Missing VAT Receipt.

[Jim@sea]

I am selling my boat. (1996) I do not have the original VAT Invoice.
I have an interested person who has asked for proof of Vat Being Paid.

I have the original Engine Warranty Document. which shows that the Boat was sold new by one of Englands larger Boat Importers. Who were the only importers of this Make of boats from Norway, and who are still in business.
I have asked them but they dont keep records for 15 years.

The boat was sold second hand in 2002 by the first owner through a well known firm of Yacht Brokers to the person I bought it off.

How important is a Vat Invoice on a 15 year old boat worth about £20,000.
Is there any way of verifying that Vat has been paid.

Mind you I bought a new Moody 30 in 1979 and I still have the VAT receipt. Nobody has asked me for it. So presumably all successive owners have not needed it.

 

[Glyn-2008]

I think you need to look at this very recent thread in order to get lots of various answers. You're going to need a bit of reading time though as it was hotly contested.


http://www.ybw.com/forums/showthread.php?t=338104

 

[Nautibusiness]

Jim

It is only as important as the buyer sees it to be.

On £20K of value the worst case is a PERCEIVED (IN CAPS for Tranona) risk of £4K. Some will not care in the slightest, some will run a mile, some will try and screw a further £4K off your price.

It is conceivably possible that overseas customs will ask for proof when the foreign buyer tries to bring the boat into his EU country, but it is unlikely. It is less unlikely that HMRC will come knocking. But, the perception that it may happen and no matter how many different ways the HMRC wording is interpreted you cannot get rid of peoples worries here.

On £20K I wouldn't be overly concerned and (as a private seller) I would shrug my shoulders to the buyer and say, "It's 15 years old, it's hardly likely I'd still have that receipt and at £20K it isn't worth HMRCs paperwork trail to chase."

 

[Imperial One]

Jim,

If you know who sold the boat the second time round call them up. They should have kept copies of all relevant documentation on their files so in theory could issue a certified true copy of a document for you. On a 20 year old boat that should be OK for most people - as long as LOMBARD are not involved anyway!!
I am a little surprised that the original sellers don't keep their records - we do and I know other major companies also hang on to such things even if they are archived away and take a day or two to dig out.
Good luck with the sale.

Mike.

 

[superheat6k]

The party line seen everywhere regarding VAT is that you must have the original invoice showing this was declared, and therefore one must presume actually paid (simply having an invoice showing a vat element does not prove payment was made and accounted to HMRC - this would be nigh impossble to ever do).

However, the onus on paying vat over is with the original seller when new, and as far as I understand there is no precedent for subsequent buyers of any secondhand goods to be put to to prove it was paid in the first place.

HMRC only require company records to be kept for 7 years so as long as you can show the boat is older than this then they will likely not be interested.

Similarly if the boat is UK registered, e.g. SSR, then any foreign busybody should politely be told the tax status of the vessel is a matter for UK tax authorities - HMRC.

That all said as mentioned previously the value of the boat is £20k so the vat risk (in my view a very very low risk) is a maximum of £4k, and as you would be reasonably able to show the vessels age, you could also reasonably ask the actual vat levy to be at the rate in force at the time the boat was first sold. However, despite the rhetoric about this subject does anyone actually know of anyone who has been forced to fork out in the manner, I certainly do not, but a thread showing all those who have would be interesting, but I would expect the list to be a short one.

Don't forget that with any boat sale many supposed would be buyers will then try to find any excuse to avoid completing the sale. Therefore if the boat is reasonably priced and otherwise the ownership trail is reasonably up together I would insist what you have is all that is available - the buyer accepts this or he walks away, leaving you to find another buyer.

When I bought my current boat last year there was no VAT invoice, despite advice from the broker when I first viewed the boat it was available along with all other title documents. In this case it was a specific question I asked and at first viewing, and as the answer was that it was present did give me fair grounds to include this factor in the price I later haggled to.

