Help needed on boat purchase & VAT

[Two Drifters]

Hello

We are getting frightingly close to becoming liveaboards full time :~) the house is under offer to great buyers and we are due to exchange in a few weeks - fingers and toes crossed.

We know what boat we want and we have a rough idea of the route we want to take.

The question I have is re UK VAT. If we buy a UK VAT PAID boat in the UK or Europe and then live on her and sail off into the sunset and out of European waters and do not return to the UK or Europe within 3 years do we really have to pay the VAT again??

Seems more than a little unfair to me.

Are there any loop holes??

If not then I am minded to buy the boat in say the USA with VAT not paid and then pay it in a few years when and if we come back to Europe.

The intention is to be gone for about five years.

And yes I will phone HMRC, but wondered if any of you good folks might have any first hand experience.

Thanks 2D

 

[macd]

The question I have is re UK VAT. If we buy a UK VAT PAID boat in the UK or Europe and then live on her and sail off into the sunset and out of European waters and do not return to the UK or Europe within 3 years do we really have to pay the VAT again??

First of all, good luck with the dream.

As to thorny old VAT, I presume you've read this:
http://customs.hmrc.gov.uk/channels...HMCE_CL_000289&propertyType=document#P73_8840

The scenario you describe is fairly academic, the bottom line being 'Who's going to know?' -- especially if your first EU port of call on your return is somewhere like the Azores or most of the rest of the EU. EU registered boat? EU citizens aboard: they won't care. Providing you don't fit their terrorist/drug smuggler/illegal immigrant profile, in most places you'll have trouble interesting them in your arrival at all.

Many EU citizens here (Turkey) have de facto exported boats yet don't worry one bit, even though it's no bother to hop into Greece and set the clock running again. Not quite so convenient for you, but you can reset your clock in French territories all over the place, from the Caribbean to mid-Pacific.

If the worst comes to the worst, it's your home we're talking about, and there are exemptions for that.

Nonetheless it is worth talking to HMRC about your particular case.

Tranona will no doubt be along later with his estimable half penn'orth, which is the next best thing to talking with the VAT man himself (and sometimes better).

 

[Tranona]

Yes, it is a theoretical possibility, but rarely hear of people "suffering" from that rule. The easiest way to avoid it completely is to become non resident then bring the boat back in as personal chattels. However "easy" is not necessarily easy to do in practice and usually the downsides of such a course of action are worse than the possibility of triggering off a potential tax liability.

Your suggested alternative of buying a boat outside the EU, particularly USA is usually a non starter, Not only do you have to pay VAT, but you need to get a CE mark before it can be used legally in the EU, or sold here. Like VAT there are possible exemptions, but not for EU residents unless the boat was originally built in the EEA or was in the EEA on a specific date, so back to the non-resident bit. Most US boats will not meet the CE requirements without extensive changes, particularly to such things as engines and generators, as well as approval of the design to set the category. Much easier on newer boats that are also sold in the EU or built here and sold there, but there are few of them and these tend not to be the ones that are available at the same low prices that non compliant boats are.

Another alternative is to buy a new boat and leave immediately so you get it free of VAT - there is a well established procedure for this which new boat sellers have to follow - and then pay VAT on a reduced value if and when you bring it back. Clearly that needs a bigger initial budget and will restrict the sort of boat you buy.

BTW, fairness never came into this. The returned goods rule applies to all goods, not just boats and the drafters of this crazy tax regime never really considered the implications of the rules on the tiny number of people who want to cruise in boats - or in a wider sense even the basic movement within the EU rules are impossible to meet. So we just bumble along doing the best we can!

 

[Two Drifters]

Wow - as always I am stunned by the speed and depth of knowledge from posts, thank you for taking the time to help.

Thank you. We will of course consult with HMRC but it is a huge help to have a starting point.