Prof of VAT status

We've had this discussion before, jez. You, as a UK VAT registered company, can purchase goods and equipment from any other EU VAT (or whatever they call it, TVA, IVA or whatever) registered company simply by supplying them with your VAT no. It's one of the only good things the EU ever did
So you all you need to do is to prove to anybody who asks that your demo boat is owned by a VAT registered co and to state that your trip was being carried out for business purposes eg demo'ing the boat to a prospective customer
As for your RR, in theory IMHO, you could be asked to prove VAT status when abroad but in practice, it's very difficult to buy a new car without paying VAT at the time and I'm sure customs officials know that
 
Houghn, I assume the individual was VAT registered. It is perfectly possible for an individual to be VAT registered. You do not have to be a company.

You raise a valid point which underlines the nonsense sometimes talked on here. VAT can have been paid on a boat earlier in its history, but that doesn't mean VAT isn't accountbale-for on a later sale of that boat. Everytone talks about a boat being "VAT-paid" but of course VAT is charged on transactions not boats. You are in great shape though, becuase you have a boat with a VAT-paid invocie even though your boat is not VAT paid. That's perfect. I couldn't do that cos I bought a new boat but I am now using a turbocharged version of my structure that will deliver exactly that result even on a new boat :-)
 
Deleted User, there is no such lien in UK law and (I'd expect) most overseas EU laws. I'm at a disadvantage becuase I'm arguing the negative. I can't prove to you there is nothing in the law containing the lien you describe except by citing a million pages of law and saying "Look, see, it wasn't in there was it".

The lien you describe simply doesn't exist. I'll happily eat humble pie if you quote me a section number where the law does provide such a lien :-) Likewaise, the liability as a matter of law isn't C's. It's A's.

Oh and by the way it's a bloooody good job you are wrong. Suppose you had bought a boat from Peters and Pans plc with VAT invoice, then suppose the VAT hadn't been paid to HMRC becuase they went bust. You'd have a VAT-paid invoice, yet the person resp to pay the VAT to HMRC would have defaulted. In your world (I think) there would be a lien in HMRC's favour, right? Or do you say the mere creation of a VAT invoice removes the lien even though the axshull VAT hasn't been paid? You need to be clear on that becuase it's important (understatement!). Think about it, and other variations on same theme, and you'll see how crazy the lien concept is. That's why it aint on the statute books (not that craziness is always a guarantee of not being passed into law... /forums/images/graemlins/grin.gif). Indeed there are very few cases at all in UK law where person C is responsible for person A's or B's debts, let alone subject to having his personal property removed to pay A or B's debts. Boats VAT certainly aint one of them.

Finally, if you or anyone googles this don't google "lien" because that is the wrong word. "Lien" is the word used to describe a person's right to retain something that he already has in his possession. Eg garage wont give you your car back till you pay the service bill. What we are talking about here is the right of someone (tax office) to take something they don't already possess (namely a boat) and the correct legal terms for that are distriant, distress, charge, etc, but not lien. I have used "lien" incorrectly in my first 3 paras above, deliberately. The distinction pedantic, and I'm only mentioning it here to help googlers.
 
There is no payment or recovery of VAT in commercial transactions between 2 EU VAT registered companies. All Jez would have to have done is supply his VAT no to Westline (assuming Westline is Swedish VAT registered co) and they would issue him an invoice with zero VAT.
 
Ah yes I remember that. Sorry, blonde moment. We had a thread on it before. Jez actually pays and recovers VAT on his VAT retrun, in the aense he enters the vlaue as both a purchase and a sale. It's on the same return so he doesn't actually cut a cheque to HMRC. But paperworkwise he has no VAT invoice. When we discussed this a few months ago I suggested one option was to set up 2 companies so as to create a VAT-ed transaction. But yes, Jez does have this tricky problem if he gets pulled in France. It is paperwork problem of course, not an axshull liability to Fr VAT.
 
just a mo..
dealer A sells to individual B, who 1 year later sells it to punter C, without any proof of VAT.
Are you saying, irrespective of whether VAT was or wasnt paid along the line, punter C cannot be liable to VAT office for paying it ?The liability lies further back up the chain, and VAT office would have to pursue it there?
 
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Oh and by the way it's a bloooody good job you are wrong. Suppose you had bought a boat from Peters and Pans plc with VAT invoice, then suppose the VAT hadn't been paid to HMRC becuase they went bust. You'd have a VAT-paid invoice, yet the person resp to pay the VAT to HMRC would have defaulted. In your world (I think) there would be a lien in HMRC's favour, right?