Notwithstanding, after I bought the boat I contacted the manufacturer and they provided me a pdf scan copy of the original invoice from their files.

 

[neale]

How important is a Vat Invoice on a 15 year old boat worth about £20,000.
Is there any way of verifying that Vat has

the truth is that the vat invoice is not important on a boat such as this. The reality is that a potential buyer is likely to have been told that it is important and therefore it becomes important to you as the seller. Let's be honest a 20k boat of 1996 vintage is never going to be investigated on subsequent owners, ESP if registered in the uk with a bill of sale showing the last transaction was between two private uk individuals.

So the answer is that the current buyer may have to be allowed to slip away if they perceive the vat issue as a show stopper unless you can do something to help them get over it, and this might be a 20% reduction, as wrong as that is.

I would have no problem buying a boat like yours without the vat receipt if it was the right boat at the right price and I wouldn't be seeking a reduction based on a missing bit if paper, but not all buyers will be like me.

 

[DAKA]

20% is 20%, the arguments that its only £4k are only relevant if buying a tender for a super yacht.

A few appear to be thinking that 20% of a £20 000 boat isnt as relevant as 20% of a £2m boat which is crazy.

If someone really couldnt give a toss about £4k, chances are they would be buying a £100 000 boat !

Anyone posting that there isnt a need to worry about £4k please dont think £4 k, post while thinking about the value of 20% of your own boats value.



(prefer not to comment on the overall comments, it was just the idea that £4k is pocket change to me so you dont need to worry about it bit )

 

[neale]

20% is 20%, the arguments that its only £4k are only relevant if buying a tender for a supper yacht

Would that be a tender bit of beef for the supper yacht.

 

[coliholic]

That all said as mentioned previously the value of the boat is £20k so the vat risk (in my view a very very low risk) is a maximum of £4k, and as you would be reasonably able to show the vessels age, you could also reasonably ask the actual vat levy to be at the rate in force at the time the boat was first sold..

In the uinlikely event that this scenario did occur, if you put that argument forward wouldn't the Vatman counter with wanting to take the actual cost at original point of sale as his basis for calculating the VAT? So though the VAT rate may have been say 15%, at the time, the original price of todays £20k boat may have been what £75k? Giving a VAT payable today of £11,250. Or am I overcomplicating this?

 

[DAKA]

Or am I overcomplicating this?

Not at all, spot on !

 

[DAKA]

Would that be a tender bit of beef for the supper yacht.

Thats you added to the 1st April hit list

 

[neale]

Thats you added to the 1st April hit list

 

[Tranona]

In the uinlikely event that this scenario did occur, if you put that argument forward wouldn't the Vatman counter with wanting to take the actual cost at original point of sale as his basis for calculating the VAT? So though the VAT rate may have been say 15%, at the time, the original price of todays £20k boat may have been what £75k? Giving a VAT payable today of £11,250. Or am I overcomplicating this?

Completely irrelevant. The VATman is never going to do this - there is no mechanism for doing it. VAT is a tax on the transaction NOT the value of the boat. If there is no transaction there is no VAT. So you can't just imagine a transaction and then imagine a value, and then guesstimate a rate. So all this stuff about reducing the price in case there is a "VAT liability" is nonsense. However, it is clear from previous threads on the subject that people seem to be unable to accept this simple fact, preferring to believe the rhetoric.

In the case under discussion here the only time there was ever any VAT liability was when the dealer first sold the boat to a private individual (for which the invoice is missing) and it was the responsibility of the seller/dealer to account for it. If he did not account for it correctly then any action to correct it would indeed have been based on the invoice value then and the rate ruling at the time. However, none of that is relevant to either the boat or the current owner.

