how does the VAT/TAX work

[lanerboy]

When looking through boats to buy I have been completely ignoring the ones that are NOT tax paid, so my question is how does it work if I wanted to buy a boat that was NOT tax paid

Would I I pay the tax in to the country I buy it from possibly Italy, Spain etc before I brought it back or do I have to pay the vat when it gets to the UK to the UK vat man

cheers

 

[fergie_mac66]

Buy boat. Then Dick Turpin will turn up and say stand and deliver

 

[volvopaul]

I was going for a v48 in Guernsey a while back, simple to bring back to uk and present invoice to vat office where they then put on the mask and say stand and deliver our 20% without even saying please.

I do wonder how long it would take to be caught if one didn't own up to keeping a boat in eu waters and not paying the tax man for the privelege .

How about setting up lanerboys charters, bit delboy I know but can be a legit way of not paying the tax, just a few fishing trips to lulworth and back should do the trick.

As ever our good old "jfm" is the man to fully answer this.

 

[lanerboy]

How about setting up lanerboys charters, bit delboy I know but can be a legit way of not paying the tax, just a few fishing trips to lulworth and back should do the trick.

As ever our good old "jfm" is the man to fully answer this.

LOL I think I will wait and see what JFM has to say as I only have 1 fishing rod

 

[Tranona]

When looking through boats to buy I have been completely ignoring the ones that are NOT tax paid, so my question is how does it work if I wanted to buy a boat that was NOT tax paid

Would I I pay the tax in to the country I buy it from possibly Italy, Spain etc before I brought it back or do I have to pay the vat when it gets to the UK to the UK vat man

cheers

When a boat is offered not VAT paid, it is usually because it is owned by a VAT registered entity and VAT has been reclaimed by the business (for example a commercial charter boat). When it is sold to you then the seller will have to account for VAT so will add it to the price you agree ex VAT. So when making your offer you need to add the percentage to get to the price you will actually have to pay. The reason it is offered ex VAT is because the buyer may be another VAT registered entity which is buying it for business purposes and can reclaim the VAT, or a purchaser exporting it outside the EU. It may also be because the owner has avoided paying VAT by exporting the boat, so it would be treated as an import if brought into the EU.

You need to establish the exact status of the particular boat to determine if you will be responsible for payment or the seller. It is probably better to agree to the seller accounting for the VAT so you get a commercial invoice. If you do settle direct with customs (in the state where you buy the boat) you will get a receipt from them. Makes sense to take professional advice once you have knowledge of the exact status, and a good broker should do this for you.

 

[MapisM]

The reason it is offered ex VAT is because the buyer may be another VAT registered entity which is buying it for business purposes and can reclaim the VAT, or a purchaser exporting it outside the EU.

Not that it change the logic of what you said, but shouldn't the selling company invoice the boat with zero-rate VAT when dispatching within the EU, hence leaving to the buying entity the VAT payment upon import in the destination Country?
In other words, shouldn't the OP be able to buy an ex-VAT boat from a non-UK Country without paying any VAT upon purchase, and then pay it to HMRC upon import?

 

[Tranona]

Not that it change the logic of what you said, but shouldn't the selling company invoice the boat with zero-rate VAT when dispatching within the EU, hence leaving to the buying entity the VAT payment upon import in the destination Country?
In other words, shouldn't the OP be able to buy an ex-VAT boat from a non-UK Country without paying any VAT upon purchase, and then pay it to HMRC upon import?

Only if the buyer is VAT registered I would think. VAT is payable in the state where the transaction takes place. No doubt there are ways round it, but not for a private person without the involvement of a VAT registered entity. For many transactions there is unlikely to be much advantage in paying VAT in one state rather than another.

 

[jfm]

S, there are so many possible facts behoned "not vat paid" status of a boat that it is not sensible to list them here. I do nopt agree Traona's first paragraph if you are looking at Mediterranean boats for example, which you are.

The ONLY way to deal with this is find out the exact circumstnaces of the particular boat in question. Then work out what your VAT obligations and choices are. As I say, I cannot write it all out here. But here are a few examples of the back story of used boats sold as "not VAT paid"):

1. The boat could be owned by a VAT reg business as Tranona says. This is common in UK, much less so in Fr and It. Broadly speaking you have to add 20% cash to the price you will be paying

2. The boat could be a TI boat owned by a non EU resident. This is very common in IT, Fr and Spain. In this case you will have to add some cash VAT payment to your purchase price but the amount depends where the boat is, its size, and whether you insist on bringing it to UK. For example it could be 10% now, or 10% deferred a couple of years, or nothing (but in that last case the boat will be non VAT paid when you sell it so you get a smaller price, though that's ok because you paid less).

3. The boat could be in a zero VAT arrangement (it will usually be coded and offered for charter). This is v common in France and somewhat common in IT. Not in Spain. in this arrangement you do not pay any VAT when you buy the boat. You just pay the non-VAT-paid price and you own the boat. There are some complications in that if you cease the boat's coding or cease offering to charter it, the boat will be subject to a VAT charge if it is physically in IT and Fr, for example. This is complex and way beyond what I can write here. The boat will be non VAT paid when you sell it so you get a smaller exit price, though that's ok because you paid less

4. The boat could be smuggled. Unlike all the above this isn't legal so you need to check it out carefully!

5. The boat could just be in a non VAT location like Turkey, CI, Gib, Montenegro, etc. You pay the price without VAT but then you have to pay VAT in the EU state you take the boat to. There are many complexities/possibilities around this eg some EU countries will allow you to import the boat VAT free in certain circumstances (eg France, if the boat is comm reg and other things)

In summary you have to find out the details of the boat in question and work from there.

