How do you prove that VAT has been paid?

PaulJ

PaulJ

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A friend is in the process of buying a 34y/o boat and has asked for proof that VAT has been paid on it because he will want to take it abroad. The seller bought the boat privately and has a Bill of Sale but nothing to prove that VAT was ever paid on it. There is no reason to suspect that VAT was not paid when the boat was built but it is not on the SSR or Part 1 and has probably never been out of the UK, however no documentary evidence is available. When entering foreign ports, it can sometimes be necessary to produce documentary proof that VAT has been paid....... Is there any way round this?

Paul
 
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If the boat is 34 years old (i.e. dating from 1982), then it is...potentially..."deemed VAT paid" by the tax authorities throughout the EU. It may well be that this is the reason for the lack of a VAT trail.

This is direct from HMRC:
Certain vessels that were in use as private pleasure craft prior to 1 January 1985 and were in the EU on 31 December 1992, may be deemed VAT paid under the Single Market transitional arrangements. As Austria, Finland and Sweden joined the EU later, the relevant dates for vessels in these countries are ‘in use’ before 1 January 1987 and moored in EU on 31 December 1994.

After this date there were no further transitional arrangements agreed by the EU Commission for subsequent EU expansions.

The following documents are useful to prove the age and location of the vessel:
For Age: Builders certificate; Marine survey; Part 1 Registration; Insurance documents.
For Location: Receipt for mooring; Receipt for harbour dues; Dry dock records.

I'm not sure precisely what the 'certain vessels' bit means, but it applies to most leisure boats.

If the present or new owner can come up with this evidence, there should be no problem. You might innocently point our to your friend, perhaps over a refreshing beverage he's paid for, that desktop pubishing has come on leaps and bounds in recent years ;)

Finally, the risk of being asked for evidence of VAT, though real, is very, very small for a vessel of that age.
 
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Your friend will be in no different position from thousands of other boat owners who do not have evidence of VAT. However it is a non issue. Suggest he reads the information on the RYA site. Nobody is interested in the lack of evidence particularly on an old boat like that.

You will hear all sorts of scare stories, but they are just that, stories. Concentrate on making sure the seller has good title and that the boat is sound.
 
...entering foreign ports, it can sometimes be necessary to produce documentary proof that VAT has been paid... Is there any way round this?

What McD said:
In ten years sailing around the Med we heard innumerable second, third and tenth-hand stories about this, but only met met/know of only three boats who were ever actually asked to produce such evidence; all three as a result of their being PIAs and having seriously p****d-off the relevant authorities beforehand.
You really don't need to worry about it; though if really concerned, it's not (so I've heard) that difficult to produce a believable VAT invoice of the correct era and then type/hand-write the applicable info onto it, before suitably distressing it in line with it's apparent age - check (Google) what the applicable VAT rate was at the date of the alleged sale as the rates changed.
 
I would suggest he contacted HMRC , with prove of the age of the boat and ask advise about getting an TL2 , problem sorted if he wanted to sail away from home waters ,
U.K. Waters , I wouldn't bother
 
Like Bob said, it really, really is a none issue. Never met anyone who has actually been asked to provide VAT paid on their boat. No one has ever asked for mine. There are two types of people who allegedly get asked for this sort of stuff: those who have made some official's life difficult and those who own a brand new boat sailing under a foreign flag, who are seen as likely to be trying some sort of tax dodge.
A 30 something year old boat will not even appear on the customs radar anywhere in the EU. The book value of such a boat will be tiny and the VAT yeild on it even smaller: it's simply not worth the hassle of issuing a demand for the tax. Even then, it isn't even a problem for the EU country you arrive in, as the transaction of the sale took place in the UK, thus making any putative VAT liability the business of the UK tax authorities, not those of the country you're entering.
The whole thing really is a none event.
 
There is no real need for a T2l as most states do not require it for visitors in private boats. HMRC will not do anything or provide any form of documentation regarding VAT on boats.
 
Tranona said:
There is no real need for a T2l as most states do not require it for visitors in private boats. HMRC will not do anything or provide any form of documentation regarding VAT on boats.
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HMRC will provide a T2L if you request one. Perhaps you are not including the T2L as a form of documentation regarding VAT?