The only time valuation comes into the picture is if a boat is imported into the EU. This is defined as a transaction (chargeable event) for VAT purposes. HMRC has the option of accepting a purchase price, a valuation, or determining its own valuation (see HMRC VAT notice No8). Which is used will depend on the facts. For example if you bought a boat abroad and immediately imported it they would accept what you paid for it as representing market value. If, on the other hand you used it for some time outside the EU they might take into account depreciation and any value enhancing improvements in setting the value. VAT would be paid on the agreed valuation at the ruling rate and the receipt for this would be the only record so does become a vital document as in this case any liability could attach to the boat as well as the individual responsible for importing and paying VAT (and duty if appropriate). So, again none of this applies to the OPs boat.

 

[gjgm]

Completely irrelevant. The VATman is never going to do this - there is no mechanism for doing it. VAT is a tax on the transaction NOT the value of the boat. If there is no transaction there is no VAT. So you can't just imagine a transaction and then imagine a value, and then guesstimate a rate. So all this stuff about reducing the price in case there is a "VAT liability" is nonsense. However, it is clear from previous threads on the subject that people seem to be unable to accept this simple fact, preferring to believe the rhetoric.

In the case under discussion here the only time there was ever any VAT liability was when the dealer first sold the boat to a private individual (for which the invoice is missing) and it was the responsibility of the seller/dealer to account for it. If he did not account for it correctly then any action to correct it would indeed have been based on the invoice value then and the rate ruling at the time. However, none of that is relevant to either the boat or the current owner.

The only time valuation comes into the picture is if a boat is imported into the EU. This is defined as a transaction (chargeable event) for VAT purposes. HMRC has the option of accepting a purchase price, a valuation, or determining its own valuation (see HMRC VAT notice No8). Which is used will depend on the facts. For example if you bought a boat abroad and immediately imported it they would accept what you paid for it as representing market value. If, on the other hand you used it for some time outside the EU they might take into account depreciation and any value enhancing improvements in setting the value. VAT would be paid on the agreed valuation at the ruling rate and the receipt for this would be the only record so does become a vital document as in this case any liability could attach to the boat as well as the individual responsible for importing and paying VAT (and duty if appropriate). So, again none of this applies to the OPs boat.

I think we need to move the debate on a bit, though.
I would hope that most people after 2 years of this stuff on here have grasped that fact that, for the majority of boats sold, and sales where there appears to be nothing suspiscious (sellers with dodgy tans and big gold jewelry ) no one is ever going to have to pay VAT because of a missing document.
The problem is that people are worried they wont be able to SELL the boat at the same price as a boat with the VAt document. Now, we can discuss until the earth stops spinning if that is logical/legal/insane etc, but unfortunately it is becoming more prevelent. I think, unfortuantely, that alot of the discussion on here is about big ticket items, where boats move around countries, maybe imported,exported etc. For the majority of boats, that isnt the case, and so OP gets embroiled in something, to my mind, rather stupid.
You can argue £4k is £4k, but if you only look at the notional and not the risk, it isnt very meaningful.
But if there is one thing I have learned on this forum is that most people are very very risk averse and are not very good in calculating or understanding it.

 

[DAKA]

However, none of that is relevant to either the boat or the current owner.

I'm not so sure you are technically correct on that and I asked for clarification on that point a couple of days ago, but no one offered a valid contradiction.

As I understand the situation, it is correct that a private individual can not be charged for someone else's VAT liability HOWEVER the previously VAT liability is actually still attached to the boat .

Technically HMR&C can sell the boat in order to realise their overdue VAT being the 15/17.5/20% that applied to the value of the boat at that point in time (£11k in this case).

The current owner would then get the balance of the sale say £9k and have to privately pursuit the original person for the loss, the original person is more likely to be a VAT reg company that may or may not still exist.

EDIT
If they cant sell it , they may arrest it awaiting payment.

 

[Imperial One]

HMRC only require company records to be kept for 7 years so as long as you can show the boat is older than this then they will likely not be interested.
As we are aware just how often things do go astray we always keep copies of all relevant docs for all boats sold through us. Our Accounting records may not be kept for ever as there is no need to do so as you state.

