Prof of VAT status

[plato-gb]

old thread but came across it and yes, there is a law re vat debt 'inheritance'

Here are your commenets:
[/ QUOTE ]
David that is often stated (especially on these forums) but it's not correct. I challenge anyone to find a law saying that if A sells a boat to B, and A/B didn't correctly account for VAT on that transaction, then later B sells to C in good faith, C is liable for the VAT on the A-B transaction.

Can you give me the citation so I can read it in context? Ta

Here is the text from the VAT act 1994 along with link and reference:
http://www.opsi.gov.uk/ACTS/acts1994/plain/ukpga_19940023_en_8

Part IV Administration, collection and enforcement

72 Offences

(10) If any person acquires possession of or deals with any goods, or accepts the supply of any services, having reason to believe that VAT on the supply of the goods or services, on the acquisition of the goods from another member State or on the importation of the goods from a place outside the member States has been or will be evaded, he shall be liable on summary conviction to a penalty of level 5 on the standard scale or three times the amount of the VAT, whichever is the greater.

I have been researching the subject because I have a situation (you don't want to know) and I came across the thread these statements come from.

When you refer to transaction A/B not having been correctly accounted for, you are assuming B did not know this and therefore 'in good faith' sold the boat to C.

The VAT man would quite legitimately claim the VAT from C who would then have to prove he 'knew nothing' as woul B before they could both try to pin it on A. But the point of whether or not the VAT would be claimed from C is clear. Not only would he be expected to pay it, but he would have to prove he didn't know anything or be liable to pay "three times the amount of the VAT".

So this is a VERY serious problem both for someone selling or buying a boat without proof of VAT paid.
Rgds,

 

[plato-gb]

JFM - here is your law on liability for unpaid VAT, even if 'you' were not the one...

[ QUOTE ]
When asked by the VAT man (in the UK or abroad) it will be YOUR responsibility to prove that the VAT was paid.....and in default of which YOU get a bill for the VAT.

[/ QUOTE ]
David that is often stated (especially on these forums) but it's not correct. I challenge anyone to find a law saying that if A sells a boat to B, and A/B didn't correctly account for VAT on that transaction, then later B sells to C in good faith, C is liable for the VAT on the A-B transaction.

Here it is:
http://www.opsi.gov.uk/ACTS/acts1994/plain/ukpga_19940023_en_8

Part IV Administration, collection and enforcement

72 Offences

(10) If any person acquires possession of or deals with any goods, or accepts the supply of any services, having reason to believe that VAT on the supply of the goods or services, on the acquisition of the goods from another member State or on the importation of the goods from a place outside the member States has been or will be evaded, he shall be liable on summary conviction to a penalty of level 5 on the standard scale or three times the amount of the VAT, whichever is the greater.

http://www.ybw.com/forums/showthread.php?t=151616&highlight=VAT+HMRC

 

[strakeryrius]

Here it is:
http://www.opsi.gov.uk/ACTS/acts1994/plain/ukpga_19940023_en_8

Part IV Administration, collection and enforcement

72 Offences

(10) If any person acquires possession of or deals with any goods, or accepts the supply of any services, having reason to believe that VAT on the supply of the goods or services, on the acquisition of the goods from another member State or on the importation of the goods from a place outside the member States has been or will be evaded, he shall be liable on summary conviction to a penalty of level 5 on the standard scale or three times the amount of the VAT, whichever is the greater.

http://www.ybw.com/forums/showthread.php?t=151616&highlight=VAT+HMRC

But the burden of proof rests with HMRC - they have to prove that you had reason to believe that VAT wasn't paid before they could invoke this. If C bought from B in good faith on both sides of the transaction then than that would be almost impossible to establish.

 

[gjgm]

yes surely we are now discussing something else... fraud. I m sure there are laws for persuing people for VAT where they deliberately evaded it.

 

[jfm]

Here are your commenets:
[/ QUOTE ]
David that is often stated (especially on these forums) but it's not correct. I challenge anyone to find a law saying that if A sells a boat to B, and A/B didn't correctly account for VAT on that transaction, then later B sells to C in good faith, C is liable for the VAT on the A-B transaction.