I obtained one for use when I leave or return to Croatia. So far I have never needed it as, when asked, I produced the VAT invoice from when I bought the boat. If I didn't have that, or the T2L, I might find myself up the creek without a paddle. :(

Richard
 
That is peculiar to Croatia. No other state interprets EU rules in that way for boats arriving under their own steam. The RYA persuaded HMRC to allow issuing the form specifically because of the Croatia problem. Just not necessary for a UK based boat such as the one that is the subject of this thread.
 
Her is an extract from my letter to the RYA, dated 2013:

"RYA
Ensign Way
Hamble
SO31 4YA

Dear Sir,

Earlier this summer, whilst on passage from UK to Brest, I was approached by French Customs Officers at L'Aberwrach.

After inspecting my passport and ship registration papers, I was asked for proof that VAT had been paid on the original purchase price. The boat is an unexceptional 1979 built sailing cruiser. My response was that I had little with me but that is was an old boat and normally considered exempt from close scrutiny. After a few words with his colleagues the matter was not pursued. However the parting words were, as near as I can remember them:

“You know, you should carry your VAT papers - we can ask to see them”

I must stress that the exchange was very positive and the comment came across as friendly advice. This time.

Two points:

This exchange confirms that, at the very least, VAT accountability on old boats is a topic of conversation at some official level in France.

It begs the question as to what would happen if the matter were pressed. I am sure that such evidence I have would not pass muster. Many owners will have nothing at all to show."

I should carry proof of the age of the boat and evidence of its location at the times given.
 
Tranona said:
That is peculiar to Croatia. No other state interprets EU rules in that way for boats arriving under their own steam. The RYA persuaded HMRC to allow issuing the form specifically because of the Croatia problem. Just not necessary for a UK based boat such as the one that is the subject of this thread.
Click to expand...

I thought that the whole point of the thread was that the subject boat is to be taken abroad. :confused:

I've no idea whether "abroad" might include Croatia but to be forewarned is to be forearmed. :)

Richard
 
I recently discussed this with the RYA advisor, who said that the worse places to get asked is Faro in Portugal and Croatia, although very rare in Faro. She did advise me to get the TL2 form, and sent me one to complete, which I have and am now waiting for its return. She also stated that the TL2 is not prove of VAT paid, but some European countries believe it is and accept it.

I no nothing but what the experts tell me. I know nothing!!
 
Gentlemen, thank you for your responses and all the valuable information. I will pass it on to my friend ('not sure but it sounded as though macd may have guessed who he is?)......... "Abroad" - The plan at the moment will take the boat to Scandinavia and the Baltic and after that, who knows........

Paul
 
Tranona said:
There is no real need for a T2l as most states do not require it for visitors in private boats. HMRC will not do anything or provide any form of documentation regarding VAT on boats.
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To a point your right , in most cases VAT isn't asked for but it only take one job worth CO who want to pursue it and you could find your self with no end of a problem on your hand ,
Take a look here , http://www.sea-help.eu/SeaMagazine/de/54937
You need to translate the article has it in Germany , you will find yacht have been chained until VAT have been proved or paid plus fines ,
I not sure what the RYA is advising people on the phone but it clear on there site unless it been change that when cruising aboard you should carry prove of VAT .
The OP friend yacht won't be able to prove VAT paid , because the owner wouldn't had to pay VAT on a boat that age , so he next best option if he plain to sail aboard is to apply for a TL2 .
Off cause he could just sail off and take his change like many other do .
 
It is definitely NOT a non-issue and for all don't worry, non-issue merchants out there - it happened to me!! My boat was on the hard in Ipswich and when I returned to the marina there was a brown envelope awaiting me from HMRC. Several such envelopes had been issued to owners It was effectively a writ forbidding the boat to be moved until proof of VAT paid had been seen by HMRC. I had bought the boat as VAT paid but didn't get a certificate - OK, I should have insisted! I phoned HMRC and they said they would visit me at the marina. My Part 1 Certificate was accepted as proof of date of manufacture / 1st registration. But HMRC officials wanted absolute, quantifiable proof the boat was in the EU on 31 Dec 1994. Fortunately, I had faxed copies of marina bills from Estepona marina which I had retained when I cleared out the boat on purchase.,
I asked why the purge on yachts and HMRC responded there was a major 'push' on yachts along all of the south coast and up to Lowestoft as the yacht sectors had been identified as significant under-payment of VAT. I asked them for a letter to confirm my yacht was VAT exempt and it took a bit of wrangling to get HMRC to issue a letter as they said their normal policy was to only issue letters for yachts that were VAT paid rather than exempt - go figure!!!
 
