Importing EU based boat to UK as new UK buyer post Brexit

[Minerva]

I've seen a boat that looks interesting and fits my needs, but it's in Spain - UK owners but been based in Spain for a number of years.

My understanding that if I were to buy it, then sail it home, for argument's sake 2 months after purchase I would need to pay UK VAT. So far that's easy to comprehend and theoretically calculate.

Question being, what is the valuation used to calculate VAT? Is it the price I bought the boat for or is it the value of the boat on the day it clears into UK waters? If it was the day of import, who decides the value - does it need a further survey? In particular - If I were to buy new sails, rigging, electronics etc in EU and sail it home, would I have to pay for the increase in boats value based on the upgrades I paid for in the EU?

Furthermore, I think the engine would have to meet new emissions standards, which it won't - so a new engine will needed. Can the boat then be valued as not having a working engine when imported?

Not trying to discuss the Brexit per se and not trying to weasel out of paying taxes due, just trying to calculate what the tax liabilities would be.

Thanks

 

[nortada]

I've seen a boat that looks interesting and fits my needs, but it's in Spain - UK owners but been based in Spain for a number of years.

My understanding that if I were to buy it, then sail it home, for argument's sake 2 months after purchase I would need to pay UK VAT. So far that's easy to comprehend and theoretically calculate.

Question being, what is the valuation used to calculate VAT? Is it the price I bought the boat for or is it the value of the boat on the day it clears into UK waters? If it was the day of import, who decides the value - does it need a further survey? In particular - If I were to buy new sails, rigging, electronics etc in EU and sail it home, would I have to pay for the increase in boats value based on the upgrades I paid for in the EU?

Furthermore, I think the engine would have to meet new emissions standards, which it won't - so a new engine will needed. Can the boat then be valued as not having a working engine when imported?

Not trying to discuss the Brexit per se and not trying to weasel out of paying taxes due, just trying to calculate what the tax liabilities would be.

Thanks

An interesting post with loads of questions.

Fundamentally, I believe it will be all about the UK/HMRC attitude on the day you arrive in UK Waters.

As to your plethora of questions, new territory but I suppose your first port of call would be HMRC. I suspect there will be a tendency to make it up as they go along so it could be a good idea to get it in writing. Again, not sure who you first contact in HMRC but from experience of the T2L saga, HMRC Salford we’re both helpful and very knowledgeable.

Contact details for Salford are in this link:- Lagos Navigators & Strollers-C88/T2L Aide Memoir (British Flagged Vessels)

From experience, I would not contact any other agency, as they can only offer advice that could easily complicate the issue by starting their own enquiries and muddy the water. Shades of VAT on UK vessels returning to the UK after a period of absence overseas.

The same applies to opinions on this and other forums that, at best, can only offer advise that cannot be based on any experience.

As a test case I wish you well and I suspect, many, will look forward to hear how you get on.

Best wishes.

 

[Tranona]

The valuation for VAT is meant to reflect the market value and what you paid would normally be accepted as the value if it was recent. If you had subsequent work carried out outside the UK that would in theory be subject to VAT on entry as well, so would not make sense to do that, particularly as it would almost certainly be more expensive in the EU plus you would pay local VAT then UK VAT. HMRC publish guidance on valuation.

As to re certification, until the end of this year a CE is acceptable, but there seems to be no exemption for pre 1997 boats. Suggest if you are serious then professional advice from the RYA and a certifier such as CE Proof would be sensible.

On the face of it there would have to be something really special about the boat to make it worthwhile to buy in Europe for use in the UK.

 

[nortada]

How old is the vessel that interests you?

I have no experience of CE re-certification but in a previous life, I had dealings with HMRC on boat issues and VAT.

Almost their first words were, “Others may offer advice but we make the final decisions!”

Subsequently, having furnished them with the details, HMRC proved very helpful and accommodating and provided a formal written finding that quashed any further debate - to our advantage.

