Missing / Destroyed proof of VAT document

[nrbx]

Hi Everyone,

My first post here, i've been lurking for a while!

I was wondering if anyone has encoutered this problem before so can advise on what i need to do.

I have agreed to purchase a new boat, and paid for it in to the brokers account. The owners have now started collecting all the paperwork together and they have the proof of VAT document, however the ink on it has faded to the extent it is no longer readable.

You can just about make out that VAT of £73,021 was paid on the boat from the document, and the invoice number, but that is about it, and i suspect it will fade completly soon.

They have a copy of the invoice from the builder to the first distributer where the vat was paid, but i understand that company would have claimed the vat back so this is of no use to prove VAT is paid on the boat.

So the question is, where does this leave me. Are there any other ways to prove the vat is paid, and does it matter?

Many thanks in advance!

 

[Tranona]

There are two issues. First is why are you worried? Whilst it is nice to have the invoice, it is not an offence not to have it - and highly unlikely that you will ever be asked to show it. If the boat was originally bought in the UK(or EU) by a private person it is just about impossible for the VAT not to be paid. Any subsequent changes of ownership from one private person to another are exempt from VAT. So if you have a complete record of private ownership there should be no issues.

VAT problems arise where the boat has been owned by a VAT registered entity (often a company) as VAT offences can only be committed by such an entity, or the boat has been privately imported where VAT may have been due and the responsibility of the private importer. Be very wary of the latter as although the liability is with the importer any outstanding VAT is also a charge against the boat.

Second, what can you do about it? In many cases nothing. There are no records kept of VAT payment against a particular boat. The only evidence is the original receipt and there is no legal requirement for the entity that accounted for VAT to keep records for more than 6 years. In practice, the original supplier is probably out of business anyway, but if it isn't then there is a possibility that they still have a copy. This happens with long etablished builders like Fairline.

The vendor will sign that he is passing clear title so no liability for any past offences will fall on you. If there was any offence involving the boat (with the exception of a private import) it will have been a long time ago and unlikely ever to be investigated.

You say you have a faded copy of the invoice. If it has the VAT number and the amount, that is useful. It would have had some form of description, but often there is not enough description to tie it directly to the boat. VAT is a tax on the transaction not the boat and there is only a requirement to show that the goods involved are taxable.

Hope this helps

 

[nrbx]

Hi Tranona,

Thank you for your reply, I was mainly worried from a few aspects of people advising i need it if i travel to other EU countries. And it may be a put off on the resale value if i don't have it.

What you say makes perfect sense, the boat was owned by a vat registered dealer first and then 2 private individuals covering the last 10 years after this. It is a fairline, but i assume they will only therefore have the record of the sale to the dealer company?

We have a copy of the VAT paid by the dealer, but like you said this would most likely have been claimed back.

 

[benjenbav]

Hi nrbx, and welcome. There are a couple of issues.

First, the whole question of the necessity to hold a "proof of VAT paid". If you search these fora you will find that this gets done to death every couple of months and some of the commentators on here are experts on the subject who advise on the intricacies of VAT for a living. The upshot of their comments, as Tranona says, is that - unless fairly specialised circumstances apply - there is no way for HMRC to ask you to pay the VAT which should have been paid five years ago by a former owner.

The second issue is that, despite the above, many people feel that, when the jackboots of the douaniers crunch on their deck, it would be nice to have a piece of paper to wave at them at the moment you realise that your schoolboy French is in no way up to the task of persuading them to remove their fingers from the triggers of their hechler and koch semi-automatics.

Happily for you, it seems that the relevant piece of paper does exist, albeit that it may be close to becoming unreadable. I would suggest that a copy is made now and I would get a notary public to authenticate it as a genuine copy. This will give you what is sometimes termed "next best" evidence of the original documentation.

 

[jfm]

I'm going to ignore the debate on whether you really need the doc, as that has been done to deeeeeath

The fact VAT has been claimed back doesn't make a VAT invoice invalid as evidence of VAT paid status. For all you know, the first owner might have reclaimed the VAT. The whole concept of VAT paid status is deeply erroneous, and so the fact VAT has been claimed back becomes irrelevant: this whole issue is one of (misguided) perception, and the perception out there is that an invoice showing VAT is what you need, job done, box ticked

Your builder-to-dealer invoice is a copy. Nice to have but doesn't quite tick the (misguided) box.

So, on your faded (original) invoice, I would:

1. Take to solicitor and get him to issue a signed letter on official letterhead saying "I examined today the original of document dated X which is an invoice from a to B for Fairline Sq HIN# xxxx blah blah. I confirm that, although the document is fading and may in the future become illegible, at the time I personally examined it today, it was legible and I therefore confirm it stated the following. [then list out the boat detials, price, VAT, names, addresses, dates, vat number, everything]". I suggest you draft the letter for the solr. Unless he is boaty solr he might miss something, so better if you draft it. also, if it can be read on a photocopy on dark/high contrast setting (experiment to get best result), do that and get him to certify the copy (by writing a certification statement on the face of the copy)

2. Contact an ink restorer and see if they can spray a chemical on it to re-darken the ink. Start here for example http://paperconservation.co.uk/prof.html

Perhaps knock £750 off the price to cover thsi?

