Import duty on a EU tax paid boat - a question

[Hurricane]

I have a friend here in Sant Carles who is currently negotiating on a new (to him) boat.
The vendor is a UK resident but is selling his boat which is currently berthed in Jersey.
My friend believes that all EU duty has been paid and that the current owner bought the boat within the EU.

My question is
Does my friend need to have the boat moved into EU waters before the purchase to avoid any import duties?
Does the boat need to be in EU waters even though the vendor is an EU resident.
My friend is a UK resident.

Maybe nobody would ever know where the boat was when the purchase took place.
I've said that, strictly, the boat would be outside EU waters if the deal were to be done in Jersey so it may require to be imported if my friend wanted to use it EU waters.
I've suggested that, on the day of the sale, he could go with the current owner to (say) Granville and then the deal would have been done (as usual) between 2 UK residents inside the EU.
Is this necessary?
Am I being paranoid? If they simply did the deal in Jersey, would anyone ever know?
Is this too big a risk to take?

 

[Portofino]

Where is the Original BoS ?
Has the owner /Broker or your friend seen a copy -in which case if the original VAT has been paid as you sugest and the paperwork shows that then the friend should be ok .

Happy to stand corrected .

Perhaps just to be less likely to be stopped by officialdom hair dryer off the Jersey decals when he motors off on hand overday and SSR reg online a couple of weeks before.( not that this has anything to do with VAT status ) just minimising chances of anybody ever enquiring in the first place .

 

[Piers]

I have a friend here in Sant Carles who is currently negotiating on a new (to him) boat.
The vendor is a UK resident but is selling his boat which is currently berthed in Jersey.
My friend believes that all EU duty has been paid and that the current owner bought the boat within the EU.

My question is
Does my friend need to have the boat moved into EU waters before the purchase to avoid any import duties?
Does the boat need to be in EU waters even though the vendor is an EU resident.
My friend is a UK resident.

Maybe nobody would ever know where the boat was when the purchase took place.
I've said that, strictly, the boat would be outside EU waters if the deal were to be done in Jersey so it may require to be imported if my friend wanted to use it EU waters.
I've suggested that, on the day of the sale, he could go with the current owner to (say) Granville and then the deal would have been done (as usual) between 2 UK residents inside the EU.
Is this necessary?
Am I being paranoid? If they simply did the deal in Jersey, would anyone ever know?
Is this too big a risk to take?

Having read the reply to a letter in MBY about EU VAT paid boats being outside the EU for more than three being liable for VAT (again) on return to the EU, I made enquiries about Play d'eau to the lawyer firm that gave the reply. It appears a nasty bit of legislation. Could be worth checking it out. I can email the article and contact details if you want. Send me a PM.

Piers

 

[Portofino]

If that's the case the vat is applied agian after a time period of out 3Y ?
Then would the clock be re-zero ,d every time you fuelled up in France or birthed in France/uk ( although fuels cheaper in CI -so only a few L ) -keeping the small -receipts ,and I phone dated holiday pics ?

I once bought a boat and the BoS said -- 64/64 th s for £1 " and other considerations "
I kept a 20 pence handy -no body ever asked

 

[westernman]

If that's the case the vat is applied agian after a time period of out 3Y ?
Then would the clock be re-zero ,d every time you fuelled up in France or birthed in France/uk ( although fuels cheaper in CI -so only a few L ) -keeping the small -receipts ,and I phone dated holiday pics ?

I once bought a boat and the BoS said -- 64/64 th s for £1 " and other considerations "
I kept a 20 pence handy -no body ever asked

VAT is due on import on the value - which is not necessarily what you paid for it.

This can be used to your advantage if you use the boat for a period of time before importing it. The boat is then obviously worth less as it is older and has been used more. In particular this can be used to considerable advantage on a new production boat. After one year it is worth at least 30% less than the new price due to wear and tear, the scratches you made in the hull, the condsiderable damage which was done in the grounding you had (which is invisible) etc etc. You need a reputable surveyor for the valuation.

