there is no way of getting "proof" unless the original seller has a copy.

As already noted, VAT payments are not linked to individual boats and there is no independent record of payment. Even if payment is direct to HMRC as with an import, they keep no records either. VAT registered suppliers are required to keep records for 6 years, but only to prove that they have accounted for VAT correctly to HMRC, not necessarily to prove that they have charged it correctly on an individual transaction.

Just as an aside, in the early days of VAT the amount of information required on an invoice meant that it was impossible anyway to tie that invoice uniquely to a particular boat. Could just be "To supply of one XYZ 35 yacht £5000 + VAT @ 8% total £5400". Prior to 1998 there was no requirement to have any unique identity on a boat, nor even when there was an identity to quote it on the invoice!

Of course many boats do have good paperwork to tie everything together - builders certificate, Bills of Sale, registration, VAT invoices etc, but lots, particularly older boats don't, and there is no legal requirement for any documentation at all.
 
sailorman said:
the wording on my letter from Oyster Brokerage
[That non-VAT boats that were in the EU waters on 01/1993 are counted as VAT Exempt]
i have a sworn statement from a Notar that she was in Zealand on that date
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Their terminology is incorrect. Your notarised statement is the only thing of importance as together with evidence of when it was built is your evidence that it meets the requirements. The brokerage statement as well as being incorrect (the boat also had to be built before 1986) is of no consequence anyway. See the extensive explanation from HMRC on the RYA site.
 
I don't have the original invoice and I'm not going to worry about it. The boat was built in 1989 in the UK and has always been privately owned kept in the UK. The standard bill of sale states that the boat is sold free of encumbrances so any VAT problems are the vendor's. If a future buyer wants money off for VAT liability I will refuse but undertake to pay him if he is ever charged VAT for the boat. I reckon my money will be pretty safe.

VAT is about 17% of the gross so probably within the haggling range these days.
 
It is extremely unlikely that you will be asked for proof that VAT has been paid in Europe. That's because in most EU countries registration actually records the life history of a boat and all its transactions from registration, so it proves VAT status.

UK registration merely says: "We have a list of boats which claim to be British". There's no record of VAT status.

So HMRC notice 8 (google it) advises private owners "to carry evidence that VAT has been paid". Evidence is not proof. This includes the advice
"carry a Bill of Sale (if applicable and between two private individuals in the UK). Whilst this is not conclusive proof that VAT has been paid, it does indicate that the tax status is the responsibility of UK customs authorities.
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HMRC have been very helpful to private boats which have been told "only form T2L can prove your VAT status". This has recently occurred in Croatia, which used to have large numbers of UK registered boats which had not paid VAT in its waters. They were thus aware of the UK gap between registration and VAT status which arose when Croatia joined the EU. In Portugal a particularly diligent official was also aware of the weakness in UK registration procedures, and asked for T2L. I understand he's been told this is not the correct use of T2L.

Owners who must carry proof that VAT has been paid are non-EU registered boats which have EU residents on board (usually detected because they carry EU passport crew). Channel Island registered boats are often used by EU residents, and will routinely be checked that VAT has been paid, as will other non-EU boats with EU passports aboard.

Sure, when you're buying a boat, and the previous owner can't prove VAT status, try levering his price down. A confident owner will know the facts above, and won't be stirred. You may get away with frightening a non-VAT aware owner . . .
 
jimbaerselman said:
Sure, when you're buying a boat, and the previous owner can't prove VAT status, try levering his price down. A confident owner will know the facts above, and won't be stirred. You may get away with frightening a non-VAT aware owner . . .
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.... and I hope you are told to piss off in no uncertain terms! I have the (probably) daft idea that boat transactions should be win/win with honour and honesty on both sides.
 
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DJE said:
I don't have the original invoice and I'm not going to worry about it. The boat was built in 1989 in the UK and has always been privately owned kept in the UK. The standard bill of sale states that the boat is sold free of encumbrances so any VAT problems are the vendor's.
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Exactly. Errm, for disputes within UK, that is. Countries with law based on the Napoleonic code (much of the EU) have difficulties dealing with pieces of paper which aren't notarised, or perforated to a government standard which identifies the seller.
 
Threads like this make me go and dig out my vat receipts.
A piece of A4 with the details of the now defunct vendor plus the expected numbers etc.
Surely it's the work of 5 minutes to produce one that could not be disproved.
Not of course that I would ever advocate such a plan of action.
 
doris said:
Threads like this make me go and dig out my vat receipts.
A piece of A4 with the details of the now defunct vendor plus the expected numbers etc.
Surely it's the work of 5 minutes to produce one that could not be disproved.
Not of course that I would ever advocate such a plan of action.
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I'd rather argue that one isn't necessary than on oath admit that I'd forged a tax document.
 
nicho said:
I guess I'm not going to concern myself about it - never was really, just a niggle in the back of my mind. As I posted, I have full paper trail of Bills of Sale, one of which states the sold price includes VAT.
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You are right not to get too worried about it - however the statement on your Bill of Sale is meaningless. The BofS is evidence of transfer of title and nothing really to do with the financial aspect of the transaction. As Jim says its only value in respect of VAT is that it shows where the transaction has taken place. As it is the transaction that triggers of a VAT liability (if any) that is important. However although it indicates that any VAT issues are the responsibility of HMRC, it does not prevent another state from potentially claiming a liability if the boat then moves to another state, simply because not all states interpret VAT rules in the same way.

In practice, though, for most "ordinary" people customs are not interested in private leisure boats, particularly those of either low value or great age where both the chances of any irregularity are small and the tax value low. So, having all your other paperwork in line is usually enough to satisfy them.
 
I hate to alarm people, or contradict them, but I have had problems with the Dutch customs on this very issue.

They came on board when I was in Ost Vlieland and asked to see my Bill of Sale and proof of VAT being paid. I had an electronic (scanned) Bill of Sale on my laptop, and they were happy with that. On the Bill of Sale, the VAT number of the agent who sold it to me was given, together with the number of the original invoice (which I did not have with me). They were very unhappy about this, and kept on chasing me up by e-mail. I was abroad for six months, and could do little about it.

When I got back, I dug through the depths of my computer, and managed to dig up an eight year old Word document. I sent a PDF version to them, and they declared themselves happy with that.

I have absolutely no idea what might have happened if I couldn't have found it, and been stopped once again by the Dutch customs.
 
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