MBY Feb 2012 - Legal Aid (VAT) article

[EME]

Stillwaters

The rules regarding responsibility for paying vat clearly state,however,that it is the buyers responsibilty to ensure it is paid

Where is that enshrined in law?

So if I unwittingly dont get charged VAT on the purchase of a new boat in the UK although the invoice says it is included in the total sum paid then HMRC can revert to me for payment of the VAT?

 

[stillwaters]

The only time HMRC can go after a boat is when a boat is imported and failed to payover import duty? ie Smuggled.


No. Any boat flying any EU vat area flag or owned by an EU resident,unless non-vat qualifying,is subject to vat. If vat has failed to be paid it is still due but only against the fair market value at the time of discovery by the nastymen or sale to another qualifying party.


Has anyone ever had to provide the VAT Invoice for their vessel to anyone other than in the country of registration?[/QUOTE]


Yes,loads,and you are expected to carry proof of vat payment on board. Crazy not to really,as some officials can suddenly become VERY official given an open goal like that one. Usually,they're actually ok,though.

 

[stillwaters]

Stillwaters



Where is that enshrined in law?

So if I unwittingly dont get charged VAT on the purchase of a new boat in the UK although the invoice says it is included in the total sum paid then HMRC can revert to me for payment of the VAT?

If you are buying a boat you are never going to be deemed to be unwitting,even though we both know it's probably the most unwitting thing we will ever do.
It is defined within the vat regulations about the use of agents and ignorance of the law is no excuse. Surely the one thing to take out of the MBY article is that it's always probably a good idea to have EVERYTHING checked when buying an expensive item such as a boat.

 

[stillwaters]

Agent here doesnt imply someone submitting VAT returns in the course of business, then (ie a dealer) but some third party? Otherwise surely this contradicts JFM previous reply that if you paid the dealer, VAT is paid, irrespective of whether it turns up at a tax office?

Yes,this applies to an agent who you appoint to act for you. They effectively become you and any errors become yours also. However,even with a dealer/broker it would still be prudent to ensure that you have the correct documentation such as an original copy invoice (not a bill of sale). If in doubt or not sure about the seller,use a specialist solicitor (you would on a house purchase,wouldn't you?).

 

[fireball]

No. Any boat flying any EU vat area flag or owned by an EU resident,unless non-vat qualifying,is subject to vat. If vat has failed to be paid it is still due but only against the fair market value at the time of discovery by the nastymen or sale to another qualifying party.

Which VAT ... Import duty or Sales VAT ...

If I go and buy some expensive kit from a retail shop there is VAT included in the TRANSACTION ... that VAT will be paid across to HM ... if they don't can HM really come after me for the VAT amount "due" on my kit ? I've never heard of this outside the boat world so find it strange that it may apply to the boat world.

 

[PaulGooch]

Which VAT ... Import duty or Sales VAT ...

If I go and buy some expensive kit from a retail shop there is VAT included in the TRANSACTION ... that VAT will be paid across to HM ... if they don't can HM really come after me for the VAT amount "due" on my kit ? I've never heard of this outside the boat world so find it strange that it may apply to the boat world.

It doesn't, see JFM's previous TV analogy posts.

I'm happy to put all future beer tokens on the advice from JFM.

 

[stillwaters]

Which VAT ... Import duty or Sales VAT ...

If I go and buy some expensive kit from a retail shop there is VAT included in the TRANSACTION ... that VAT will be paid across to HM ... if they don't can HM really come after me for the VAT amount "due" on my kit ? I've never heard of this outside the boat world so find it strange that it may apply to the boat world.

Sorry but it isn't a case of which vat,as duty and vat are totally different forms of taxation. In fact this thread which relates to a specific MBY article only relates to the vat status on a boat which had effectively not had its vat paid .The boat wasn't imported into the EU but went from the UK to Spain and eventually back to the UK again. The import myth seems to have persisted since Hurricane's initial post suggested that it must have been imported into the EU in order to still have vat due on it. This is clearly not the case in this instance and,as I tried to point out in an earlier post,as the fraudulent agent acting on behalf of the first buyer hadn't paid over the vat,the boat would still be subject to vat but not at the original value but against the used value at the time. In other words,the longer one can get away without paying the vat,if that is possible,the lower the vat due will become,assuming the boat continues to depreciate in value. However,if one were to get caught by an over-zealous official during a purge (not yet common in the UK but already happening in some EU countries,apparently) then they have the power to seize and impound the boat at your expense until the vat due is settled. I have been advised that in reality,this would be rather less likely to happen in ones own home country as opposed to certain EU countries as it would be easier for them to obtain payment. In truth,Brian Legal,a solicitor within a specialist practice covered the salient points in his first post on this thread. For my part,all I have tried to do is pass on what I discovered from a specialist accountant last year when looking at buying a non-vat paid Gib registered boat residing in Spain from its second owner. bothered

 

[stillwaters]

It doesn't, see JFM's previous TV analogy posts.

