No vat receipt when buying - help please

[AntarcticPilot]

I don't know anybody that provides that cover for boats. Maybe somebody would underwrite it?

The thing is with a house sale, and I have been in a similar position, if there are missing documents there is still the land registry to fall back on so the insurer has some comfort. Here it appears there is nothing and we have this to contend with.

Point taken about proof of ownership; though this doesn't seem to be the OP's main worry. However, surely if there was major finance on the boat, it would be registered under Part 1?

I may be wrong, but I was under the impression that the indemnity insurance was not specific to house purchase, but would be available in any contractual situation where one party could not offer proof of some important contractual obligation. Maybe it would be worth speaking to a friendly solicitor, as they seem to regard this as part of their toolkit?

 

[little_roundtop]

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

A reasonable person given this situation would immediately seek to replace these types of essential documents, especially for high-value items like a boat. It seems the seller didn't do this and for me that's suspicious. It would raise enough doubt in my mind to walk away.

 

[jordanbasset]

A quick check on yacht world shows boats not VAT paid sell for for on average 10% to 20% less than those which are VAT paid. Unless paper work is produced I would assume it is not VAT paid and not buy it unless I got a discount.
That said I have not been asked for proof of VAT in 3 years sailing down to the med but when selling I am sure it is something a buyer would want to see. The current owner seems to be transferring the risk of that onto you, which is fine provided you find an amenable like minded buyer when you sell.

 

[zambant]

The fact that all the documents are missing is the biggest red flag when taking on brokerage listings. The question has to be is a lender or other beneficiary holding those documents as security?

I have had perfectly plausible people hand me a sheave of photocopies and an SSR, claiming that's all there is, only for my own investigation to reveal the boat was still on finance and the finance co held all the originals. That is a fact.

Th Op's seller may be perfectly legitimate and a victim of circumstance, but it will not be without consequence for any new owner, even if it is just awkwardness in a foreign port when asked for VAT status, or difficulty selling on at a later date.

The VAT status system of carrying original documents is ridiculous but it's all we have and unfortunately unlikely to change.

Likewise there is no compulsion to register a boat for home waters use, or to even have a qualification or license, so no central register to check ownership. Which means original documents are the title. Again that is unlikely to change in the foreseeable future.

There is no "HPI" type register so again, possession of original title documents is paramount.

The voice of reason gentlemen, ladies and others......

 

[Deleted member 36384]

The voice of reason gentlemen, ladies and others......

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

Would you have bought it, or thought the risk acceptable, if he dropped the price by 20%, and if yes, knowing now what has been said on this thread would you then have changed your mind if the 20% drop was now on the table?

I am not being flippant here, just wondering at what point would a risk like this be acceptable to you.

 

[westernman]

A quick check on yacht world shows boats not VAT paid sell for for on average 10% to 20% less than those which are VAT paid. Unless paper work is produced I would assume it is not VAT paid and not buy it unless I got a discount.
That said I have not been asked for proof of VAT in 3 years sailing down to the med but when selling I am sure it is something a buyer would want to see. The current owner seems to be transferring the risk of that onto you, which is fine provided you find an amenable like minded buyer when you sell.

Boats which are not VAT paid are being (usually) sold by a company.

Then if they are bought by a company, the VAT they pay to the seller can be reclaimed. If a boat belonging to a private individual is bought by a company, no VAT can be reclaimed - although it has been paid somewhere along the line.

If a non VAT paid boat is being sold by a company to an individual, then the seller will invoice you for the VAT and account for that VAT to HMRC or the equivalent if another EU country. Effectively, you, the private individual will pay the VAT. The seller will give you a VAT receipt.

The price difference between a non VAT paid boat and a boat sold by a private individual (which for a boat based in the EU is effectively always VAT paid unless he has been up to something dodgy - e.g. not paying VAT when he imported it) should be exactly the VAT rate.

 

[westernman]

Would you have bought it, or thought the risk acceptable, if he dropped the price by 20%, and if yes, knowing now what has been said on this thread would you then have changed your mind if the 20% drop was now on the table?

I am not being flippant here, just wondering at what point would a risk like this be acceptable to you.

The lack of verifiable history would flip me out.
I would not care about the lack of VAT receipt.

 

[gjgm]

A quick check on yacht world shows boats not VAT paid sell for for on average 10% to 20% less than those which are VAT paid. Unless paper work is produced I would assume it is not VAT paid and not buy it unless I got a discount.
That said I have not been asked for proof of VAT in 3 years sailing down to the med but when selling I am sure it is something a buyer would want to see. The current owner seems to be transferring the risk of that onto you, which is fine provided you find an amenable like minded buyer when you sell.

