Original VAT Receipt

[Tranona]

This has always been the official EU line, but is not necessarily then written into the law of individual states, simply because it is impractical to implement. VAT on boats in the UK for example pre dates the 1992 treaty so there are many boats where VAT has been paid in a regime where it had no significance, and then as you know there are many boats that may or may not have had VAT paid on them but fall into the "deemed VAT paid" category by virtue of being of a certain age and located in a state on the accession date.

The advice quoted is no different from the advice given by HMRC, even though the latter know that it is impossible for some boats to comply. The reality is that even if you did not have evidence when visiting Croatia there is nothing the Croatian authorities can do unless they can show that a chargeable event has occurred within their jurisdiction. This is exactly what is happening currently with Briatore's boat in Italy where the authorities are claiming that he used the boat privately in Italy while claiming it was a non EU registered charter boat and therefore there is a vAT liability on both the boat and the fuel he used.

As we also know there are and will continue to be, boats in Croatia with suspect ownership and VAT issues as a legacy from pre-EU days so it is likely that customs will be more pro active there than in other states and as a by product giving grief to other law abiding people.

 

[BrianH]

The reality is that even if you did not have evidence when visiting Croatia there is nothing the Croatian authorities can do unless they can show that a chargeable event has occurred within their jurisdiction.

But hasn't Brussels recently dictated that any member state has the jurisdiction to collect eligible VAT from any EU-registered vessel that it may decree is non-VAT paid?

I would seriously suggest there is plenty they can do ... like impound the vessel until 25% of an assessed value is paid.

 

[MoodySabre]

Alternatively, contact Princess down in Plymouth (formerly Marine Projects who built your Moody). If you talk to them nicely, they may dig out the original paperwork from when your boat was built, it may make reference to a VAT payment. Worth a punt?

Certainly Princess used to be helpful on this issue if it was a boat they sold. Some (like mine) were finished at Swanwick and they didn't keep the paperwork going back far enough.

 

[Tranona]

You're wearing rose tinted glasses. Whilst I agree that it doesn't often happen it cause all sorts of hassle when it does. VAT status of a boat is of interest to some countries officials and, it's up to the owner to prove that VAT has been paid, rather than officialdom proving it hasn't, no offence has to be seen to be committed. In many places, you're guilty if you can't prove otherwise.

Your post is contradictory anyway as you say..."A privately owned British boat bought in the UK with a solid paperwork trail is of no interest". The solid paperwork trail has to include the VAT receipt where VAT was applicable when new. I've also found that invoices with a price which is inclusive of VAT can be rejected as they want to see the VAT as a separate amount.

Just to show how strange some laws are elsewhere, look at Portugal, a country where we're based and problems with officialdom are often mentioned. If new white goods (TV, Washing machine etc) are carried in your private car, it's an offence not to have the VAT receipt with you. It is also a serious offence for a bar not to issue a printed receipt for an 80 cent coffee or beer and tills now have to be connected on line directly to dept of finances. They're paperwork crazy and public notaries have jobs for life.

Don't think that because we're British with a British registered boat, they're going to give us leeway.

No, not rose tinted spectacles. There is very little evidence of even random checks, never mind anybody being charged VAT because of a lack of evidence of VAT payment. Lack of evidence is NOT an offence. The offence if there is one is avoiding payment of VAT and if customs in a state want to charge VAT they have to show that a chargeable event has occurred within their jurisdiction. A boat bought in the UK is by definition outside the jurisdiction of other states for VAT and is the responsibility of HMRC. Customs in other states know this - and they do talk to each other!

As I tried to explain earlier where people have got into difficulties with VAT in other states it is because there is something in the boat's history that suggests VAT has not been accounted for anywhere. I have already suggested a number of scenarios that might trigger interest, but a boat legally purchased in the UK in a transaction between two private individuals is not one of them. You are correct in saying that other states have a more stringent approach to evidence of VAT payments, but not all do, and surely it is clear from over 20 year's experience that boats move freely from one state to another without difficulties.

My post is not contradictory. There is no legal requirement to keep the VAT receipt for a boat in the UK. In fact there is little formal documentary requirement for boats at all. No registration, no legal identity, no prescription of title documents. A "good" paperwork trail is one where every transaction is recorded in a form that makes clear title and shows that there are no liabilities outstanding against the boat. A transaction between two private individuals does not give rise to any VAT liability so if you follow the transactions back and they were all between private individuals, the only VAT transaction was from the original seller (builder or dealer) and any VAT was HIS responsibility, not the buyer.

The underlying problem is that VAT is, as its name implies a tax on a transaction, not on the underlying asset. The responsibility for accounting for the tax lies with the person responsible for the chargeable event, usually a VAT registered trader, but may be a private individual, for example in a private import. Unless you have an independent record of each chargeable event no one will even know for certain whether the tax has been accounted for correctly. So we are left with an imperfect system reliant on a commercial piece of paper. Not very satisfactory, but seems to work.