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No, wrong, because you as the buyer have paid the VAT to Peters and Pans PLC and you have the invoice to prove it, just like any other VAT paid boat

Don't forget that what we're talking about here is proof that VAT has been charged and paid at some stage in the boat's life which is not the same as proving that HMRC have received the VAT or that it has'nt been reclaimed at a later time. In effect it's just proof that a VATable transaction has taken place
 
Ok, so you are saying that the mere creation of a VAT invoice removes HMRC's lien then? You are saying that HMRC have a lien if VAT was incorreclty not invoiced on a transaction when it should have been, but if the VAT is correctly invoiced and merely not paid over to HMRC then HMRC still have a claim for the money but no lien over the goods, right?

That's a pretty specific distinction for lien/non lien. For it to exist it must be codified in law pretty clearly. So you should be able to find and cite the section number quite easily :-)
 
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When we discussed this a few months ago I suggested one option was to set up 2 companies so as to create a VAT-ed transaction.

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Yup, I don't see why this would'nt work although I'd like to be a fly on the wall when you explain this to a HMRC inspector during a VAT inspection /forums/images/graemlins/smile.gif
 
Assuming everyone acting in good faith (no conspiracy to defraud) then yes that's exactly what I'm saying (UK law specifically)

I'm saying A has liability to account for VAT to HMRC on the A-B sale. B has no obligation to pay it to HMRC, nor is there any "lien" on the boat when B owns it. Later, C buys from B. C is even more removed from A than B was. C has no obligation to pay VAT on the A-B sale, nor does HMRC have a lien on C's boat for VAT that A failed to pay (or, according to Deleted User's latest post, that A failed to invoice correctly, it being immaterial according to Deleted User whether A actually paid the VAT to HMRC).

As a small point (it's a bit Fred drifty) I'd add that VAT office have a 3 year time limit in which to commence assessing A for the VAT on the A-B sale (absent criminal/fraud etc). So after 3 years from the A-B sale punter C has even less to worry about becuase HMRC is hands-tied in pursuing A, let alone B or C. They sure as hell dont have a lien on C's boat for a VAT liability they are time-barred from pursuing.
 
well,this being your dept.. but if it is so, why isnt it better understood;why do we have all this panic over the original VAT document; and why in all RYA discussions hasnt it come out that as long as you are not company A, the tax office cant come after you ?
In fact, apart from the possible risk of some inconvenience from some officious foreign Customs bod who doesnt know what he is talking about..most of us dont need to give a hoot?
Its a refreshing take on the matter, to say the least !
Who else can verify it?
 
Not just a creation of an invoice but a creation of an invoice which reflects an actual transaction between the seller of the goods and a buyer. 3 possible scenarios here

1) Buyer pays correct amount of VAT to seller. Seller is responsible for paying HMRC. Therefore no lien on boat
2) Invoice shows incorrect amount or VAT which buyer pays to seller. Seller is responsible for paying correct amount to HMRC. No lien on boat
3) Seller fails to supply invoice or buyer loses invoice. Therefore no record of VATable transaction having taken place and VAT still due. Buyers responsibility

Thinking of another example. You jet off to Dubai wearing your expensive Rolex which you bought in the UK and paid VAT on. You return to the UK and get stopped by Customs. The officer asks you where you bought your Rolex. You say you bought it in the UK and paid VAT on it but he says prove it. You are'nt carrying the invoice for the watch so the Customs officer demands VAT on it. Who is responsible? You as the owner of the watch or the shop that sold it to you or the distributor who sold the watch to the shop or the manufacturer who sold the watch to the distributor? You, of course
 
1 and 2 are perfecty correct. 3 is just plain wrong. It is not "buyer's responsibility". Show me the law for 3?

If Seller has sold boat to Buyer (which is the fact pattern you assume) a VATable transaction has taken place. Your statemetn "Therefore no record of VATable transaction having taken place" is just mixed up. If a VATable transaction has happened, HMRC may pursue seller but not buyer for the VAT. Alternatively, if no VATable transaction has taken place they can't pursue anyone. So either way, they can't (and dont ever) pursue buyer.

The Rolex thing is different. You are being qwuestioned as potential importer, not buyer. You are stopped by HMRC bringing high value goods across the border into the EU. If you have indeed bought the watch in Dubai you are liable as you are the importer. They have proof of 2 of the 3 links in the links in the chain (YOU are the importer, the import is from Dubai) and the only unanswered question is whether you already paid VAT in UK. There are rules that give them power to hold your goods at the border if they have reasonable grounds to believe you owe them unpaid VAT, and if they invoked those powers you would need to gather evidence that you had the watch in the UK (shop receipt, sworn affidavit, friends witness statements to say yeah that's his regular watch he had it biore Dubai, etc) With that evidence you would then win for sure and get the watch back, even without a VAT invoice

With a boat you are not the importer bringing it over the border so they have zero out of the above 3 links in the chain. They therefore have zero evidence (and your non possession of a VAT invoice doesn't give them any) that YOU owe the VAT, so they cannot seize the boat. In fact is is very rare for the current posessor of goods to owe the VAT. Normally it is the seller. The goods would have to have been imported from outside the EU by the possessor for the posessor to be the one who owes the VAT.
 
