No vat receipt when buying - help please

[Deleted member 36384]

If this was me, I would worry about this, and it would spoil my enjoyment of the boat, so I wouldn't buy it.

That is a sound position to take based on how you feel about this matter. I would buy the boat if it represented good value and was what I wanted. The thought of sailing on a modern, well found, step aboard and sail away type purchase has a lot of appeal to me, but not this and refit, for example. I tend to buy stuff and then keep it for a long time, so resale wouldn't be an issue for me. My philosophy when spending money on leisure things is that I should be able to afford the write off, otherwise I won't buy.

Really dont want to walk away but do want to take it to Europe ocassionally

If its that good i.e. "really don't want to walk away" buy it, you have all the information you need to manage the lack of evidence on VAT paid. You would be prepared to accept the boat at a -20% on the sale price from your OP, so you obviously are prepared to accept the risk at a price. Such is life.

 

[GrahamM376]

Really dont want to walk away but do want to take it to Europe ocassionally Please....someone....help?! John

If you only want to be able to produce a bit of paper to satisfy some foreign official, rather than defraud UK Customs, it's a half hour job to produce one yourself with desk top publisher.

 

[westernman]

If you only want to be able to produce a bit of paper to satisfy some foreign official, rather than defraud UK Customs, it's a half hour job to produce one yourself with desk top publisher.

A bill of sale (between two UK residents for a boat which is in the UK at the time of sale) is all that is required for the foreign official for a British registered boat.

You can add to it things like "the seller warrants that the boat is VAT paid" and other such things if it makes you feel more confident.

In my case, my boat was built in Canada and imported into the UK. I bought from a private seller in the UK and had the clause "the seller warrants that VAT was paid on the boat when it was imported into the UK".

I also have the original slip of paper from the Customs in Cowes. As I explained, it really is the most unconvincing evidence that VAT has been paid you could ever imagine. There is no way you can even be sure it actually is for a boat and even less sure that it is actually about my boat! There is no official number on it or any way it could be used to trace anything.

As some one who runs a VAT registered company, we of course make the VAT receipts for our customers - who will use that for reclaiming VAT paid. You do it anyway you like. There is no "official" way a VAT receipt has to be made out.

If someone gives you a VAT receipt for your boat - how do you know that it is genuine?
If it is genuine how do you know the company which made the receipt actually paid HMRC?
Answer is in the end you don't know and you don't care.

The bill of sale is your key document and key safeguard.

 

[bbg]

Hmmm.. I would be worried about complications on resale as well....

That might be true in Britain, but I have the feeling this "VAT Invoice" issue is a British sailor's "urban legend".

I bought my (then French-registered) boat in France, without a VAT invoice, although it did have French paperwork.

During the time I was training and racing in France, I chatted with a lot of sailors about buying and selling without proof of VAT paid. No-one had any clue what I was talking about. It is simply a non-issue.

I then sold my (British-registered) boat to a Frenchman without the VAT invoice that I didn't have, who promptly registered it on the Franch registry without any problems. I've been in touch with him several times since then and I'm sure he would have told me if there was an issue.

VAT is a tax payable on the occurence of certain events. Sale from one private EU resident to another private EU resident is not one of those events. Neither is taking the boat from Britain to Europe.

 

[Tranona]

That might be true in Britain, but I have the feeling this "VAT Invoice" issue is a British sailor's "urban legend".

The "urban legend" comes about because our HMRC refuses to explain what is being explained in this thread. It simply relies on the two bald statements, first that it is necessary to show evidence of VAT to travel in Europe (EU) with your boat and secondly that the only evidence that they will accept that VAT has been paid is the original commercial invoice.

Both statements are literally true. However, there is no evidence that there is any sytematic check on "proof" - although there are rumblings that Portugal is pressing for there to be some. As to the "evidence" of payment - your lack of evidence is their lack of evidence so there is no basis for any offence of just not having the evidence. It is, however clear that it is very rare for HMRC to take any action against an owner (or his boat), unless he was the person responsible for accounting for VAT. In such cases it would normally have to go to court, and there are time limits for action. There is some useful commentray from HMRC and the RYA in the VAT FAQ sheet on their website. While not definitive and full of the usual "ifs" and "maybes" it does reflect the reality.