Bear in mind that a boat being sold as VAT not paid is declaring that, depending on what/where/who/how.. VAT WILL legally be payable.
That is totally different from not being able to prove to HMRC that VAT, when HMRC all but admits they will never ask anyway.
The issue really isnt the VAT, the issue is the perceived resale price.

 

[jonic]

Point taken about proof of ownership; though this doesn't seem to be the OP's main worry. However, surely if there was major finance on the boat, it would be registered under Part 1?

Unfortunately it is not always registered.

I spoke with a someone today on another VAT matter for another boat (which resolved nicely ) and hypothetically put this current situation.

I was told that if like any goods the vessel arrives in a UK port and can not prove its VAT payment history it can be seized to pay the VAT and a civil case would have to ensue for the current owner to claim against the previous owner.

That's not say it would happen and customs will investigate all angles and take a pragmatic view, but some on here are saying there is no risk, but the reality is different.

 

[Ben Dockrell 22]

A reasonable person given this situation would immediately seek to replace these types of essential documents, especially for high-value items like a boat. It seems the seller didn't do this and for me that's suspicious. It would raise enough doubt in my mind to walk away.

I could not agree more tbh.


Though i wish John success all the same.

 

[westernman]

Unfortunately it is not always registered.

I spoke with a someone today on another VAT matter for another boat (which resolved nicely ) and hypothetically put this current situation.

I was told that if like any goods the vessel arrives in a UK port and can not prove its VAT payment history it can be seized to pay the VAT and a civil case would have to ensue for the current owner to claim against the previous owner.

That's not say it would happen and customs will investigate all angles and take a pragmatic view, but some on here are saying there is no risk, but the reality is different.

The bill of sale suffices to avoid that case - it demonstrates that the current owner has no VAT to pay (unless he has been out of the country longer than xxxx and it then becomes a reimportation - but the same issue applies even with a VAT receipt!).

HMRC will then chase after the previous owner if he has not correctly paid for VAT - for instance on a re-importation.

The current owner has committed no offence.

 

[Rivers & creeks]

The bill of sale suffices to avoid that case - it demonstrates that the current owner has no VAT to pay (unless he has been out of the country longer than xxxx and it then becomes a reimportation - but the same issue applies even with a VAT receipt!).

HMRC will then chase after the previous owner if he has not correctly paid for VAT - for instance on a re-importation.

The current owner has committed no offence.

Not sure if I understood that right. Say I buy a Bavaraia from Mr Jones who can't produce a VAT certificate because (unknown to me) he bought it VAT unpaid from a charter company. Once HMRC discover this they chase Mr Jones and not me for the VAT?

 

[sailorman]

Not sure if I understood that right. Say I buy a Bavaraia from Mr Jones who can't produce a VAT certificate because (unknown to me) he bought it VAT unpaid from a charter company. Once HMRC discover this they chase Mr Jones and not me for the VAT?

if bought from a charter Co & you were an ordinary Joe Bloggs with no vat registration, the charter Co would have to levy vat on that sale

 

[jonic]

The bill of sale suffices to avoid that case - it demonstrates that the current owner has no VAT to pay (unless he has been out of the country longer than xxxx and it then becomes a reimportation - but the same issue applies even with a VAT receipt!).

HMRC will then chase after the previous owner if he has not correctly paid for VAT - for instance on a re-importation.

The current owner has committed no offence.

No. I spoke with a spokeman for HMRC this afternoon. He said it is the goods they become interested in and they can be seized regardless of which owner has not paid.

It would then become a civil matter between the owners.

They look at each case on its merits, but a bill of sale would not necessarily leave you risk free. It would help if you were in a foreign port, as it would then revert back to UK customs- but again that is not guaranteed as each territory can now collect on behalf of another member state.

It is all a grey area, and the only way to be sure you will not have a problem is to have an original VAT invoice, with the amount accounted for and a VAT number, or a customs receipt, or to be deemed VAT paid as referred to in customs notice 8

My understanding is that UK customs operate with a lighter touch than other states with regard to missing documents.

 

[westernman]

Not sure if I understood that right. Say I buy a Bavaraia from Mr Jones who can't produce a VAT certificate because (unknown to me) he bought it VAT unpaid from a charter company. Once HMRC discover this they chase Mr Jones and not me for the VAT?

Yep.