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With a boat you are not the importer bringing it over the border so they have zero out of the above 3 links in the chain. They therefore have zero evidence (and your non possession of a VAT invoice doesn't give them any) that YOU owe the VAT, so they cannot seize the boat. In fact is is very rare for the current posessor of goods to owe the VAT. Normally it is the seller. The goods would have to have been imported from outside the EU by the possessor for the posessor to be the one who owes the VAT.

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The only slight wrinkle here are the "New Means of Transport" rules.

Rick
 
True. But as we're having a full on disgreement over the basics it doesn't seem right to complicate things with NMT, which rarely applies to a 2nd hand boat where this argument is focussed :-)
 
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but, for example, Channel Islands residents can take their boats to France without having to prove that VAT has been paid but they have to prove that they are CI residents and therefore exempt from VAT

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Not so much "exempt" as "no VAT <u>yet</u> payable" as the vessel can only stay a max of 6 months, unless bonded / sealed - otherwise it gets a VAT bill. (We are not in the EU for VAT purposes).
 
Yup it is misunderstood and overstated. Dunno why. If you are a brit boating in UK waters without vat receipt I strongly doubt whether hmrc would ever pick a fight, unless they have some reason to suspect you had imported the boat from outside EU (tip off, serendipitously finding your log book full of Jersey entries up till now, whatver)

The usefulness of VAT papers is to put off foreign inspectors. Geenrally as a brit boaster you are importing your boat there. So if they're having a bad day they might delve into whether it was being imported from say Jersey. But if you arrive in Calais with a fuel receipt 2 hours ago in Ramsgate that ought to tell them you haven't imported it from outside the EU, becuase your last port of call simply can't have been non EU

Hey, I dont dispute the usefulness of VAT invoice etc. All I'm trying to make clear is that the usefulness is to get foreign inspector off your boat faster. I'm saying it is absolutely untrue to say that if your boat is non VAT paid on some earlier transaction in its hisotry (the A-B sale) then you (Mr C) are actually liable for A's VAT on it, with some kind of Deleted User lien to boot. You simply aren't. You still might have to get johnny foreigner tax inspector off your case, but it's good to know what you're fighting over and it's good not to approach the fight on the footing that if you cant find a VAT invoice he is actually due the VAT. Suppose you were the bloke stopped in Calaiis as above: it's useful to know that you ought to be able to release yourself merely by proving you were in Ramsgate 2 hours previosuly, right? Rather than fretting about non VAT invoice and omitting (thru ignorance) to mention that get-out-of-jail fuel receipt in your coat pocket?
 
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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.

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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.

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Ok, I will concede the point on the basis that you seem to know yer VAT stuff /forums/images/graemlins/grin.gif.....I will therefore rephrase "responsibility" into "YOU (and not the Seller) could be the fella sitting on yer boat trying to explain to a foreign Custom's officer why they should not slap a VAT bill against the boat - and seal her until paid OR the lawyers sort it out at your expense".

IMO anyone who buys a boat which they beleive VAT has been paid on (and pays the £££ accordingly) without getting evidence is a bit of a donut (no offense meant to OP /forums/images/graemlins/tongue.gif)........both to cover yerself on the potential downsides with Foreign Customs, but also for re-sale (£££) purposes.

Still, it is not my money /forums/images/graemlins/grin.gif
 
Re: Proof of VAT status

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Why do we not have this problem with cars, or caravans or in fact any other high value movable item?

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Of course us in Jersey not being in the EU (for VAT purposes) means that folk here who do keep cars and caravans in France DO get their vehicles impounded / sealed and have to pay VAT to the French Customs (6 months is the limit) - of course Jersey (and Guernsey) vehicles are easy to spot /forums/images/graemlins/frown.gif - and then it is up to you to prove that VAT has been paid (and sometimes they have been VAT paid - ex UK vehicles). Jersey registered boats are also a red flag - and the French Customs DO board want to see the VAT papers, as well as length of stay.

Now, I guess with us being Johnny Foreigners we are an easy target (as in truth many of the vehicles and boats are not VAT paid /forums/images/graemlins/shocked.gif) and I am sure that in practice French customs do not check UK vehicles because they know that 999 times out of a 1000 it is simply a waste of time.
 
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