I'm a bit worried you have paid the broker, sheesh. But let's not go there in this thread.

Good luck

 

[Tranona]

Thats sound advice about getting a notarised copy. Is the dealer still in business? Worth a try.

The subject of documentation going abroad also gets done to death - one running on Scuttlebutt now, but consensus is that generally nobody bothers about VAT except in certain "hot spots" where non-VAT countries butt up against the EU, or where large expensive boats (often chartering) congregate. So France/Channel Islands, Gibraltar/Spain Italy/Croatia, Greece/Turkey. However they are after the Flavio Briatories of this world who have multi million £ boats registered in the Cayman Islands and used in the EU as "charter" boats. Fine until the "owner" starts using privately and the tax man gets curious!

 

[gjgm]

Ah, does it matter... that is the question.
Following the advice given above, I would say, no. It is possible that a future buyer may not be prepared to accept your efforts with the docs, and so the number of potential buyers is smaller. And some buyer may try to knock of £££ for the untrue reason that HMRC might clap him in irons.
But as you have agreed to buy and indeed paid for the boat, if I understand you, those are risks you have already undertaken.

 

[nrbx]

Hi Gigm,

Yes and no to the risks on the vat paid aspect, i clarified with the broker before we agreed to buy and pay that the vat document existed which i was told it did.

I suspect the solicitor / document restoring route is the best way to go then, or both.

It turns out Bank of Scotland may have a copy of it from the old owners finance, so fingers crossed!

Thanks for all the replies.

 

[Imperial One]

We are having a nightmare with a Vat invoice situation not unlike this at the moment.
The only major outfit left lending money on boats, no names but go figure, refused to lend because THEY were not happy with the Vat papers!

We have proof of vat payment but they thought the first owner could have reclaimed the Vat and so said it was not good enough.
The fact that we also have a second invoice showing vat paid seemed to have been of no relevance at all to them!
As we all know, when a Vat registered company reclaim they have to charge it again on resale so you have no issue providing you have proof.

My point here is that while the HMRC are happy we are now facing a new challenge from lending sources who seem to be finding any reason, no matter how tenuous, NOT to finance.

The stupid thing is that the HMRC chaps at the leisure marine division in Portsmouth have looked at the papers and said they are all good and as far as they are concerned the boat is Vat paid......but the lender, who have no statutory powers said they were not good!

Sadly, HMRC are no longer allowed to write a letter saying they are happy with a vessels Vat status and paperwork. So to find a solution, we have had to get the original paper showing vat paid, in France, notarised before they would proceed.

In short the powerful body you might expect to be an issue if your papers are not 100% are actually not the issue.
Nowadays it is some person, who probably does not even have a boat, who has the power to stop a sale dead.
So, if you want to protect your future sales of the boat, my advice is to be sure you have a legible copy of all papers so that you can satisfy people, that in theory you have no need to!
Good news on this tale is that after all and using the papers we already had, the sale will now proceed.......perhaps it is all part of an unpublished government incentive to create work!

Happy Christmas all

 

[Phoenix of Hamble]

I think gjgm has stated the only real reason for wanting a VAT paid invoice..... that is the sale on of the vessel at some point in the future... its a bit of a vicious circle, in that we, as a community, self perpetuate the obessesion with these documents.

I've been abroad more times that I can count with my boat, and despite being checked by douaniers of various nationalities on quite a few occasions now, have never been asked for any such document.

 

[DAKA]

Seeing as you have handed a chunk of cash to the Broker and this is going to take at least a month to sort out ( ITS CHRISTMAS) you need to be checking just how your cash is protected.

Choice 1
reject the VAT proof and get your money back (as soon as the VAT documents/discount is sorted you can restart a new sales process).

Choice 2
Get in touch with the Brokers bank and check the trust status, are there any automatic transfers in place, is it written in trust or is it just called a clients account.

If you have been lurking you should be aware of this issue

http://www.ybw.com/forums/showthread.php?t=254190


Its not time to panic but its time to check.

 

[Ubergeekian]

So, on your faded (original) invoice, I would:...

I would make up a similar blank form on the computer, print it out, type in the details (same amount and invoice number, natch), knock it around a bit and stick it in the file. Who's ever going to tell?

My boat came with an original VAT invoice. Well, it might be original. I have no idea whether it was printed in 1986 or 2009, and although I am sure a forensic lab could tell, I don't think UKBA or the douaniers have one afloat with them.