I'm happy to put all future beer tokens on the advice from JFM.

Frankly I don't have an issue with anyone becoming tee-total though I do hope that neither you or anyone else encounters a similar problem in the future due to failure to ensure that a significant vat payment has been correctly receipted. Surely the point of the MBY article?

 

[John100156]

JFM has it. Like most of us I've had several businesses over the years claiming and paying VAT. If I don't pay they come after me, if I were not to pay my VAT, or go bust, the debt is mine not those to whom I sold my services!

Clearly this is a case of fraud, let's find out who the fraudulent agent was in Gib, take him out in a boat, fill it with all the mountains of previous owners invoices we all have on board our boats and sink it..... It has taken me half hour to wade through all this......

 

[PaulGooch]

Frankly I don't have an issue with anyone becoming tee-total though I do hope that neither you or anyone else encounters a similar problem in the future due to failure to ensure that a significant vat payment has been correctly receipted. Surely the point of the MBY article?

I stand by my belief that JFM has it right.

 

[John100156]

Perhaps Hurricane could set up a poll, something like:

Who thinks...

JFM is right
JFM is wrong
Not sure

Results might be interesting given the number of views this thread has had.....

 

[Pinnacle]

I claim a Lakesailor!!!!

 

[Hurricane]

Sorry - been at the boat show today - only just caught up.

Stillwaters - you seem to have missed an important point.

Have you run a VATregistered company before?

A company selling a boat (the first time that she transfers to private ownership) IS RESPONSIBLE TO HMRC to pay any VAT due.
If that company chooses not to recover the tax from the private owner, HMRC can assume that the value of the sale includes VAT and deduct accordingly.

Consequently, the first private owner does not need to account fot any VAT.

Think about it - how would a private individual actually pay VAT to HMRC when he isn't registered.

 

[John100156]

Yep that's it.

If I buy van through my business, for £10k plus £2k VAT, I claim back the £2k VAT. If I then sell to a private person for £6k, it is assumed that the sale price is £5k and £1k VAT, which I now pay back to HMRC. I as the VAT registered party am responsible for the VAT. If I do not pay it because I am a cheat, HMRC when they find out will seek to recover the £1k from me, not the new owner of the vehicle. It would be chaos otherwise.

 

[jfm]

Sorry but it isn't a case of which vat,as duty and vat are totally different forms of taxation.

Stillwaters I'm sorry to be slow replying; I've been away today

I don't want to pick a fight, but for the sake of the forum I do want to say that virtually every sentence you have written is incorrect in law. I don't have time to go through it all and correct each sentence, but I assure you it is virtually all wrong in law. Just take the sentence I quote above: in the UK import VAT is a customs duty and is charged under the customs duty tax code, and so (for example) all the same smuggling penalties apply. In contrast, VAT on ordinary sales transactions is not a customs duty and is collected under a completely different section of law and the smuggling penalties do not apply. You seem to have no idea how wrong even that one sentence you wrote is.

You are just being a barrack room lawyer and you seem never to have never actually read the law. Do correct me if I'm wrong there. There are about 16,000 pages of tax legislation just in the UK and I can anorakishly admit I have read all of them many times. Several governments and Dave Hartnett have invited me round to ask for views on how to write many of those pages over many years, and I've written quite a few of them myself, yeah verbatim from my laptop to parliament to the statute books without even a comma changed. I fear neither your accountant nor Brian Legal can claim the same. I'm saying this only to illustrate that I am really not shooting from the hip here and I am saying quite forcibly that you (and Brian legal, who doesn't want to engage it seems) are wrong. I don't mind if you disagree of course.

I fear also you are exaggerating to make your point. In reply to "Has anyone ever had to provide the VAT Invoice for their vessel...? you replied "Yes,loads..." I've been boating heavily in uk, France, Italy, Spain for 10 years, pretty much every week in the season, oftentimes in the past in non-VAT paid boats (and I am a UK citizen and resident) and I have never been asked for a VAT invoice. Every serious boater knows a demand for vat papers is a very rare occurence and most on here have never experienced it. Do you want to give some specifics to back up your "loads" claim?

 

[stillwaters]

Sorry - been at the boat show today - only just caught up.

Stillwaters - you seem to have missed an important point.

Have you run a VATregistered company before?

A company selling a boat (the first time that she transfers to private ownership) IS RESPONSIBLE TO HMRC to pay any VAT due.
If that company chooses not to recover the tax from the private owner, HMRC can assume that the value of the sale includes VAT and deduct accordingly.

Consequently, the first private owner does not need to account fot any VAT.

Think about it - how would a private individual actually pay VAT to HMRC when he isn't registered.

