HMRC U-turn on tax on returning boats

[Seven Spades]

Funny, I notice a profound lack of gloating from the usual Brexit supporting voters on this topic, about how what a win it was and good things are going to be. Keeping their heads down, are they?

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Also it is not all bad news, somethings are better other are worse. Anyone wanting a new boat to keep in the med can do so without having to pay any VAT at all which is a win. Not being able to bring it back is a loss. Most are worse for yachtsmen.

 

[jordanbasset]

Also it is not all bad news, somethings are better other are worse. Anyone wanting a new boat to keep in the med can do so without having to pay any VAT at all which is a win. Not being able to bring it back is a loss. Most are worse for yachtsmen.

Yes but if you do that you can only use it for 90 days out of every 180

 

[Paddy Fields]

Yes but if you do that you can only use it for 90 days out of every 180

Yeah, so it benefits the ultra rich, ie who will be able to buy a new boat without VAT, and be able to afford to keep it in Europe while only using it occasionally, and who probably won’t have the time to flip it in and out of the EU to reset the VAT clock, and so will pay someone else to do it.

 

[Chris_Robb]

Yeah, so it benefits the ultra rich, ie who will be able to buy a new boat without VAT, and be able to afford to keep it in Europe while only using it occasionally, and who probably won’t have the time to flip it in and out of the EU to reset the VAT clock, and so will pay someone else to do it.

Think of it this way, Paddy, you will have more time to plant your potatoes

 

[syvictoria]

Think of it this way, Paddy, you will have more time to plant your potatoes

From Britannica: Paddy, also called rice paddy, small, level, flooded field used to cultivate rice in southern and eastern Asia.

Try harder...

 

[Chris_Robb]

From Britannica: Paddy, also called rice paddy, small, level, flooded field used to cultivate rice in southern and eastern Asia.

Try harder...

Possible to Potatoes would rot there?

 

[Poignard]

Praties?

 

[goeasy123]

You'll like this segue .... Talking of Paddys and getting back to the subject in hand.

I spoke to a fellow recently returned from the Caribbean due to C-19. He tells me that, in response to HRMC’s statement, one of the Dublin marinas is offering UK owners deals to base their UK VAT paid boats with them to 1) maintain union goods status and 2) avoid the UK VAT charge and 3) to avoid the shortened 3 year RGR limit HMRC will apply. He’s going to take it.

He said there is consensus growing amongst British owners that frequent the Caribbean that this is a good way to go.

 

[Chris_Robb]

You'll like this segue .... Talking of Paddys and getting back to the subject in hand.

I spoke to a fellow recently returned from the Caribbean due to C-19. He tells me that, in response to HRMC’s statement, one of the Dublin marinas is offering UK owners deals to base their UK VAT paid boats with them to 1) maintain union goods status and 2) avoid the UK VAT charge and 3) to avoid the shortened 3 year RGR limit HMRC will apply. He’s going to take it.

He said there is consensus growing amongst British owners that frequent the Caribbean that this is a good way to go.

1 is correct, 2 and 3 are not necessarily correct.
In his case he should be protecting his EU Vat capability and is doing the right thing.
Avoiding UK VAT Charge - yes you would think that if you follow the advice by the RYA.
What they have not said, is that although there is the usual 3 years exemption to returning and not paying vat again, there are also a device used for years called "Special Circumstances" which allows you to claim "waiver" at customs discretion for returning a yacht at any time after that date. This Waiver has never been refused to yachts a) returning under same ownership, b) have not hade major improvements done and c) not applied for a refund of duty at any time.

This has been in operation for as long as VAT has existed and comes under the RGR Rules. Yachts returning on the deck of a ship have used this doing a short declaration on the import clearance form. This is done by a customs broker on their behalf. Yachts returning on their own bottom have also been subject to these regs - but have for practical reason been waived in with just the completion of a C1331 form - the kind of form we will now need to get used to.

There have been a lot of misleading statements made about boats returning under same ownership, they should not have a problem. Where there is a problem at the moment is for anyone who boat a yacht both UK and EU Vat paid, unless it has been back to the UK during this ownership period - WILL Have to pay VAT again.

The CA is taking a view that we dont want any modifications of the current law which has worked well for years. We therefore need rules that say when yachts are deemed exported, as the HMRC seem to think the boat was exported when it left the UK - therefore giving a night mare to a new owner. We are campaigning for a simple line in the sand of the 31st December 2020 for the moment of Deemed export - until that point they are in free circulation in the European Customs Territories - aka the Single Market.
Take not of the wording on the description of goods moving in the EU Customs Territories.