 

[gjgm]

I would make up a similar blank form on the computer, print it out, type in the details (same amount and invoice number, natch), knock it around a bit and stick it in the file. Who's ever going to tell?

My boat came with an original VAT invoice. Well, it might be original. I have no idea whether it was printed in 1986 or 2009, and although I am sure a forensic lab could tell, I don't think UKBA or the douaniers have one afloat with them.

Well, interesting point , leaving the legality of this aside.
Who is ever,ever going to know? How ?

 

[jfm]

I would make up a similar blank form on the computer, print it out, type in the details (same amount and invoice number, natch), knock it around a bit and stick it in the file. Who's ever going to tell?

My boat came with an original VAT invoice. Well, it might be original. I have no idea whether it was printed in 1986 or 2009, and although I am sure a forensic lab could tell, I don't think UKBA or the douaniers have one afloat with them.

Perfectly good suggestion Uber, if you can get it exactly right. I wouldn't disagree, let alone condemn you for it. Off the cuff, I would say it is not illegal either, ie not fraud, because there is no pecuniary gain sought or achieved by this action. Way to go...

 

[Imperial One]

Just be sure to pass it by the lenders and make sure they are happy that it is worded in a way to suit them, now that they seem to be the only people left to please!!!!

 

[Tranona]

Seeing as you have handed a chunk of cash to the Broker and this is going to take at least a month to sort out ( ITS CHRISTMAS) you need to be checking just how your cash is protected.

Choice 1
reject the VAT proof and get your money back (as soon as the VAT documents/discount is sorted you can restart a new sales process).

Choice 2
Get in touch with the Brokers bank and check the trust status, are there any automatic transfers in place, is it written in trust or is it just called a clients account.

If you have been lurking you should be aware of this issue

http://www.ybw.com/forums/showthread.php?t=254190


Its not time to panic but its time to check.

Why should he be worried? The money is not his if he has the title to the boat, but the vendor's. If the sale has been completed the money should now be with the vendor.

 

[boatmaster]

Tax opinion Latters

The stupid thing is that the HMRC chaps at the leisure marine division in Portsmouth have looked at the papers and said they are all good and as far as they are concerned the boat is Vat paid......but the lender, who have no statutory powers said they were not good!

Sadly, HMRC are no longer allowed to write a letter saying they are happy with a vessels Vat status and paperwork. So to find a solution, we have had to get the original paper showing vat paid, in France, notarised before they would proceed.

Some years ago, customs announced that it would no longer issue tax opinion letters and instead printed very vaigue guidelines for yachtsmen. Dover Yacht unit was subsequently closed which was mainly where these letters came from. and Hm customs almost stuck thier fingers up at us wealthy boaters who can afford to pay vat for such extravagant luxuiries. ( not a fan as you probably gather)

I have a relative who is a broker and work with him to cover holiday, Recently we had a similar issue to this post which made the boat a bit of a 'hot potato' and awkward to sell. we suggested that the owner contacted customs for clarification knowing damn well that he wouldnt get it, but.........He would have a good defence if asked later by HMRC proof vat paid on the boat. about a week later he marched into the broker office waving a letter from HMRC, newcastle upon tyne office stating that the boat was deemed vat paid and that the vessel was free to circulate within the EU.
Now whether or not an unknowing civil servant has stuck his/her neck on the line i dont know, but the letter is HMRC and thats all that matters, i'll dig out the address and post it. maybe thats the way to go.

 

[BrendanS]

Now that is a result, as the demise of the Dover Yacht unit has been seen as the end of such letters for many years here on the ybw forums

 

[boatmaster]

Now that is a result, as the demise of the Dover Yacht unit has been seen as the end of such letters for many years here on the ybw forums

indeed, i'll get the address posted, hopefully tomorrow lunch time.

 

[DAKA]

Why should he be worried? The money is not his if he has the title to the boat, but the vendor's. If the sale has been completed the money should now be with the vendor.

Agreed if thats the case, I assumed the sale was halted as the VAT docs were not as described.

Just how do the Yacht associations recommend buying a boat .........

Trust £250 000 cash with a Broker, trust the Broker that the documents are legally acceptable, trust the Broker that there is clear tittle.

What duty exactly does the Broker owe to the purchaser and what mechanisms are in place if the Broker fails in any one of these duty.

Crazy situation, the purchaser should be advised

Not to trust the whole cash with the Broker
Only deposit the minimum to start the sales process with the Broker after checking the account is a clients account correctly written under trust .

Put the boat/cash into escrow
Balance of cash to the owner/split finance company
Be present or at least have someone present at exchange to
check the boat is there and not 'fire damaged'
check the documents

Then drive the boat away to another marina.

The Yacht Broker associations are more like some sort of Yeha Western Cowboy preservation society.

Just one punters opinion of the situation, a punter who has saved his pennies for the last 5 years and is ready to change his boat but feels like a 'Mark' and doesnt want to risk loosing 5 years of savings.