It may also work to your disadvantage as well (e.g. you sell the boat to yourself from a company you own at considerably less than market price).

 

[Tranona]

This transaction is likely to come under the Returned Goods rule. Boats, and indeed most other goods, that leave the EU are potentially liable to VAT on reimportation. To avoid this the boat should be brought back into the EU within 3 years by the same person who took it out. If it changes hands outside the EU then the new owner will have to pay VAT on reimportation.

On the basis of the information given so far, the new transaction must take place within the EU with the boat being in the EU at the time under the ownership of the vendor. Hopefully he will have evidence that it has been in the EU within the last three years, otherwise he may be liable for VAT before he can sell.

 

[Hurricane]

Having read the reply to a letter in MBY about EU VAT paid boats being outside the EU for more than three being liable for VAT (again) on return to the EU, I made enquiries about Play d'eau to the lawyer firm that gave the reply. It appears a nasty bit of legislation. Could be worth checking it out. I can email the article and contact details if you want. Send me a PM.

Piers

Thanks Piers
Maybe I can get back to you if my friend needs to know more.

 

[Hurricane]

This transaction is likely to come under the Returned Goods rule. Boats, and indeed most other goods, that leave the EU are potentially liable to VAT on reimportation. To avoid this the boat should be brought back into the EU within 3 years by the same person who took it out. If it changes hands outside the EU then the new owner will have to pay VAT on reimportation.

On the basis of the information given so far, the new transaction must take place within the EU with the boat being in the EU at the time under the ownership of the vendor. Hopefully he will have evidence that it has been in the EU within the last three years, otherwise he may be liable for VAT before he can sell.

Thats "kind of" how I remembered it from previous discussions.

On a practical point though, would anyone know that the boat has been out of the UK and that someone else bought it and then sailed it back into EU waters?
The boat would still have all its previous proof of VAT etc.

Assuming that the boat hasn't been out of the UK for more than 3 years does my friend actually need the boat moved into EU waters or would nobody ever care?
If you know what I mean.
What would you do?

 

[Piers]

Thanks Piers
Maybe I can get back to you if my friend needs to know more.

No probs.

 

[westernman]

Thats "kind of" how I remembered it from previous discussions.

On a practical point though, would anyone know that the boat has been out of the UK and that someone else bought it and then sailed it back into EU waters?
The boat would still have all its previous proof of VAT etc.

Assuming that the boat hasn't been out of the UK for more than 3 years does my friend actually need the boat moved into EU waters or would nobody ever care?
If you know what I mean.
What would you do?

Do not underestimate the amount of intelligence which is collected and filed away somewhere about boat movements.

I.e. it is too much at risk to not get the current owner to sail into some EU port somewhere (and getting a bill from the marina in his name), before doing the deed. Also the cost and inconvenience of doing it exactly by the rules is not too great.

 

[Tranona]

Just take the boat to St Malo, get a marina receipt and have the BofS notarized by a French lawyer. Or do the same thing in a UK port.

Given that the rules are well known and the potential financial implications of falling foul, makes sense to be bullet proof. The biggest risk is for the vendor as it is he that is liable, and hopefully he has evidence that the boat has been in some time during the last 3 years, such as marina bills, customs entries. If there were problems post the sale the buyer could be affected as the liability if any could attach to the boat.

Caution required.

 

[jfm]