As a private individual in the UK, buying something in the UK from someone or from a company in the UK it is impossible for you to commit VAT fraud.

 

[Tranona]

Not sure if I understood that right. Say I buy a Bavaraia from Mr Jones who can't produce a VAT certificate because (unknown to me) he bought it VAT unpaid from a charter company. Once HMRC discover this they chase Mr Jones and not me for the VAT?

Just to clarify, it is the charter company's responsibility to account for VAT (assuming it was VAT registered). Such boats are advertised ex-VAT because if they continue as charter boats under a new owner who is also VAT registered the new owner can reclaim the VAT, So if he buys it for £100k, he pays £120k and reclaims the £20k. If he bought a similar boat privately for £120k he would not be able to reclaim any VAT.

If a private buyer buys the boat he also pays £120k, and the original owner accounts for the £20k to HMRC. No different from buying a new boat from a dealer.

If, on the other hand he buys a charter boat from, say Sunsail in Turkey there will be no VAT to pay - but if he imports it into the EU he pays VAT on the value. If he fails to do this, he still has the liability and can be pursued for it. If he then sells the boat without paying, the new owner is not liable. However as Jon says HMRC could seize the boat, and register a charge against it, but would have to go to court to do it. The owner could sue the previous owner to recover his loss. It is probably unlikely to go this far as HMRC would prefer to pursue the guily party directly - but the potential threat will be there.

 

[prv]

I was told that if like any goods the vessel arrives in a UK port and can not prove its VAT payment history it can be seized to pay the VAT

If it's "like any goods", what's to stop the same thing happening to my freezer?

Pete

 

[jonic]

If it's "like any goods", what's to stop the same thing happening to my freezer?

Pete

Look up returned goods relief for things like freezers.

 

[Quandary]

In his question the OP asked about VAT, he indicated that the seller had owned the boat since buying it new from a now defunct dealer in 2002, he has not since indicated that this in any doubt.
In any case the vendor will surely have some docs. marina accounts, yacht club membership, vhf radio registration, all sorts of stuff to verify the period of ownership, if more proof is needed. The seller will provide a document indicating that he purchased and paid vat in 2002. If any of this was untrue he would be committing fraud, which is a crime. The seller has a permanent address? If he is selling it to avoid an unfavourable split of assets on divorce etc. any dispute will be around splitting the proceeds of the sale, not dividing the boat. The OP is not going to be charged vat again in the uk and he does not need to provide proof if he goes abroad. If vat were for some reason to be due on the boat, it is owed by a previous owner not the purchaser.
This is the boat he wants to own and I presume the price is fair, so what problem does he have?
All the stuff about importation of boats from abroad, company ownership etc. are red herrings and just serve to heighten the confusion and irrational fear that surrounds this subject. This is not the only boat that has become separated from its vat receipt, hundreds change hands every year.
If HMRC were making second hand boat owners pay vat for a second time do you not think we would have had someone on by now to tell us about it.

 

[jonic]

In his question the OP asked about VAT, he indicated that the seller had owned the boat since buying it new from a now defunct dealer in 2002, he has not since indicated that this in any doubt.
In any case the vendor will surely have some docs. marina accounts, yacht club membership, vhf radio registration, all sorts of stuff to verify the period of ownership, if more proof is needed. The seller will provide a document indicating that he purchased and paid vat in 2002. If any of this was untrue he would be committing fraud, which is a crime. The seller has a permanent address? If he is selling it to avoid an unfavourable split of assets on divorce etc. any dispute will be around splitting the proceeds of the sale, not dividing the boat. The OP is not going to be charged vat again in the uk and he does not need to provide proof if he goes abroad. If vat were for some reason to be due on the boat, it is owed by a previous owner not the purchaser.
This is the boat he wants to own and I presume the price is fair, so what problem does he have?
All the stuff about importation of boats from abroad, company ownership etc. are red herrings and just serve to heighten the confusion and irrational fear that surrounds this subject. This is not the only boat that has become separated from its vat receipt, hundreds change hands every year.
If HMRC were making second hand boat owners pay vat for a second time do you not think we would have had someone on by now to tell us about it.

Customs notice 8 is quite clear:

EU residents should only use a vessel in the Community if it is VAT paid or ‘deemed’ VAT paid.
Documentary evidence supporting this should be carried at all times as you may be asked by customs officials to provide evidence of your vessel’s VAT status, either in the UK or in other Member States.

Documentary evidence might include:

original invoice or receipt
evidence that VAT was paid at importation
invoices for materials used in the construction of a ‘Home-Built’ vessel.