“Goods in movement within the EU are termed as being dispatched upon leaving the state of origin of the goods, and as arrivals when entering the member state acquiring them. The use of these terms distinguishes single market trade from international trade with third countries - such as countries outside the EU, where the terms import and export apply. "

Note the absence of the word exported from the regulations. It is this key point that should allow us to convince the HMRC of taking a simple route of Status Quo - without the need for any studip one years Grace period - which is in any case useless if your boat is in Greece. I do not know what angle of objection the RYA are using, but it appears just to be acting as the HMRC mouth piece and not actively working to completely scrap every that's been said so far - which is still not law - and I know are papers are with the Policy desk now and are being looked at.

The old saying here is Keep it Simple (Stupid) KISS. the stupid of course in not PC now. And the revenue can easily do this.
I will post a questionnaire that I prepared for HMRC and which they dutifully filled in - which draws out what is going to happen if we do nothing!

 

[Chris_Robb]

Annex A

Questionnaire on Real Life Situations – HMRC response in YES/NO column.

Situation of yachts and ownership​	Where Vat was paid​	Location now​	YES/NO​
1. Yacht left UK Shores in 2010. It may return to UK under same ownership any time after 31/12/2020	UK​	Greece​	Yes. Subject to time limits
2. Yacht left UK shores in 2010. In 2015, it was sold in Greece to another UK citizen/resident, as Vat paid. It may return to UK under same ownership any time after 31/12/2020	UK​	Greece​	No. VAT RGR conditions are not met
3. Yacht left UK shores in 2010, was sold in March 2019, in France to UK citizen/resident. It may return to UK under new ownership any time after 31/12/2020	UK​	Greece​	No: as above
4. Yacht left UK shores in 2010. In 2018, it was sold to another UK citizen/resident as Vat paid. It may return to UK under same ownership any time after 31/12/2020	UK​	Greece​	No: as above
5. Yacht Purchased new in France in 2015. It may return to UK under same ownership any time after 31/12/2020	France​	Greece​	No – Goods had not previously left UK
6. Yacht Purchased new in France in May 2018. Now sold to UK resident in May 2020	France​	Portugal​	No – Goods had not previously left UK or EU.
7. Yacht Purchased second hand in France in 2012. It may return to UK under new ownership any time after 31/12/2020	France​	Spain​	No. Goods had not previously left UK
8. Yacht Purchased second hand in France in May 2018. It may return to UK under new ownership any time after 31/12/2020	France​	Spain​	No. Goods had not previously left UK or EU + VAT rules are not met
9. Yacht purchased second hand in France in March 2018. It may return to UK under new ownership any time after 31/12/2020	France​	Greece​	No. as above
10. Yacht Purchased in UK in May 2019. It may return to UK under the same ownership any time after 31/12/2020	UK​	Greece​	Yes – Subject to time limits
11. A Yacht belonging to an EU citizen, who is resident and working in the UK – will they be treated as if they were a UK Citizen?	France​	UK​	Goods not being imported. Owner will need to show evidence of goods in UK at end of TP + VAT being paid in UK or EU.

1 and 10 fall under the standard RGR rules of the past - where they can return within 3 years of EXPORT. We have asked them to confirm that Special Circumstances are still available (they have never said that was going) and that it WILL be operated with the same level of discretion as previously been applied by CUSTOMS.

the rest - This all falls into the trap that the HMRC are incorrectly determining the date of export to the EU as when the vessel originally left the EU - see post above for definition of movement in and around the EU (Single Market) - thus making any new owner pay tax again as not the original exported. This all fall under the headings of Double Taxation AND Retrospective taxation - and there are international treaties on this.

There will be - if funding can be found - an application for judicial review made..... This of course will force HMRC to reconsider their position, even if it gets no further that a "Pre Action Letter"

 

[Paddy Fields]

There will be - if funding can be found - an application for judicial review made..... This of course will force HMRC to reconsider their position, even if it gets no further that a "Pre Action Letter"

Or will it be a case of someone fighting a case through the courts in order to get a precedent set?

Is RGR “special circumstances” actually in the law, or is it just a case of HMRC being relaxed in applying the law?

 

[nortada]

Or will it be a case of someone fighting a case through the courts in order to get a precedent set?

Is RGR “special circumstances” actually in the law, or is it just a case of HMRC being relaxed in applying the law?

To try to force, what is a concession into law could have the opposite effect.

HMRC digging the heels in, removing any concessions and firmly apply the law as it stands.

Rather a case of shooting oneself in the foot.

Let sleeping dogs lie say I.

 

[Irish Rover]

Or will it be a case of someone fighting a case through the courts in order to get a precedent set?