 

[JumbleDuck]

You're wearing rose tinted glasses. Whilst I agree that it doesn't often happen it cause all sorts of hassle when it does. VAT status of a boat is of interest to some countries officials and, it's up to the owner to prove that VAT has been paid, rather than officialdom proving it hasn't, no offence has to be seen to be committed. In many places, you're guilty if you can't prove otherwise.

Is it also up to the owner to prove that no VAT chargeable events have occurred which aren't covered by receipts. Could you prove that your boat has never spent a couple of years in Norway or Guernsey?

 

[CondorAA5A]

Just as a an aside…

I bought a second-hand yacht which had previously been imported into the UK. VAT had been paid at time of entry but the “receipt” was just a thermal printed receipt, as you’d get from an old shop till and also the same size!

It was only just legible after several years left in the yacht’s document folder and the kind of item you’d easily throw away as it looked of no importance.

In 12 years of ownership I never had to produce it, but always felt it would look quite lame to any official bureaucrat.

 

[Tranona]

But hasn't Brussels recently dictated that any member state has the jurisdiction to collect eligible VAT from any EU-registered vessel that it may decree is non-VAT paid?

I would seriously suggest there is plenty they can do ... like impound the vessel until 25% of an assessed value is paid.

I don't know about that. Registration is nothing to do with VAT. VAT responsibility depends on where the transaction took place. It is true, I think that one state can collect VAT on a transaction that took place in another state, for example if the boat or the person responsible for paying has moved. Do not think that customs have powers to impound boats where the responsibility for VAT is with another state.

You can construct scenarios where another state might take action - for example a boat bought by a British resident outside the EU, registered in the UK, brought in without paying VAT and then sailed to another EU state - the latter could legitimately charge vAT. In fact there was a case reported here (first hand by the owner) only last year where he bought a boat VAT free in Croatia before accession intending to sail it to UK and pay VAT on it, Got stopped in Sardinia (from memory) and fined in addition to having to pay VAT there.

The current advice from HMRC is that you should advise customs in other states that HMRC takes responsibility for VAT matters on boats that change hands in the UK as evidenced by the Bill of Sale.

There is a lot of myth and scaremongering about this subject, but very little hard evidence that it really is a problem.

 

[charles_reed]

You mean like you can in Word?

But only by using an on-line convertor.
In LibreOffice it's one of many file types in which you can save, including all the MS standards.

 

[BrianH]

I don't know about that. Registration is nothing to do with VAT. VAT responsibility depends on where the transaction took place. It is true, I think that one state can collect VAT on a transaction that took place in another state, for example if the boat or the person responsible for paying has moved. Do not think that customs have powers to impound boats where the responsibility for VAT is with another state.

Yes, I accept registration is a non-sequitur and eligibility for payment should rest on the principle residence of the owner.

Which means that my avoidance of Croatia last year may have been unnecessary. With a pre-1985 constructed yacht privately bought in Holland, legally UK-registered (Part I), moored in Italy so never having left the EU, with my principle residence as owner in non-EU Switzerland, there could be a loophole there somewhere.

I still wouldn't like to argue it with some of the Croatian officials I have met over the years.

 

[chrisbitz]

But only by using an on-line convertor.
In LibreOffice it's one of many file types in which you can save, including all the MS standards.

No. Word 2010 definitely has a save as PDF function built in. Might even be in 2007 too!

 

[Tranona]

eligibility for payment should rest on the principle residence of the owner.

Not with residence of owner, but where the VAT able transaction took place. So I am resident in UK but I bought me boat in Greece and paid VAT there. It is now in UK and registered on the SSR, but any VAT issues would not interest HMRC because my Bill of Sale was enacted in Greece.

So any VAT issues on your boat would be a Dutch responsibility until you sell it when responsibility changes to state where you sell! If you sell it to a non EU resident then it keeps its VAT paid status unless the non resident then exports it, in which case it potentially becomes liable for VAT if it is brought back in.

Yet another example of complexity which makes any "instruction" from Brussels so difficult to implement.

 

[JumbleDuck]

But only by using an on-line convertor.
In LibreOffice it's one of many file types in which you can save, including all the MS standards.

I've just checked with Word on Office 2010, and "pdf" is one of the available "File ... Save As ..." types.

 

[westernman]

Is it also up to the owner to prove that no VAT chargeable events have occurred which aren't covered by receipts. Could you prove that your boat has never spent a couple of years in Norway or Guernsey?

It is practically impossible to prove a negative.

 

[westernman]

Just as a an aside…

I bought a second-hand yacht which had previously been imported into the UK. VAT had been paid at time of entry but the “receipt” was just a thermal printed receipt, as you’d get from an old shop till and also the same size!

It was only just legible after several years left in the yacht’s document folder and the kind of item you’d easily throw away as it looked of no importance.

In 12 years of ownership I never had to produce it, but always felt it would look quite lame to any official bureaucrat.

I have a VAT receipt which came from when my boat was imported into the UK by the previous owner.
In my case it is a small pink slip which is a carbon copy of a handwritten receipt.

The value of the boat is missing a couple of zeroes which means that the effective VAT rate according to the receipt is something like 1500%.