 

[Biggles Wader]

If the current UK based owner brought the boat back and the sale was completed here would that mean VAT was not applicable?

 

[Graham376]

If the current UK based owner brought the boat back and the sale was completed here would that mean VAT was not applicable?

Correct, the person who "exported" the boat can return it and claim RGR. A possible dodge if the owner was agreeable, it could return to UK under his/her ownership with delivery crew (potential purchaser?) and then the sale completed in UK. No doubt all funds would have to be deposited in escrow account beforehand.

 

[Tranona]

Using RGR in those circumstances is possible. Really depends on the value of the boat. Bringing it back by road would be around £8k (assuming under 40' or so) including preparation lifts etc. so, if the purchase price/value is over, say £35k the shipping would be less than VAT. As the OP wants to keep the boat in the UK this approach mat be worth investigating. The boat will, of course lose its "EU VAT paid status".

 

[Graham376]

Using RGR in those circumstances is possible. Really depends on the value of the boat. Bringing it back by road would be around £8k (assuming under 40' or so) including preparation lifts etc. so, if the purchase price/value is over, say £35k the shipping would be less than VAT. As the OP wants to keep the boat in the UK this approach mat be worth investigating. The boat will, of course lose its "EU VAT paid status".

I'm sure no law abiding owner would issue a second bill of sale indicating the sale took place in EU

 

[Koeketiene]

If the current UK based owner brought the boat back and the sale was completed here would that mean VAT was not applicable?

Just complete the sale in the UK 'on paper'.
No-one is going to check where the boat is at the moment you conclude the sale.

 

[Graham376]

Just complete the sale in the UK 'on paper'.
No-one is going to check where the boat is at the moment you conclude the sale.

There's the problem of the C1331 when he brings it into the UK without having declared taking it out after very recent purchase and registration change.

 

[doug748]

..........Subsequently, having furnished them with the details, HMRC proved very helpful and accommodating and provided a formal written finding that quashed any further debate - to our advantage.

The Cruising Association have done a lot of work on this and that was their opinion also. For example I believe that UK Vat is only payable on the basic purchase price not the full purchase cost - ie a £100,000 boat, VAT paid in Europe at 20%, would pay UK VAT on £80,000. So get the bill of sale right. There are probably other more esoteric cost cutting tactics, not cheats but the Revenue do seem to be applying the rules with some sympathy to the problems involved
I would join the CA and have a word with people who have done it.

.

 

[awol]

Sail via Southern to Northern Irelend and hence to GB - no C1331 and as to the status of the boat, who knows?

 

[Tranona]

The Cruising Association have done a lot of work on this and that was their opinion also. For example I believe that UK Vat is only payable on the basic purchase price not the full purchase cost - ie a £100,000 boat, VAT paid in Europe at 20%, would pay UK VAT on £80,000. So get the bill of sale right. There are probably other more esoteric cost cutting tactics, not cheats but the Revenue do seem to be applying the rules with some sympathy to the problems involved
I would join the CA and have a word with people who have done it.

.

Not sure that is correct for a secondhand boat as no VAT is payable in the EU when it is purchased. The principle is that the VAT is based on the market value when imported. In the case of the boat in this thread VAT was originally paid many years ago in the UK. There are also specific rules about work carried out subsequent to purchase that enhance the value over the purchase price.

The guidance from HMRC is here www.gov.uk/guidance/sailing-a-pleasure-craft-that-is-arriving-in-the-uk and the specific section on importing boats here www.gov.uk/guidance/sailing-a-pleasure-craft-that-is-arriving-in-the-uk#declaring-a-pleasure-craft-that-youre-importing In this section are the contacts for advice and the form (C384) to complete for VAT and duty. If you read the form it shows that VAT calculation is based on purchase price and any freight costs.

