Looking ahead.

[artemis07]

A few years ago I was told that if a yacht leaves the EU for more than three years it will be liable for VAT on re-entry. Does this rule (if true) still stand? It follows that after BREXIT (apologies for mentioning the word) UK registered yachts/ boats would be liable for VAT on returning to the UK after three years in the EU! Furthermore, UK yachts would have the same status as non EU vessels have at the present time (or now). I could mention a few other problems (selling a boat to a non UK resident for example) but I don't want to bore everybody.

I presume the correct answer is "Nobody Knows" what will happen in 2019.

 

[Tony Cross]

If a yacht is outside EU waters for more than 3 years she still loses her VAT paid status and VAT must be paid again if she returns to EU waters.

What happens after Brexit is an unknown because the negotiations haven't yet begun. It may well be that an EU VAT paid vessel will be deemed to be VAT paid in the UK and vice-versa. That would certainly be the easiest and most sensible approach (at least at first) but the faact is that nobody knows yet....

 

[KellysEye]

We were away for six and a half years and weren't asked for a VAT payment payment when we returned. When we have left th EU I can't see why VAT should be charged for three years away or longer, if VAT has already been paid.

 

[RichardS]

If a yacht is outside EU waters for more than 3 years she still loses her VAT paid status and VAT must be paid again if she returns to EU waters.

I know that this has been discussed before .... and each time someone asks whether there has ever been an actual recorded case of this happening, and I don't recall ever seeing a positive answer.

Anyone care to comment?

Richard

 

[Tranona]

Yes, the rule does still exist. It is in the "returning goods" section of VAT notice No 8. However the 3 years bit is covered by a "normally" and in practice, not only does the rule affect only a very small number of people, but seems from the few reports of those who have been through it, not heavily enforced.

As to what happens after 2019 is indeed anyones' guess, but unlikely to revert to exactly how it was pre 1992 as (hopefully) there will be some agreement to retain as much of the existing freedom of movement of boats as possible. That would be in line with the current govt approach on other matters, but no doubt it will not be high on the list of priorities!

 

[Mister E]

Will vat still be around in gb after leaving?

 

[Tranona]

We were away for six and a half years and weren't asked for a VAT payment payment when we returned. When we have left th EU I can't see why VAT should be charged for three years away or longer, if VAT has already been paid.

You are clearly ignorant of the law - which has been in place since 1982. Did you declare your boat on return? If you did not you have committed a criminal offence. Ignorance is no excuse.

However, as I noted above, even if declared you are unlikely to have been charged VAT as it seems the discretion in the rules is exercised.

BTW these rules apply to most goods, not just boats, but are more appropriate to commercial transactions.

 

[Tranona]

Will vat still be around in gb after leaving?

Almost certainly. In the UK it predates the EU by 20 years so highly unlikely that govt will replace a system of tax collection that is both difficult to avoid and cheap to collect as merchants do all the work!

 

[Peroo]

We asked a similar question before returning to the EU - here is some correspondence that may help.

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Subject: RE: UK Flagged boats returning to the UK [Protective Marking: PROTECT]

I can answer your first question without hesitation. Yes, if a VAT paid vessel has not changed hands outside of the EU it can be brought back into the UK under the RGR relief scheme. The 3 year limit is quite flexible and each application for RGR outside of the 3 year period will be treated on its own merits.
For a vessel to qualify for RGR it must be tax paid before leaving the EU, I will have to seek clarification on how this works for VAT exempt vessels.
I’ve attached the public notice covering RGR and also HMRC’s FAQ’s on vessels. There is a brief mention of RGR but it does not cover your particular question.
My understanding is that there is no tax exemption for vessels of a certain age; I will research this as well. I know that many vessels have not paid VAT as they are pre 1973 and that is ok until a chargeable event occurs i.e. the vessel changing hands outside of the EU. How this works with vessels that have not changed hands I will need to clarify and email again shortly.
<<RGR.htm>>
<<NAS_FAQs_May_2008_v1-0.doc>>
Kind regards


To HMRC
Subject: UK Flagged boats returning to the UK

A number of uk flagged yachts here in the Caribbean have been debating the VAT implications of returning to the uk or Europe having been away for over 3 years.

Could you clarify the position please?
- If a yacht has not changed hands and paid VAT before leaving the EU, arrived in Horta having sailed from the Caribbean and has been away for over 3 years, does Returned Goods Relief apply?
- If a yacht was VAT exempt given its year of construction, before it left the EU has not changed hands and, again arrived in Horta from the Caribbean after more than 3 years away from the EU, does Returned Goods Relief apply?
- What does the returning yacht in either of these cases need to be aware of and declare when arriving in Horta?
(Horta would, for most yachts, but not all, returning from the Caribbean, be the first EU port of entry)
This is a question that a number of live-aboards have been pondering, and as your name and contact details were provided I thought I would try and help my fellow cruisers by asking some pertinent questions.
Many thanks in anticipation - if there is a FAQ you could point us to, that would be great.