Here is the text from the VAT act 1994 along with link and reference:
http://www.opsi.gov.uk/ACTS/acts1994/plain/ukpga_19940023_en_8

Part IV Administration, collection and enforcement

72 Offences

(10) If any person acquires possession of or deals with any goods, or accepts the supply of any services, having reason to believe that VAT on the supply of the goods or services, on the acquisition of the goods from another member State or on the importation of the goods from a place outside the member States has been or will be evaded, he shall be liable on summary conviction to a penalty of level 5 on the standard scale or three times the amount of the VAT, whichever is the greater.

I have been researching the subject because I have a situation (you don't want to know) and I came across the thread these statements come from.

When you refer to transaction A/B not having been correctly accounted for, you are assuming B did not know this and therefore 'in good faith' sold the boat to C.

The VAT man would quite legitimately claim the VAT from C who would then have to prove he 'knew nothing' as woul B before they could both try to pin it on A. But the point of whether or not the VAT would be claimed from C is clear. Not only would he be expected to pay it, but he would have to prove he didn't know anything or be liable to pay "three times the amount of the VAT".

So this is a VERY serious problem both for someone selling or buying a boat without proof of VAT paid.
Rgds,

You're mixing this all up. The law you're quoting applies to non payment of VAT on import, ie smuggling. And for a person to suffer the penalty he has to be in on the smuggling to a degree. That's totally different from the ABC scenario I described. Totally different

I've already explained elsewhere on here and in the MBY article that a smuggled boat bought by an innocent buyer is subject to seizure by HMRC and so innocent buyer would have to pay the VAT to get his boat back. This is an incredibly rare scenario but it is true even if boat buyer is 100% innocent. The bit of law you quote above then applies a FURTHER penalty if the boat buyer is somewhat complicit in the smuggling

But that has nothing to do with the ABC secenario I described in the much earlier post above, where C (not B) acts in good faith. You are completely wrong therefore when you say "The VAT man would quite legitimately claim the VAT from C who would then have to prove he 'knew nothing'", both in temrs of the applicabilty of the section you quote (it doesn't apply) and on the burden of proof (which rests not with C but with HMRC, on a beyond resonable doubt level)

You have to read this sort of law with much greater precision than you are applying.

 

[plato-gb]

Theory versus fact

It's actually a real situation that has prompted all the research. Still ongoing. When it's over I will write up the conclusions and post them.
Briefly, seller insists boat is deemd VAT paid, EU and HMRC rules say this status has been lost and boat therefore owes VAT.
If I accepted seller's word (even though he's unwilling to sign a guarantee against the boat having to pay VAT) I would be precisely in the position described by the law cited.
Like I said, I'll give conclusions once issue resolved.
Best to all

 

[erudman]

Could one try and follow the VAT chain forwards rather than backwards i.e. contact the boat's builder to find the dealer who sold the boat, using the hull ID for example, and then obtain the first invoice from them?

With luck, VAT was paid when the boat was first sold, the dealer still exists and they have copy of the invoice to prove it.

 

[Tresca]

VAT confusion part 99

VAT status again - if anyone can shed light please let me know.

My boat was imported into the UK from Canada in 93 and I've a very official import document stating all taxes are paid. This doesn't specifically state VAT and there's no separate VAT invoice. The boat was constructed before 83 but wasn't imported until after just after 92 so I presume it's not deemed exempt on grounds of age according to HMRC rules.
I'm wondering if the import document is enough as a proof of paid status for EU cruising?

cheers

Anthony

 

[Tranona]

VAT status again - if anyone can shed light please let me know.

My boat was imported into the UK from Canada in 93 and I've a very official import document stating all taxes are paid. This doesn't specifically state VAT and there's no separate VAT invoice. The boat was constructed before 83 but wasn't imported until after just after 92 so I presume it's not deemed exempt on grounds of age according to HMRC rules.
I'm wondering if the import document is enough as a proof of paid status for EU cruising?

cheers

Anthony

If you have the strength read the whole thread and you will be able to pick out the relevant bits - particularly from jfm.

Anyway, in summary for crusing around the EU in a demonstrably UK boat, the chances of being asked for any proof of VAT status is close to zero. If all your documentation shows that you are a UK resident, the boat is registered in the UK, and crucially your Bill of Sale shows it was bought in the UK then anything to do with VAT is the responsibility of uK HMRC, not the state you are visiting.

Difficult to say whether the document you have is proof of VAT. That would have been paid by the person or company that imported the boat.

