MBM and VAT advice

[jfm]

You're absolutely right Daka that a company would not normally hand over the original VAT invoice when it sells goods 2nd hand so yet again boating VAT "rules" are illogical but the practical answer is - I'm agreeing with Paul Gooch - for the company to keep a certified copy.

Actually these days you get invoices as pdfs so you can have as many originals as you like.

 

[Observer]

I might have been upset a couple of years ago , but Ive got used to it now !

Please educate me how it works then, VAT reg company claims VAT back and then sells boat along with original VAT receipt.

Original company then get VAT inspection and dont have VAT receipt which they claimed back £200 000 VAT .

They phone the bloke they sold the boat to and ask to borrow the VAT receipt back quick............



clarkson/Victor meldew impersonations welcome assuming the actual reply is included

The seller company has to keep original VAT invoice for VAT inspection so would not hand it over. However, it would have to issue a VAT invoice to the buyer and that becomes the new owner's best evidence of legal status (as mentioned in my post above). The buyer doesn't need the 'original' invoice at all (copy or original). He's got something much better - a VAT invoice issued to himself.

Just to qualify the above - the second sale may be not taxable if the place of supply is not where the seller 'belongs' (ie in another EU state). Then the seller may have obligation to register for VAT in that state and account for tax on the sale. Or value of sale may be below registration threshold. If the seller can't issue VAT invoice then there is a value to buyer of having the original invoice, or a copy.

 

[Observer]

You're absolutely right Daka that a company would not normally hand over the original VAT invoice when it sells goods 2nd hand so yet again boating VAT "rules" are illogical but the practical answer is - I'm agreeing with Paul Gooch - for the company to keep a certified copy.

Self-certified? Would be pretty meaningless as evidence. Anyway, as you say, easy to have multiple copies of a PDF.

 

[jfm]

Self-certified? Would be pretty meaningless as evidence. Anyway, as you say, easy to have multiple copies of a PDF.

CErtified by a solicitor or something
I agree that the vat reg co would itself issue a fresh vat invoice to the buyer, but due to urban mythery the buyer might insist on the earlier vat invoice too. In that case if i were the company I'd probably give it to buyer to get the deal done, and rely on the certified copy or even have a deal with buyer that I could borrow it back for a week in the event of a heavy hmrc audit

 

[Observer]

CErtified by a solicitor or something

Yes that's possible but implies a degree of spurious authenticity. A VAT invoice is no more than evidence that a transaction has occurred. Certifying a copy of the evidence does nothing to substantiate its worth as evidence unless the certifying solicitor is also able to certify how the original document came into existence.

If the reliability of a copy invoice as evidence is questioned, it can only be fully validated by access to accounting records of the seller. For the purposes we're discussing, the value of the invoice and the identity of the buyer are immaterial. All we're looking for is confirmation that a taxable supply of goods has occurred between a registered person and another party.

That's my analysis anyway. Happy to be corrected.

 

[MapisM]

If the reliability of a copy invoice as evidence is questioned, it can only be fully validated by access to accounting records of the seller. For the purposes we're discussing, the value of the invoice and the identity of the buyer are immaterial. All we're looking for is confirmation that a taxable supply of goods has occurred between a registered person and another party.

My understanding is that even if in theory you're correct, in practice the invoice is accepted as a good enough evidence that such transaction occurred.
And if it is, obviously a certified copy (or a re-printing of the original pdf) is as good as the original.
Btw, the access to accounting records could even be impossible - even for the fiscal authorities! - if the transaction took place more than 6 (in the UK, as I understood) years ago, because the seller would be entitled to bin them.

As an aside, for pdf invoices, is it required the use of certified emails/attachments?
Because THAT would be a very reliable way to be sure of the authenticity, but afaik normal emails/attachments are considered good enough.
Which is ridiculous, when you think about it...

 

[jfm]

Yes that's possible but implies a degree of spurious authenticity. A VAT invoice is no more than evidence that a transaction has occurred. Certifying a copy of the evidence does nothing to substantiate its worth as evidence unless the certifying solicitor is also able to certify how the original document came into existence.

If the reliability of a copy invoice as evidence is questioned, it can only be fully validated by access to accounting records of the seller. For the purposes we're discussing, the value of the invoice and the identity of the buyer are immaterial. All we're looking for is confirmation that a taxable supply of goods has occurred between a registered person and another party.

That's my analysis anyway. Happy to be corrected.

Observer I think we are at crossed purposes on certified copy. I was suggesting that a VAT-registered trader who buys a boat then sells it later +VAT, and on that occasion creates a new VAT invoice, might wish to hand over the original new boat dealer invoice to deal with urban myths, rahter than save it for its own accounting records. I was saying that in these circs the trader can keep a certified copy, which would be perfectly fine in a VAT inspection. I wasn't suggesting a certified copy goes with the boat and forms part of the ship's papers

I agree with you the trader's VAT invoice when the boat is sold secondhand ought to be ok as part of the ship's papers, but we are dealing with urban myths and people like the original dealer invoice

 

[Observer]

Observer I think we are at crossed purposes on certified copy. I was suggesting that a VAT-registered trader who buys a boat then sells it later +VAT, and on that occasion creates a new VAT invoice, might wish to hand over the original new boat dealer invoice to deal with urban myths, rahter than save it for its own accounting records. I was saying that in these circs the trader can keep a certified copy, which would be perfectly fine in a VAT inspection. I wasn't suggesting a certified copy goes with the boat and forms part of the ship's papers

I agree with you the trader's VAT invoice when the boat is sold secondhand ought to be ok as part of the ship's papers, but we are dealing with urban myths and people like the original dealer invoice

Yes sorry I didn't read your previous post carefully enough. That would probably work. However, I'd still say that the trader's VAT invoice to the new buyer is more conclusive of VAT status than the original invoice addressed to the trader.