------------------------------------------------------------------------------------------------------------------------

Hope this may be of use.

 

[macd]

highly unlikely that govt will replace a system of tax collection that is both difficult to avoid and cheap to collect as merchants do all the work!

Compellingly so, Tranona, which is why VAT has been adopted under various names in many countries far beyond Europe. The same will no doubt apply to many other 'EU' measures.

 

[BobnLesley]

As noted previously, the law/rule exists, but never heard of anyone being re-charged VAT. Also worth noting that if you head west then Martinique, Guadeloupe, French Guiana are all in the EU; not sure about French St Martin or St Barts and I believe (no promises) that French Polynesia in the Pacific's EU too.

 

[Tranona]

As noted previously, the law/rule exists, but never heard of anyone being re-charged VAT. Also worth noting that if you head west then Martinique, Guadeloupe, French Guiana are all in the EU; not sure about French St Martin or St Barts and I believe (no promises) that French Polynesia in the Pacific's EU too.

But not in the EU VAT area..... so irrelevant for this discussion.

 

[Fr J Hackett]

Is there any obligation to pay VAT in the first port of call i.e. in the above example Horta or can you select which country you pay your VAT in. Isn't there a 6 Month VAT free period before you have to pay the VAT also?

 

[macd]

Is there any obligation to pay VAT in the first port of call i.e. in the above example Horta or can you select which country you pay your VAT in. Isn't there a 6 Month VAT free period before you have to pay the VAT also?

VAT is paid in the country in which the VATable event (i.e. importation) takes place, so usually at the port of arrival. You can 'select' that place only by your choice of route.

The'VAT-free period', actually 18 months, applies only to vessels owned by non-EU residents. It's officially described as temporary importation. It may be that, post-Brexit, TI will be available between the UK and EU and vice versa. Or not. If it is, our Colonial cousins are well-versed in strategies to maintain their qualification.

By way of a P.S., our boat is VAT-paid in Spain and, although British registered, has never been to the UK. This is a slighty quirky but far from unique situation which we hope, but cannot be sure, will work to our advantage. My bet is that for boats in general, some sort of transitional arrangements will be put in place, something like the reverse of those applied in the early 90s. I have been known to lose bets, though...

 

[Tranona]

VAT was paid on our last boat in Greece. The new owners, who bought pre Brexit intend taking her back to the Med, probably Spain so will be in a good position after 2019 - unless of course they want to then bring it back to UK. Who knows what the rules will be on that.

 

[GrahamM376]

Furthermore, UK yachts would have the same status as non EU vessels have at the present time (or now). I could mention a few other problems (selling a boat to a non UK resident for example) but I don't want to bore everybody. I presume the correct answer is "Nobody Knows" what will happen in 2019.

As you say, nobody knows for sure but my guess is that any boat VAT paid within the EC before Brexit will keep its VAT paid status afterwards. New boats purchased in the UK afterwards will no doubt be treated as Non-EC vessels when visiting the EC as per the current rules. New boats purchased in the EC to be exported to the UK would no doubt be zero rated at origin but pay UK VAT on entry. It's all guesswork

 

[Tranona]

As you say, nobody knows for sure but my guess is that any boat VAT paid within the EC before Brexit will keep its VAT paid status afterwards. New boats purchased in the UK afterwards will no doubt be treated as Non-EC vessels when visiting the EC as per the current rules. New boats purchased in the EC to be exported to the UK would no doubt be zero rated at origin but pay UK VAT on entry. It's all guesswork

Love your use of the term "EC"! If only that were still current and we were members of the European Community as I doubt there would have been a referendum!.

It is the EU, which is a very different animal that we voted to leave. I think most of even the hardened Leavers would tolerate membership of that if it was still in its pre 1992 state. Most of the factors driving Leave are the consequence of the establishment of the EU to replace the EC.

 

[GrahamM376]

Love your use of the term "EC"! If only that were still current and we were members of the European Community as I doubt there would have been a referendum!.

It is the EU, which is a very different animal that we voted to leave. I think most of even the hardened Leavers would tolerate membership of that if it was still in its pre 1992 state. Most of the factors driving Leave are the consequence of the establishment of the EU to replace the EC.

Completely agree, we voted for the "common market" and, if it were still just that, then no problem for me personally.

 

[Sandyman]

Completely agree, we voted for the "common market" and, if it were still just that, then no problem for me personally.

Bom Dia Boat wont clean itself Graham

Yes I know.............................also, irrelevant for this discussion.

 

[GrahamM376]

Bom Dia Boat wont clean itself Graham

Yes I know.............................also, irrelevant for this discussion.

If you wipe the sleep from your eyes - it is clean.