Similarly if the boat is UK registered, e.g. SSR, then any foreign busybody should politely be told the tax status of the vessel is a matter for UK tax authorities - HMRC.
If only this was the case in practice - by adopting this stance you could very easily find yourself with a whole load of hassle depending on the attitude of the official asking. In my experience, some of them are difficult enough with the relevant papers all totally in order.

Hope this helps - you can never have too much paperwork in my opinion.

 

[Tranona]

As I understand the situation, it is correct that a private individual can not be charged for someone else's VAT liability HOWEVER the previously VAT liability is actually still attached to the boat .

I have already covered that. That can only happen in the case of an imported boat where the VAT is in effect an ad valorum tax that is individual to a boat. While the person who imported it is personally responsible for paying the tax, HMRC could get a court order to apply a charge to the boat. The number of boats this is likely to affect is tiny - that is smuggled boats and therefore illegal and even then it is doubtful that HMRC would go to the expense of going to court unless the amount involved is significant.

The boat in question here is legally in the UK, has title documents back to the original importer so there is zero chance of there being any issues.

 

[Tranona]

I think we need to move the debate on a bit, though.
I would hope that most people after 2 years of this stuff on here have grasped that fact that, for the majority of boats sold, and sales where there appears to be nothing suspiscious (sellers with dodgy tans and big gold jewelry ) no one is ever going to have to pay VAT because of a missing document.
The problem is that people are worried they wont be able to SELL the boat at the same price as a boat with the VAt document. Now, we can discuss until the earth stops spinning if that is logical/legal/insane etc, but unfortunately it is becoming more prevelent. I think, unfortuantely, that alot of the discussion on here is about big ticket items, where boats move around countries, maybe imported,exported etc. For the majority of boats, that isnt the case, and so OP gets embroiled in something, to my mind, rather stupid.
You can argue £4k is £4k, but if you only look at the notional and not the risk, it isnt very meaningful.
But if there is one thing I have learned on this forum is that most people are very very risk averse and are not very good in calculating or understanding it.

Could not agree more. For us ordinary mortals it is blown out of all proportion.

However, for some people who stretch the rules as far as they can to minimise tax it is a real issue - but not the absence of an invoice, but whether their scheme to avoid paying the tax is legal or not. However, such people do not waste their time on these forums, but have highly paid advisers to do the worrying for them.

 

[DAKA]

I have already covered that. That can only happen in the case of an imported boat where the VAT is in effect an ad valorum tax that is individual to a boat. While the person who imported it is personally responsible for paying the tax, HMRC could get a court order to apply a charge to the boat. The number of boats this is likely to affect is tiny - that is smuggled boats and therefore illegal and even then it is doubtful that HMRC would go to the expense of going to court unless the amount involved is significant.

The boat in question here is legally in the UK, has title documents back to the original importer so there is zero chance of there being any issues.

Excellent , thank you




Assumes the boat didnt spend part of its life outside EU and attract a second 15% but I'm happy with your explanation, you have converted me.

 

[Nautibusiness]

I think we need to move the debate on a bit, though.
I would hope that most people after 2 years of this stuff on here have grasped that fact that, for the majority of boats sold, and sales where there appears to be nothing suspiscious (sellers with dodgy tans and big gold jewelry ) no one is ever going to have to pay VAT because of a missing document.
The problem is that people are worried they wont be able to SELL the boat at the same price as a boat with the VAt document. Now, we can discuss until the earth stops spinning if that is logical/legal/insane etc, but unfortunately it is becoming more prevelent. I think, unfortuantely, that alot of the discussion on here is about big ticket items, where boats move around countries, maybe imported,exported etc. For the majority of boats, that isnt the case, and so OP gets embroiled in something, to my mind, rather stupid.
You can argue £4k is £4k, but if you only look at the notional and not the risk, it isnt very meaningful.
But if there is one thing I have learned on this forum is that most people are very very risk averse and are not very good in calculating or understanding it.

I wish there was a "Like" button.