 

[DAKA]

The whole VAT idea is getting more like a farce..........

So its only really the worry warts that are interested in the original VAT receipts but........

YBWFORUM LTD buy a £1m boat for 'charter' pay £200k VAT to Sunseeker and then claim £200 k back from HMR&C.

They then sell the boat to 'shrewdforummember' who demands the original VAT invoice and asks YBWFORUM LTD to sail the boat from Poole to CI , (as he says he intends to stay there) do the deal in Jersey (outside VAT) and no second 20% VAT is paid.
'Shrewdforummember' then sails back to Poole, all the locals recognise the boat, no questions asked, several years latter shrewdforummember sells the boat as VAT paid.

The Boat has an original VAT receipt, everyone is happy.

Put this scenario with all the secondhand VAT paid boats in CI and Croatia which have now lost their VAT paid status ( treated as exported after 3 years) and the whole concept of a tatty old VAT receipt being worth anything at all and its a joke.

Now I realize both my examples are not common however the worry warts are demanding absolute certainty but dont get 100% certainty with the VAT receipt.



I must have this wrong, surely

 

[NealB]

the worry warts are demanding absolute certainty but dont get 100% certainty with the VAT receipt.



I must have this wrong, surely

Crikey........I think I agree with something that Daka has said.

I feel the need to sit down!

 

[Tranona]

I must have this wrong, surely

Physically possible to do - however, big flaw is that it is illegal, in that when the boat comes back to Poole that is a "chargeable event" and VAT is due - even if the original VAT invoice was to a private person. Your whole scheme depends on nobody grassing you up and the next buyer ignoring the fact that you bought it outside the EU.

If you are bored today, read up on the rules regarding exports and particularly returned goods relief (which you know about already - just need to apply it to your scenario).

 

[jfm]

I must have this wrong, surely

No, you have it exactly right. The only thing I'm surprised about is that you are surprised. The VAT rules have operated this way for years and on several posts even in this thread it is explained how an original dealer VAT invoice doesn't necessarily mean a boat has not been smuggled like the s/seeker in your example

What you describe is illegal on the part of shrewdforummember, and that is why it is rare. Loads of people just wouldn't do such a thing

 

[DAKA]

Physically possible to do - however, big flaw is that it is illegal, in that when the boat comes back to Poole that is a "chargeable event" and VAT is due - even if the original VAT invoice was to a private person. Your whole scheme depends on nobody grassing you up and the next buyer ignoring the fact that you bought it outside the EU.

Thanks for explanation Tranona which makes sense, I personally wouldn't get involved in such a scheme and as a thirdhand buyer I now deduce that it wouldnt really be my problem but it still makes a mockery of demanding to see a tatty VAT receipt.

 

[PaulGooch]

Thanks for explanation Tranona which makes sense, I personally wouldn't get involved in such a scheme and as a thirdhand buyer I now deduce that it wouldnt really be my problem but it still makes a mockery of demanding to see a tatty VAT receipt.

But you're wrong again Pete. As the 3rd hand buyer, you would be in possession of the smuggled boat and it could be seized.

 

[gjgm]

But you're wrong again Pete. As the 3rd hand buyer, you would be in possession of the smuggled boat and it could be seized.

The point being, as raised earlier, that the VAT doc is only one of many docs to help provide the would be buyer some comfort.. service bills, marina bills etc being others.

 

[Observer]

The Boat has an original VAT receipt, everyone is happy.

Put this scenario with all the secondhand VAT paid boats in CI and Croatia which have now lost their VAT paid status ( treated as exported after 3 years) and the whole concept of a tatty old VAT receipt being worth anything at all and its a joke.

Now I realize both my examples are not common however the worry warts are demanding absolute certainty but dont get 100% certainty with the VAT receipt.

I must have this wrong, surely

Nothing to disagree with in any of the responses above. However, a wise buyer will ask to see the invoice from YBWFORUM LTD to shrewdforummember, note that no VAT was charged on the sale and wonder why. If it is explained that the sale was not taxable because it happened outside the EU customs area, he will then wonder how shrewdforummember managed to get it back into the UK without an import declaration and payment of import VAT.

Relying only on the original VAT invoice would be a mistake. Also, as stated, a VAT invoice from the actual seller is better than the VAT invoice on first sale as new, although not a guarantee that no prior undeclared import has occurred.

 

[jfm]

a wise buyer ... Relying only on the original VAT invoice would be a mistake.

All good stuff Observer. Of course everyone is educated by RYA, brokers and the mags, urbanmythly, that the original invoice is what you need.

 

[Tranona]

All good stuff Observer. Of course everyone is educated by RYA, brokers and the mags, urbanmythly, that the original invoice is what you need.

Semantics, but it does depend on the way you read "original". In most of the advice it is used to differentiate from "copy", rather than to indicate the "first" VAT invoice issued. In the section about documentation (in the RYA/HMRC FAQs) it also refers to there being a possibility of more than one VAT invoice relating to the same boat. This is, however, by implication rather than a clear statement and there is insufficient further explanation as to why this might be so, leading to the ambiguity.

 

[penfold]

Any taxcode which contains such vagueness and imprecision is unfit for use.

 

[jfm]

Any taxcode which contains such vagueness and imprecision is unfit for use.

I might be missing yr point but I dont think the vagueness and imprecision is in the tax code so much as in the material put out by brokers, RYA et al.