Is RGR “special circumstances” actually in the law, or is it just a case of HMRC being relaxed in applying the law?

I'm not sure if you call it "the law" but here's what the latest notice from HMRC says

Pay less import duty and VAT when re-importing goods to the UK and EU

Specifically
Time limits for returning goods

The goods must be returned no later than 3 years after they were exported in order to get this relief. We may be able to waive this in special circumstances such as:

• specialised goods returning to the UK from long-term hire or loan agreements outside the UK and EU
• building equipment or machinery returning to the UK after use in capital projects outside the UK and EU
• exhibition goods returning after long-term display or storage outside the UK and EU
• collectors’ or heritage items originally manufactured in the UK or EU and returning from overseas after re-acquisition by a UK dealer or investor, for example collectable items of furniture or ceramics
• professional and personal effects returning with returning UK or EU expatriates
• goods owned by Crown Servants returning to the UK after their postings overseas, the time limit for Crown Servants is currently 6 years, Crown Servants include:
  • diplomatic staff
  • armed forces
  • embassy
  • consular personnel

Contact the National Import Reliefs Unit for more information on these special circumstances.

 

[goeasy123]

Chris,

I agree with everything you say in #269/270. You only address the interests of boat owners and not the UK marine industry. HMRC's position w.r.t. to all the rules will damage UK businesses much more so than the impact on a few sailor citizens. Also it will reduce tax revenues far beyond anything they might get from returning owners. HMRC are shooting themselves in the foot and shooting the industry in the head. Here is why:

Post Brexit the UK and EU27 will have almost identical rules. While they do so a private buyer or seller of boats and related services would be advised to spend their money in the EU27. UK businesses will suffer. Do I need to explain why?

The purpose of my previous post (#268) is to point this out... even to the extent that EU27 businesses (like the marina I mention in Dublin) are taking active advantage of HMRC's decision. People are clearly buying it.

I had lunch recently with a senior Spanish customs official. He understood the issue better than me. While he was not at liberty to say exactly what the Spanish authorities might do, he was clear that they would act to help Spanish business take advantage of the situation.

The best way to solve the industry problem is to scrap multi-VATing, TI and RGR altogether. Coincidentally, this is also a better way to solve the problems faced by boat owners. WIN-WIN instead of LOSE-LOSE.

You're going to get a lot further moving HMRC's position if it damages industry AND REDUCES TAX REVENUES than if we only push the inconveniences for few sailors.

There is more than one way to skin a cat. The CA is in an excellent position (better the RYA) to make the case with 6000 members and industry relationship to reference.... and Mr Bickerstaffs' relationship with and evidence from the EC.

Do you not agree?

 

[Graham376]

I'm not sure if you call it "the law" but here's what the latest notice from HMRC says

Pay less import duty and VAT when re-importing goods to the UK and EU

Specifically
Time limits for returning goods

The goods must be returned no later than 3 years after they were exported in order to get this relief. We may be able to waive this in special circumstances such as:

• professional and personal effects returning with returning UK or EU expatriates

Whilst someone returning from several years circumnav may be deemed an expatriate, UK residents wishing to bring their boats back from EU are not.

 

[nortada]

Chris,
I agree with everything you say in #269/270. You only address the interests of boat owners and not the UK marine industry.

The interests of owners/customers and the industry are the same.

No customers = no industry.

 

[goeasy123]

The interests of owners/customers and the industry are the same.

No customers = no industry.

Absolutely.... damaged UK industry means poorer service for owners.

Two problems, one solution. Scrap the rules.

 

[nortada]

Absolutely.... damaged UK industry means poorer service for owners.

Two problems, one solution. Scrap the rules.

Rather than scap anything, why not just keep the status quo?

 

[greeny]

So, same subject, different object.
What if I want to take my Portuguese car which is vat paid in Portugal, back to the uk and matriculate it there after January. Is vat payable again?
And same question, vice versa with a British car brought to Portugal (or any other EU country) and matriculated. Is that liable for vat a second time too?
In theory I guess the same rules apply?

 

[Chris_Robb]

So, same subject, different object.
What if I want to take my Portuguese car which is vat paid in Portugal, back to the uk and matriculate it there after January. Is vat payable again?
And same question, vice versa with a British car brought to Portugal (or any other EU country) and matriculated. Is that liable for vat a second time too?
In theory I guess the same rules apply?

A car is only allowed 6 months on TI. I have not looked in detail at this. Cars are more complex as there are also different rates of duty under that VAT that are paid. I know the Greeks started to enforce this a few years back, but have no idea whether this came to anything.