 

[jfm]

VAT status again - if anyone can shed light please let me know.

My boat was imported into the UK from Canada in 93 and I've a very official import document stating all taxes are paid. This doesn't specifically state VAT and there's no separate VAT invoice. The boat was constructed before 83 but wasn't imported until after just after 92 so I presume it's not deemed exempt on grounds of age according to HMRC rules.
I'm wondering if the import document is enough as a proof of paid status for EU cruising?

cheers

Anthony

Cant answer Q without seeing doc. Can you post a scan of it? Or give the document number? I have an example of one of these in the office, used for a boat import, but I dont have it to hand right now, and I'd be happy to compare it. Note, the detial of this law is complex and VAT payable on import is actually an import duty not a VAT tax, so far as much of the application of law is concerned. So if your doc states all importantion taxes are paid that should cover VAT. But it would be nice to see the doc or get a more precise description from you.

You wouldn't have a VAT invoice so that's no surprise, and yes it's not deemed VAT paid if it was a 1993 importation

 

[Tresca]

VAT shadows

Just checked the document which is a C104A - Importation of a private vessel on transfer of normal home to the united kingdom. So status rests on a 28 year old photocopy but 'Satisfied as to tax paid status' 'documents inspected' sounds good and it's HMC & E agent. Customs duty and customs duty vat isn't payable according to the doc on condition of personal recreational use so there's a clear distinction there.

The boat remained in the UK until it's move to Ireland in 2003 but still remained in ownership of a UK citizen if that's at all relevant. Having read the entire thread I've concluded there's not much I can do apart from worry, not worry or pay tax and there's enough evidence I think to justify not paying and I'm not going to worry... will see what happens.

Thanks for your replies

 

[jfm]

Just checked the document which is a C104A - Importation of a private vessel on transfer of normal home to the united kingdom. So status rests on a 28 year old photocopy but 'Satisfied as to tax paid status' 'documents inspected' sounds good and it's HMC & E agent. Customs duty and customs duty vat isn't payable according to the doc on condition of personal recreational use so there's a clear distinction there.

The boat remained in the UK until it's move to Ireland in 2003 but still remained in ownership of a UK citizen if that's at all relevant. Having read the entire thread I've concluded there's not much I can do apart from worry, not worry or pay tax and there's enough evidence I think to justify not paying and I'm not going to worry... will see what happens.

Thanks for your replies

Ah, that's a very unusual case. It relates to the rule whereby someone can bring personal effects (including a boat) into the EU VAT-free if they are moving residence into the EU. The fact you have a form C104A means HMRC must have been satisfied the importation was correctly VAT free under this personal effects rule. So you now have a VAT-paid status boat, but make sure you keep that form C104A. you shouldn't have any problem when you sell the boat, tho it might take a bit of explaining! Ditto if a foreign official inspects the boat while you're cruising in EU. But you're very much in the right, VAT-paid, and good to go

 

[DAKA]

I recently phoned HMR&C yacht division for clarity on how long a VAT paid boat could be taken outside UK waters for and remain VAT paid.

I was told 3 years (after they checked it).

Seeing as I was only leaving for a year or so I was happy and went away but I am aware of loads of VAT paid boats that have been outside UK/EU waters for decades (owned by UK citizens) are the supposed Yacht experts wrong ?, it didnt sound right to me and nothing in writing from them.

Are there loads of boats 'on holiday' in Jersey that are loosing their VAT paid status ?

 

[Theshipscat]

Far be it from me to suggest anything illegal but in these times of desk top pubishing wouldn't it just be possible that one (not me or any of you obviously) might just copy and falsify a Vat paid certificate? After all the according to the Vat man he has no idea who's paid and who hasn't as no record is kept, which is why a lot of people are in this mess to start with (apart from owner copies getting lost).

Personally I'm not worried because my boat was first registered, alledgedly in 84 so is exempt. I would be a tad nervous though if I had some huge Gin Palace as I have heard the Customs people are clamping down on imports. I was informed in 2008 by Ancasta that Customs had pulled two boats in Southampton water which had been brought in from the USA.

 

[jfm]

I recently phoned HMR&C yacht division for clarity on how long a VAT paid boat could be taken outside UK waters for and remain VAT paid.

I was told 3 years (after they checked it).