Unfortunately, despite all this the "legend" has become established, and re-inforced by banks and finance houses insisting on sticking to the singular statement of "evidence" and refusing to lend if this is not available. In practical terms it probably does not make much difference as most lending is on modern boats of high(ish) value where the absence of a complete set of papers would raise questions anyway. But it spreads further and Brokers are required to ensure documents are in place or warn the buyer of the HMRC stance - and some may even refuse to list a boat that does not have evidence, so limiting the market.

Not a very happy state of affairs, but one that arises from the basic error in trying to say that a transaction tax can also be an asset tax - and of imposing new conditions retrospectively. The idea of being able to prove VAT payment across Europe dates from 1992 - nearly 20 years after VAT on boats was first applied in the UK with no suggestion that just like any other goods, there was any need to keep the original invoice.

 

[gjgm]

In process of buting a sailing boat and have a significant problem suddenly raised its head.

Buying from the original owner who purchased the boat new in 2002.

His house burnt down - destroyed all paperwork including the original bill of sale.

The dealer who sold the boat went bust in 2007

What the hell do I do? He wont drop the price by 20%....

Really dont want to walk away but do want to take it to Europe ocassionally

Please....someone....help?!
John

HMRC isnt interested. Unless European Navies already have your photo on their bridge as suspect number one- they are not interested.
Your risk (unless the boat is smuggled) is that someone behaves as you do when you come to sell it and believe the seller needs to give a 20pct discount off the value of the boat, though they will never actually have to pay that to any VAT office.
There is no solution.
BTW, even if you have a VAT invoice, it doesnt mean VAT isnt now due on the boat (if VAT was reclaimed, or the boat exported to Cis, for example), so your piece of paper should be pretty worthless if people understood !
Meantime... see if you can renegotiate, but age/value depending, the seller may not see why he should give you money for (probably) nothing.

 

[savageseadog]

Tell the vendor that you'll accept his story but if there's any problems you'll burn his house down.

 

[nimbusgb]

Just as an idea ......

People who want to take a holiday somewhere esle in the world will sometimes join a website where they look for people they are happy about swapping thier homes with so each family gets the holiday experience with no or little money exchanging hands, they just pay thier fares to reach thier holiday swap homes.


So there is probably a website where boat owners can peruse the details of other boat owners and do a holiday boat swap for the experience ? Before anyone goes on about insurance that must also have been mentioned on such websites about swapping homes for a holiday ?

No worries about registration or vat.

Like i say just an idea though very probably already out there bobbing around.

Oh that life was so easy! While you can trade your house with someone for a holiday plenty of states get all bent out of shape when it comes to loaning a boat to someone. The immediate response of most is to assume that there is a charter in place and that they are missing out on income. Unfortunately the threat of having ones boat impounded keeps most people from doing this sort of thing.

 

[Quandary]

Tell the vendor that you'll accept his story but if there's any problems you'll burn his house down.

At last, a sensible answer.

 

[SmileyGiley]

My understanding.

If you go to another Euro country, they would not have recourse to VAT, so long as you can show you just came from the UK. If anyone else tries to argue you should pay VAT you can say that the UK is where any VAT payment should be levied. VAT is payable at the first point of entry to Europe. If you came from UK, then any putative VAT must be payable there.

If you sail outside the EU, (ahh that world cruise) when you come back to the EU you may be challenged to show that the yacht has been VAT paid in Europe. That may be a sticky moment. If you can show that the yacht was living in the UK prior to departing EU waters, and that you were the owner when the yacht left, and that you have not sold & repurchased the yacht whilst it was away, and that you have not had a major refit(which becomes VATable somehow) then you should be OK.

As many have said, you onward sale price may be less too as the buyer may have the same concerns. An added extra, I think that if you were to be found to be 'importing' the yacht after your world cruise (due to lack of paperwork) there would be import duty as well as VAT to pay.

But, as with the rest of the posters, I didn't read the fine print before writing this (I did take a quick scan of the paperwork a while back tho for the same reason). The only answer is to read the regs. Good info available online from HMRC (their help files are actually pretty good). The RYA has much info too. Probably you'll never have a problem, but without the paperwork there is always the possibility.

Last spanner in the works - Can he prove there is no outstanding finance on the yacht? Potentially a far more open ended can o' worms

 

[westernman]

Can he prove there is no outstanding finance on the yacht too?

No.

 

[westernman]

To put this into perspective:-

When you buy a used car from a private buyer, do you always ask for the VAT receipt?

When you take your car abroad, do you take the VAT receipt with you?