Mike
1. If it's in jersey then of course your friend needs to be 2x diligent that it is actually vat paid. Rest of this reply assumes it is
2. Boat will have lost its vat status inter alia if 3 yrs have gone by since it was last in eu. Rest of this reply assumes that rule doesn't bite
3. Your friend should buy the boat when it is physically in eu. This is because even if 1 and 2 are ok, boat will lose vat paid status if it changes ownership outside eu. (Under the 3 year RGR rule, only the person who owned it when it was last taken to Jersey can be the owner when it returns to eu, if vat paid status is to survive)
4. Your friend can exchange contracts in Jersey. It is completion that has to be done in eu
5. You're right that perhaps noone will know. But maybe they will. Or maybe they will suspect and price chip when your friend comes to sell it. Hardly seems worth risk when boat is so close to say Cherbourg or Granville
6. The 1£ and other considerations thing is red herring. The bill of sale isn't itself a contract for sale. The only thing you can say of such a bill of sale is that it doesn't tell you what the boat was sold for so it is bit irrelevant
7. Bottom line is see the boat in Jersey, survey it there, agree to buy it there, pay deposit, but write in the contract that completion of deal occurs in Granville or other agreed eu port and physically do that

 

[MapisM]

J, re. 7, does it have to be a EU port?
I would have thought that EU territorial waters might be sufficient, and if so, anyone would struggle to prove that you weren't there, if you see what I mean...

 

[Elessar]

J, re. 7, does it have to be a EU port?
I would have thought that EU territorial waters might be sufficient, and if so, anyone would struggle to prove that you weren't there, if you see what I mean...

doesnt fix "suspect and chip".

I'd do it in granville, and keep the receipt for the mooring and some diesel.

 

[Rickard]

This transaction is likely to come under the Returned Goods rule. Boats, and indeed most other goods, that leave the EU are potentially liable to VAT on reimportation. To avoid this the boat should be brought back into the EU within 3 years by the same person who took it out. If it changes hands outside the EU then the new owner will have to pay VAT on reimportation.

On the basis of the information given so far, the new transaction must take place within the EU with the boat being in the EU at the time under the ownership of the vendor. Hopefully he will have evidence that it has been in the EU within the last three years, otherwise he may be liable for VAT before he can sell.

Yes this is how it works. Did it with my boat in 2013.
The owner in Guernsey drove the boat to Portsmouth where the reimportation was cleared and then I transported it to Sweden

 

[jfm]

J, re. 7, does it have to be a EU port?
I would have thought that EU territorial waters might be sufficient, and if so, anyone would struggle to prove that you weren't there, if you see what I mean...

In this case I'd do it in a port, tied up to the dock. Reason is that to allow international trade there are various regulations dealing with vessels that come within the 12miles but don't stop, and these sometimes deem the vessel not to be imported. These regulations are designed to stop the hassle of vessels and cargo being imported into each country they pass within 12nm of land in ordinary navigation.

As regards proof, in UK (and some other countries) it is not the tax authority's job to prove you were not there. In UK, provided tax authority persona has made a reasoned estimate/conclusion from the evidence (or lack of) before him, the onus of proof is on taxpayer in this situation to prove the boat WAS imported into EU

 

[jfm]

Yes this is how it works. Did it with my boat in 2013.
The owner in Guernsey drove the boat to Portsmouth where the reimportation was cleared and then I transported it to Sweden

Yes but when Tranona says "transaction" he should be referring to the transfer of ownership, not execution of the contract of sale. The latter can be done outside the EU. It's important to be clear about what must be done after the current owner (seller) reimports the boat to EU and what need not be

 

[Tranona]

Yes but when Tranona says "transaction" he should be referring to the transfer of ownership, not execution of the contract of sale. The latter can be done outside the EU. It's important to be clear about what must be done after the current owner (seller) reimports the boat to EU and what need not be

As in my post #11 for belt and braces.

 

[Hurricane]

Thanks everybody, my friend is extremely grateful.
This kind of advice shows up just how bad professional brokers are at handling this kind of thing.

Thanks again
Mike

 

[MapisM]

In UK, provided tax authority persona has made a reasoned estimate/conclusion from the evidence (or lack of) before him, the onus of proof is on taxpayer in this situation to prove the boat WAS imported into EU

Interesting. I wasn't aware of the burden of proof reversal in this specific case - hence my previous suggestion.
Btw, my general (and superficial!) understanding of the UK legal system is that it's based on the presumption of innocence principle...
...though of course I can see why it isn't, in this case!