Seeing as I was only leaving for a year or so I was happy and went away but I am aware of loads of VAT paid boats that have been outside UK/EU waters for decades (owned by UK citizens) are the supposed Yacht experts wrong ?, it didnt sound right to me and nothing in writing from them.

Are there loads of boats 'on holiday' in Jersey that are loosing their VAT paid status ?

I think they're wrong Daka, though will ponder on what they might be referring to and report back if anything comes to mind. You should ask them to quote the precise section of law in which the 3 year rule is written when faced with answers like this. If they were right, then every yacht returning to UK should be stopped and asked "Yes I know you have VAT paid paperwork but please prove you haven't been gone >3years", and of course no-one has ever been asked that question

I've said many times, if you have a tricky tax question never phone hmrc. Tax is a very complex subject and the few folks who know about it earn lots of money for getting the right answers. You absolutely do not find tax experts working in hmrc call centres, any more than you can find out how to make a space rocket, cure cancer, write a hit song, etc, by ringing the NASA/NHS/Simon Cowell call centres

 

[DAKA]

You absolutely do not find tax experts working in hmrc call centres,

100% agreed, I was under the misconception that they might have gone to the trouble to train some of the yacht division in simple elements such as this.


Just for clarity I accept your reply (even so qualified) as accurate and theirs wrong .
Thanks.

Pete

 

[Hurricane]

Far be it from me to suggest anything illegal but in these times of desk top pubishing wouldn't it just be possible that one (not me or any of you obviously) might just copy and falsify a Vat paid certificate? After all the according to the Vat man he has no idea who's paid and who hasn't as no record is kept, which is why a lot of people are in this mess to start with (apart from owner copies getting lost).

Personally I'm not worried because my boat was first registered, alledgedly in 84 so is exempt. I would be a tad nervous though if I had some huge Gin Palace as I have heard the Customs people are clamping down on imports. I was informed in 2008 by Ancasta that Customs had pulled two boats in Southampton water which had been brought in from the USA.

Very few people have a VAT paid certificate.
As has been said many times before, VAT is a tax on a transaction so the paperwork that proves that VAT has been paid is generally an invoice from a VAT registered company or trading entity. So, I'm sure that it would be very easy to prove that a document was bona fide by simply asking the company that supposedly actually paid the VAT. Now, if the VAT invoice had been lost and all you were doing was reproducing a document that had previously been printed I should think that would be a different matter.

But then - what do I know !!!

 

[Theshipscat]

Very few people have a VAT paid certificate.
As has been said many times before, VAT is a tax on a transaction so the paperwork that proves that VAT has been paid is generally an invoice from a VAT registered company or trading entity. So, I'm sure that it would be very easy to prove that a document was bona fide by simply asking the company that supposedly actually paid the VAT. Now, if the VAT invoice had been lost and all you were doing was reproducing a document that had previously been printed I should think that would be a different matter.

But then - what do I know !!!

Ahah but think of all the yacht companies that have disappeared over the years. You try getting records from Gibsea or Cobra or few 100 others.

 

[Tranona]

I think they're wrong Daka, though will ponder on what they might be referring to and report back if anything comes to mind. You should ask them to quote the precise section of law in which the 3 year rule is written when faced with answers like this. If they were right, then every yacht returning to UK should be stopped and asked "Yes I know you have VAT paid paperwork but please prove you haven't been gone >3years", and of course no-one has ever been asked that question

The 3 year "rule" is in 4.4 of HMRC Reference Notice 8. This is the section referring to re-importation of VAT paid boats. The 3 years is "normally" and I have seen elsewhere reports that the normally is flexible as one of the other conditions is that the re-importer must be the original exporter so the number it applies to is likely to be very small.

 

[jfm]

The 3 year "rule" is in 4.4 of HMRC Reference Notice 8. This is the section referring to re-importation of VAT paid boats. The 3 years is "normally" and I have seen elsewhere reports that the normally is flexible as one of the other conditions is that the re-importer must be the original exporter so the number it applies to is likely to be very small.

So it is, thanks Tranona. I therefore will take a humble pie from the freezer and stick it in the m'wave and I apologise to the hmrc person who advised Daka. I'd be interested to see the underlying law but dont have time to search for it. It's quite needle-in-haystack if, as I suspect, it's in the 200pages of 1993 EU regulations on imports/exports generally. If you happen to know where the law is please shout.