 

[Pete7]

Depending on how the boat was paid for, you may be looking for dozens of VAT receipts. Our Moody was paid for with stage payments and each one is a VAT receipt. Then there are other VAT receipts for the extras. I doubt if you could produce an aged looking invoice printed on Moodys letterhead paper today.

 

[jonic]

Right everybody stop.

I have been at a marine VAT conference on two occasions now in recent years, where a UK customs spokesman has said that UK Bills of Sale are no longer a guarantee that you could ask for any customs issues to be referred back to the UK by a foreign customs official if in foreign waters.

If foreign customs want proof the boat is VAT paid and it's in their waters they can and do take an interest and will make their own call.

It may be rare but not beyond the realms of possibility.

UK customs now advise that if you do not have proof:

"It is also advisable to contact the relevant authorities in the Member State you intend to visit, or their Embassy in the UK, to confirm what documentation will be required in advance of your voyage."

 

[Tranona]

Right everybody stop.

I have been at a marine VAT conference on two occasions now in recent years, where a UK customs spokesman has said that UK Bills of Sale are no longer a guarantee that you could ask for any customs issues to be referred back to the UK by a foreign customs official if in foreign waters.

If foreign customs want proof the boat is VAT paid and it's in their waters they can and do take an interest and will make their own call.

It may be rare but not beyond the realms of possibility.

UK customs now advise that if you do not have proof:

"It is also advisable to contact the relevant authorities in the Member State you intend to visit, or their Embassy in the UK, to confirm what documentation will be required in advance of your voyage."

However, John there are no guarantees in any of this. The law is a mess. HMRC covers its back by make useless pronouncements such the one you quote. Similarly you are unlikely to get any sense out of the "relevant authorities" other than pat repetitions of similar useless statements which bear no resemblance to what happens - or rather what does not happen.

There is a big gulf between what Brussels sees as how its directives are supposed to work and what is actually possible. How can you possibly have a coherent system when states have chosen to implement the directives in ways that fit in with their own national laws, often choosing to go their own way. So you get nonsenses like the lease schemes that are legal in some states, but not others, reduced incentivised VAT rates in other states, exceptions for certain activities in some states and not others, variations in valuation methods, different legal status of documents etc etc.

All one can do is make the best of a bad job as the ambiguities will not go away. From the other side, it seems pretty clear that authorities are just as aware of the ambiguities and concentrate their efforts on those potential real offenders who exploit the ambiguities rather than waste their time with the law abiders who through no fault of their own might not have a particular piece of paper - which as we all know is not evidence of proper accounting for VAT anyway.

 

[BrianH]

Not with residence of owner, but where the VAT able transaction took place.

Darn it, you are right again. I was thinking of all the times I had bought products in the EU but paid no VAT (or could reclaim it) because I was resident out of the EU - but, of course, was obliged to pay local VAT on importation there.

So any VAT issues on your boat would be a Dutch responsibility

But consider this: Croatia has an EU mandate to collect VAT on behalf of its fellow EU state, Holland, and when I next declare in to a port of entry there, the official demands proof that my yacht was in the EU in 1992 (before my ownership), which is the accompanying requirement to the pre-1985 construction qualification for being deemed VAT-paid - then I would be unable to supply it.

Consequently, in a worst-case scenario, Croatia would have the right to issue a 25% of value VAT demand and hold my yacht until payment is made.

 

[jonic]

However, John there are no guarantees in any of this. The law is a mess. HMRC covers its back by make useless pronouncements such the one you quote. Similarly you are unlikely to get any sense out of the "relevant authorities" other than pat repetitions of similar useless statements which bear no resemblance to what happens - or rather what does not happen.

There is a big gulf between what Brussels sees as how its directives are supposed to work and what is actually possible. How can you possibly have a coherent system when states have chosen to implement the directives in ways that fit in with their own national laws, often choosing to go their own way. So you get nonsenses like the lease schemes that are legal in some states, but not others, reduced incentivised VAT rates in other states, exceptions for certain activities in some states and not others, variations in valuation methods, different legal status of documents etc etc.

All one can do is make the best of a bad job as the ambiguities will not go away. From the other side, it seems pretty clear that authorities are just as aware of the ambiguities and concentrate their efforts on those potential real offenders who exploit the ambiguities rather than waste their time with the law abiders who through no fault of their own might not have a particular piece of paper - which as we all know is not evidence of proper accounting for VAT anyway.

indeed it is a mess, but it is not possible to advise someone that no proof of VAT will not be a problem. Especially if they take the boat overseas.

 

[Observer]

There are very few certainties here. Tranona understands how VAT law works and is correct in his advice on principles of VAT law so far as it goes. But no-one can make definitively complete and correct statements on incomplete fact patterns. And even if the facts are complete, national tax authorities and individual officers may act capriciously or reach incorrect conclusions.

Obviously my credentials are unproved so far as readers are concerned. You all have to decide whose statements make most sense in the light of your own knowledge. Read up a bit and decide who you trust most. I have a pretty fair knowledge of VAT law myself. Out of all the opinions and assertions about VAT that I have read over years on these boards, there are only two posters whose views I would take seriously (not unquestioningly) - jfm who posts on the motor boats forum and Tranona.

Up to you.