As I suggested in post#3 the first thing to do is contact HMRC for advice. The contact details for the relevant unit in Portsmouth are in the link. Useful though to contact the CA as well to get advice and any real life experiences from others, but knowing the rules is the starting point.

 

[Graham376]

The principle is that the VAT is based on the market value when imported.

My guess is that market value would be the purchase price for the boat in the case of a recent acquisition.

 

[Tranona]

My guess is that market value would be the purchase price for the boat in the case of a recent acquisition.

That is right - very difficult to argue you paid too much for the boat to reduce the base for calculating VAT. Where debate and negotiating comes in is where there is a time gap between purchase and import or where there has been significant expenditure in recent times - for example buying a run down boat in the Caribbean, refitting it and sailing back. Tom Cunliffe explained all this a few years ago when he imported a boat he had built in Canada, used it for a few years outside the UK/EU and then imported it. Agreed a value that reflected depreciation and use from the original cost.

 

[westernman]

That is right - very difficult to argue you paid too much for the boat to reduce the base for calculating VAT. Where debate and negotiating comes in is where there is a time gap between purchase and import or where there has been significant expenditure in recent times - for example buying a run down boat in the Caribbean, refitting it and sailing back. Tom Cunliffe explained all this a few years ago when he imported a boat he had built in Canada, used it for a few years outside the UK/EU and then imported it. Agreed a value that reflected depreciation and use from the original cost.

The first owner of my boat did the same thing - but with only a small delay.
The boat was built in Canada. A test sail was done local to the yard.
Then the boat was sailed by a delivery crew across the Atlantic to Cowes, IoW where it was imported.

Now of course the boat was used. It was a classic old style design and seems to have been valued at a small fraction (about 25%) of its build cost.
The original VAT receipt from HM customs is a small pink slip which is handwritten and difficult to read.

 

[Tranona]

The original VAT receipt from HM customs is a small pink slip which is handwritten and difficult to read.

Vital bit of paper as it is the only record of payment.

 

[nortada]

Vital bit of paper as it is the only record of payment.

So true, where it me, I would make a number of copies and keep the original in a very safe place.

 

[doug748]

Not sure that is correct for a secondhand boat as no VAT is payable in the EU when it is purchased. The principle is that the VAT is based on the market value when imported. In the case of the boat in this thread VAT was originally paid many years ago in the UK. There are also specific rules about work carried out subsequent to purchase that enhance the value over the purchase price.

The guidance from HMRC is here www.gov.uk/guidance/sailing-a-pleasure-craft-that-is-arriving-in-the-uk and the specific section on importing boats here www.gov.uk/guidance/sailing-a-pleasure-craft-that-is-arriving-in-the-uk#declaring-a-pleasure-craft-that-youre-importing In this section are the contacts for advice and the form (C384) to complete for VAT and duty. If you read the form it shows that VAT calculation is based on purchase price and any freight costs.

As I suggested in post#3 the first thing to do is contact HMRC for advice. The contact details for the relevant unit in Portsmouth are in the link. Useful though to contact the CA as well to get advice and any real life experiences from others, but knowing the rules is the starting point.

I was fairly sure I took this from the CA webinar for non members on their site but it is not on it now. It may be in the longer members version or at least be explained. I took particular notice because it implied a willingness to accept a notional 20% off the price of a used boat as representing a remaining fraction of the tax paid when new. Which I thought was fair.

I might just have picked it up from some dodgy video but I don't think so. In any case it does illustrate the need to go into the matter carefully with so many things unresolved.

.

 

[awol]

I was fairly sure I took this from the CA webinar for non members on their site but it is not on it now. It may be in the longer members version or at least be explained. I took particular notice because it implied a willingness to accept a notional 20% off the price of a used boat as representing a remaining fraction of the tax paid when new. Which I thought was fair.

I might just have picked it up from some dodgy video but I don't think so. In any case it does illustrate the need to go into the matter carefully with so many things unresolved.

.

Surely that should be 16.67% off the price?