Hi Hurricane.Yes,not that it is of particular relevance,I started my first business many years ago and grew it and a number of others along the way to a significant turnover involved in both export and import as well as home market trading.
If you care to review the whole thread you will in fact find that you actually started it under a false premise of thinking that vat could only have been due if the boat had been imported into the EU.That wasn't stated in the article and this was then even clarified by the legal specialist. Now you are throwing in an example of a vat registered company,which is also not relevant in the instance given as there has been no mention that anybody bought the boat through a company.Indeed,had this been so then the vat situation would have been handled differently on the first sale,along the lines that you state.In common with the vast majority of boat purchases,it appears that at no time was this boat bought in a company name.
Private individuals actually pay vat to HMRC in a number of ways the most common of which is by making everyday purchases which are subject to vat,whereupon the seller becomes liable for repayment of an element of it. However,due to the long-standing complexity of whether vat is or is not payable on boats and the comparative high sums involved slightly different rules apply to them from normal day to day items. Over a period of years many individuals have purchased boats exclusive of vat,ostensibly on the basis of chartering them or not keeping them in the EU.There are still currently a number on the market and if an individual (or a company) was to buy one of them then the vat should be paid against the value at the time (not the new value). An individual buying such a boat would therefore,having become liable for the vat,pay it to HMRC or their countries appropriate customs and seek to get proof of the payment from them.You don't have to be vat registered to pay vat,HMRC are happy to receive money from any source.
I have already employed an expensive tax accountant for a large wad of info on this subject and you have also had it confirmed by a specialist solicitor on this thread.Maybe they are wrong and the info readily available on the internet from other specialists is also wrong....?

the

 

[jimmy_the_builder]

Several governments and Dave Hartnett have invited me round to ask for views on how to write many of those pages over many years, and I've written quite a few of them myself, yeah verbatim from my laptop to parliament to the statute books without even a comma changed.

F**k me. If that's not a big gun, I don't know what is.

Cheers
Jimmy

 

[jfm]

...if an individual (or a company) was to buy one of them then the vat should be paid against the value at the time (not the new value). An individual buying such a boat would therefore,having become liable for the vat,pay it to HMRC or their countries appropriate customs and seek to get proof of the payment from them.You don't have to be vat registered to pay vat,HMRC are happy to receive money from any source.

Blimey, I cannot believe I am reading this. You have a very light grasp on tax law stillwaters. The individual you mention has no liability whatsoever to HMRC in that circumstance. If you still think he has, could you quote which section of law imposes the liability (Practical hint: it doesn't exist, anywhere in the 16000 pages). If the individual tried to pay HMRC, they would refuse the payment. For exactly the same reasons, my TV customer does not owe £20 to HMRC when he buys the TV, and if he went to HMRC attempting to pay the £20 (or £20k) HMRC would refuse it. There is absolutely no difference in law between a TV and a boat here.

I have already employed an expensive tax accountant for a large wad of info on this subject and you have also had it confirmed by a specialist solicitor on this thread.Maybe they are wrong and the info readily available on the internet from other specialists is also wrong....?

Hmm. Maybe you think you have. It's more likely you have employed Mr Middle Of The Road and merely think he was expensive. Likewise the solicitor on this thread is clearly out of his depth (and chose not to engage when the questions got too hard for him) and though he no doubt means well he does not know his tax law properly. Reference your last sentence, there is pages and pages of wrong info on the internet on this (and many other subjects). You yourself are adding to it here

 

[grumpy_o_g]

I've written quite a few of them myself, yeah verbatim from my laptop to parliament to the statute books without even a comma changed

Just when I was starting to like you ...

In all seriousness though I cannot understand why there is any question over this. This isn't even a particularly complicated part of the law (even I can understand it) and it's not as if there's room for discussion or opinions. The law is (literally) black and white and there's little scope for interpretation here. Given that we weren't even told the circumstances behind the article in MBY this month there was little point in using it as an example to my mind.

Thanks for clarifying the situation (as usual).

 

[PaulGooch]

<snip>Over a period of years many individuals have purchased boats exclusive of vat,ostensibly on the basis of chartering them or not keeping them in the EU.There are still currently a number on the market and if an individual (or a company) was to buy one of them then the vat should be paid against the value at the time (not the new value). An individual buying such a boat would therefore,having become liable for the vat,pay it to HMRC or their countries appropriate customs and seek to get proof of the payment from them.You don't have to be vat registered to pay vat,HMRC are happy to receive money from any source.

If i buy a boat from a company that, for whatever reason, was able to claim the VAT back on their original purchase cost, they would have to pay HMRC the VAT element of the sale price of the boat when they sell it to me. I have no liability to pay anything directly to HMRC and if the company fail to do so, it's not my problem. I won't have to get anything from HMRC.

If i buy a boat from a non EU Country, import duty becomes payable on the current value of the boat. This is the duty that is passed on to subsequent owners, should i fail to pay it.

You seem to keep missing the distinct differences between the two transactions.

I have already employed an expensive tax accountant for a large wad of info on this subject and you have also had it confirmed by a specialist solicitor on this thread.Maybe they are wrong and the info readily available on the internet from other specialists is also wrong....?

the

Should have saved your money and just asked on here

EDIT : Was typing this when JFM posted #58 lol

PS, can i have my beer tokens back now please