 

[lanerboy]

Thanks John for clearing my question up, obviously I cannot do anything until my boat sells but in your opinion is it worth considering boats in the med mainly France, Spain and maybe Italy that are not tax paid or would I just be better to look for a boat that is tax paid and avoid all the agro.

Also if I was to pay the tax on a non vat paid boat in the country of purchase would this save me any money or do I need to add 20% to the buying price regardless of country, what I suppose I am asking is would the vat still be 20% in the countries I mention like it is in the UK

Cheers Shawn

 

[Tranona]

Also if I was to pay the tax on a non vat paid boat in the country of purchase would this save me any money or do I need to add 20% to the buying price regardless of country, what I suppose I am asking is would the vat still be 20% in the countries I mention like it is in the UK

Cheers Shawn

Most are around 20% - France 20%, Germany 19%, Spain 21%, Italy 22%, Croatia 25% as examples. List published by the EU regularly and available on line.

The actual tax you pay may vary according the type of transaction - for example if the boat is being imported from outside the EU it may be based on a customs valuation, and valuations may vary from country to country. If it is straightforward sale then the amount is based on the invoice price.

As already suggested you need to know the exact status of the boat to determine what the tax will be.

 

[MapisM]

would the vat still be 20% in the countries I mention like it is in the UK

Nope, in IT it's 22% (and IIRC, 21 in ES and 20 in FR).
Not deal breaker differences, anyway...

PS: Ops, beated to that!

 

[jfm]

in your opinion is it worth considering boats in the med mainly France, Spain and maybe Italy that are not tax paid or would I just be better to look for a boat that is tax paid and avoid all the agro.

No, whatever you do choose the right boat. Don't buy a manky boat rather than a nice one, based just on VAT status. Choose the boat you like and only then worry about the VAT. You might have to pay 20% on top (but that should be discounted into the price) or you might get lucky and find that you can pay less than 20%.

Remember, a non VAT paid might cost you 20% less then you have to pay 20% VAT. Meanwhile, a VAT paid boat costs you 20% more then might not be VAT paid or the sellers have lost the papers or whatever. THAT is aggro in my books!

Definitely just find the right boat (or shortlist of 3 boats) as step one

 

[lanerboy]

that helps loads thanks everyone for your advise much appreciated again

 

[Observer]

No, whatever you do choose the right boat.

<snip>

Remember, a non VAT paid might cost you 20% less then you have to pay 20% VAT. Meanwhile, a VAT paid boat costs you 20% more then might not be VAT paid or the sellers have lost the papers or whatever. THAT is aggro in my ...

So buying not VAT paid saves 4% on VAT paid price (at 20% VAT rate) cos you buy a £100k boat for £80k and then pay £16k VAT.

What's not to like?

;-)

 

[Whitelighter]

Except that if you really bought a £100k boat ex vat it would cost you £83,333 - not £80k

 

[theoldsalt]

I have just purchased a boat from Guernsey VAT not paid. I had to import the vessel and pay the VAT. I found that HMRC did not require evidence of the purchase price but were willing to negotiate on it's "value" for calculating the VAT. I now have an HMRC receipt for VAT supplied nicely laminated for safe keeping.

I have contact names and telephone numbers in HMRC for anyone that needs that information.

 

[jfm]

So buying not VAT paid saves 4% on VAT paid price (at 20% VAT rate) cos you buy a £100k boat for £80k and then pay £16k VAT.

What's not to like?

;-)

Oi Oi Oi! I was fully thinking when typing that of the classic maths fact that if you buy something at 16% off you have increase it by 20% to get back where you started, but I consciously just stuck to 20:80 maths to keep the text short Anyway hope all well with you guys!

 

[jfm]

I have just purchased a boat from Guernsey VAT not paid. I had to import the vessel and pay the VAT. I found that HMRC did not require evidence of the purchase price but were willing to negotiate on it's "value" for calculating the VAT. I now have an HMRC receipt for VAT supplied nicely laminated for safe keeping.

I have contact names and telephone numbers in HMRC for anyone that needs that information.

That's interesting to hear. Way back when, 1999 iirc, a friend bought a 40 ft nearly new boat in Jsy for something like £150k, then after a month or so of cruising he imported it to UK. Torquay was the port, iirc. HMRC (or C+E as they were then called) accepted a value significantly less than the price paid and gave him a VAT-paid pink receipt. So it's interesting to hear that 15 yrs later that still can happen

 

[benjenbav]

Oi Oi Oi! I was fully thinking when typing that of the classic maths fact that if you buy something at 16% off you have increase it by 20% to get back where you started, but I consciously just stuck to 20:80 maths to keep the text short Anyway hope all well with you guys!

Hahaha. I told someone the other day that, with a 20% VAT rate, the VAT element of the gross was 1/6 and they looked at me as if I'd farted in church and then told me it was 1/5. Not VAT advice just simple arithmetic. Sheesh, some people!

 

[Hurricane]

Oi Oi Oi! I was fully thinking when typing that of the classic maths fact that if you buy something at 16% off you have increase it by 20% to get back where you started, but I consciously just stuck to 20:80 maths to keep the text short Anyway hope all well with you guys!

Isn't it better that that when you factor in the depreciation over the period that you own it.
You only depreciate the boat's value and not the depreciation on the VAT
Or have I got my maths wrong?????