Brit yachts arriving in Holland are likely to be boarded. Over the years I have been boarded 3 times. I have been asked for 'all papers', and 'proof of VAT' only. I carry all those docs.

I figured that arriving in darkness without calling CG at 12M appeared dodgy. It is probably what the bad guys do.

I suspect that although they ask for papers, they are sussing me/you out. Q. Is this yacht worth searching?

I should add that all officials have been pleasant, and upon leaving, have wished me happy sailing.
 
Boo2 said:
Sorry, what's a TL2 form ?
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A T2L document is used as part of a set of European Community documents when freighting goods between EU states and the UK HMRC advise that this document does not apply to leisure vessels. It is intended to prove that goods being traded within the EU and crossing borders qualifies to be traded internally. However, because Portugal and more particularly Croatia, have misinterpreted the meaning they have been demanding such a document as proof of VAT-paid status from visiting EU-flagged vessels.

Croatia has circularised all Italian harbour authorities (the document is on display in my marina office and in perfect Italian as everyone here who discusses it comments in surprise) that a T2L document will be required by all visiting EU-registered yachts to prove their EU community status. The RYA have posted a page on their web site on the situation: http://www.rya.org.uk/newsevents/news/Pages/DemystifyingCroatianrequestsforaT2L.aspx

As only shipping companies who are authorised to handle custom-relevant shipments can issue a T2L (now includes HMRC) it is bizarre and a distortion of existing customs regulations and also contrary to the spirit of open borders to expect a visiting yacht under free passage to possess such a document. This doesn't help when an official demands it because of a distorted interpretation passed down the chain of command - it can seriously spoil your day, if not your entire cruising plans.


.
 
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Bitterend said:
It is definitely NOT a non-issue and for all don't worry, non-issue merchants out there - it happened to me!! My boat was on the hard in Ipswich and when I returned to the marina there was a brown envelope awaiting me from HMRC. Several such envelopes had been issued to owners It was effectively a writ forbidding the boat to be moved until proof of VAT paid had been seen by HMRC. I had bought the boat as VAT paid but didn't get a certificate - OK, I should have insisted! I phoned HMRC and they said they would visit me at the marina. My Part 1 Certificate was accepted as proof of date of manufacture / 1st registration. But HMRC officials wanted absolute, quantifiable proof the boat was in the EU on 31 Dec 1994. Fortunately, I had faxed copies of marina bills from Estepona marina which I had retained when I cleared out the boat on purchase.,
I asked why the purge on yachts and HMRC responded there was a major 'push' on yachts along all of the south coast and up to Lowestoft as the yacht sectors had been identified as significant under-payment of VAT. I asked them for a letter to confirm my yacht was VAT exempt and it took a bit of wrangling to get HMRC to issue a letter as they said their normal policy was to only issue letters for yachts that were VAT paid rather than exempt - go figure!!!
Click to expand...

This is new - have you reported it to the RYA. When you say "several" envelopes that suggests not every boat, but only certain ones. The fact that your boat was not in UK on the qualifying dates suggests that they may have been targeting boats where there is a possibility that a VAT offence has occurred - that is most likely either a company owned boat or one that has spent some time out of the country.

They are probably right in saying that there is potential underpayment of VAT on boats, particularly those illegally imported or re-imported from outside the EU. They will have to show that a "chargeable event" has occurred before VAT can be charged.

An owner of a boat purchased from another UK citizen and a history of being kept in the UK (which is the vast majority of UK boat owners) has nothing to worry about, even if they do not have a VAT receipt. Lack of a receipt is not an offence - the offence is not accounting for VAT. The only way a private boat owner can commit such an offence is if he illegally imports a boat from outside the EU and does not pay VAT.

The "risk" of encountering problems with customs in other states, particularly the ones regularly visited by UK boaters is also tiny. Although some (particularly Dutch) may ask to see VAT proof, they cannot actually do anything about it if you do not have it. If you bought the boat in the UK, any VAT issues are the responsibility of HMRC. Carrying a copy of the Bill of Sale is wise (as advised by the RYA).

Not an ideal situation, but the consequence of the EU introducing a "rule" that is unworkable, and not actually translated into law in member states.
 
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