If you re register your car abroad, do you need to produce a VAT receipt?

In my case, the answer to all three questions is no. And I have done all three.

 

[jonic]

If you leave the EU and sail back in, that is potentially a chargeable event and of interest to customs.

The Channel Islands is out of the EU.

I had a boat recently with VAT paid papers, the boat had been outside of the EU, there were missing documents and the papers did not satisfy HMRC.
VAT was levied by HMRC on the owner at the time. This was in 2009.

 

[Tranona]

To put this into perspective:-

When you buy a used car from a private buyer, do you always ask for the VAT receipt?

When you take your car abroad, do you take the VAT receipt with you?

If you re register your car abroad, do you need to produce a VAT receipt?

In my case, the answer to all three questions is no. And I have done all three.

The only flaw in that argument is that the VAT regulations specifically state that boats are "different" and state clearly that there needs to be proof of payment or "deemed exempt" according to the criteria in the transition agreement.

The problem is that nobody thought through the implications of trying to enforce this - or they did and decided to ignore it. Latter is more likely because generally people responsible for drafting are not stupid, but are often prey to political decisions which may be daft.

 

[bbg]

If you leave the EU and sail back in, that is potentially a chargeable event and of interest to customs.

The Channel Islands is out of the EU.

I had a boat recently with VAT paid papers, the boat had been outside of the EU, there were missing documents and the papers did not satisfy HMRC.
VAT was levied by HMRC on the owner at the time. This was in 2009.

Had the boat changed hands outside the EU? Was the owner not an EU resident, but brought it in to the UK for sale (in the UK to a UK resident)?

 

[jonic]

Had the boat changed hands outside the EU? Was the owner not an EU resident, but brought it in to the UK for sale (in the UK to a UK resident)?

The chain of Bills of Sale show each owner as EU resident with EU addresses, the boat had been out of the EU and I guess HMRC were not happy that the previous VAT payment still stood.

The point is there are often those on here who say HMRC will not be interested, but in the right circumstances they will be. And if there is no paperwork it can get sticky.

 

[wallydoo]

Looks to me like the pile of smelly stuff is getting ever deeper for this poor guy......... can no one give him help ??

 

[zambant]

So just in case some one wonders I'm the OP

Take the sharp knives away..... I'm looking to cut my jugular

So No VAT receipt, no original bill of sale when he first bought it - Both lost in his house fire poor bloke. Dealer cased trading. Receiver wont/cant be bothered to look through his records

It may have finance on it despite the owner paying for it in full

Cant do an HPI check on it....

May not even belong to him..

Why on earth do we bother to use a broker to sell the damm things?

My head just blew up - how the hell do we manage to buy boats?????

 

[Tranona]

So just in case some one wonders I'm the OP

Take the sharp knives away..... I'm looking to cut my jugular

So No VAT receipt, no original bill of sale when he first bought it - Both lost in his house fire poor bloke. Dealer cased trading. Receiver wont/cant be bothered to look through his records

It may have finance on it despite the owner paying for it in full

Cant do an HPI check on it....

May not even belong to him..

Why on earth do we bother to use a broker to sell the damm things?

My head just blew up - how the hell do we manage to buy boats?????

It is buyer beware! you are trying to buy from a private individual and there is little consumer law to protect you. It is up to you to determine if you are happy with the boat and the ownership etc. If a broker is involved he will have checked what is there - but if there is no paperwork he can't do anything about it. The problem lies solely with the current owner. If it is any consolation, very few recent boats will have this sort of problem. Pity you found one, but guess you have to walk away and move on as there is nothing you can do to resolve it.

 

[Rivers & creeks]

Think of it like this: You ask for a test sail and the engine makes an unpleasant grinding noise, the owner says its always done that and it doesn't cause any problems, and true the engine to all appearances functions just fine. Would you still go ahead without a lower price? Of course not.

But then we flipping do don't we? We buy with our heart not our head. So walk away or get a further reduction, because in five years time when you come to sell, all the prospective buyers will be lining up on YBW to ask if they should buy and we'll all be giving the same advice. It's like a boat with osmosis, so many boats have a mild dose of the pox and get sold from one to the next with each sale including a reduction for the cost of repairs that never happen.

You can get an extra 10% off and sell the boat in five years time prepared to also give an extra 10% off. Or walk away. Maybe the next guy doesn't care about the lack of paperwork. Heck - at the moment the owner can't even prove it belongs to him