Proof of VAT paid

[Tranona]

I'd be prepared to pay for such a letter. How do I go about getting one? every time we have tried to get round this we have hit a brick wall.

- boat originally owned by a Greek charter company then sold to a private owner ( and because of Greek law at the time 'deemed VAT paid' ) then I bought it.

There is no way you can get it because VAT was never paid. Is completely irrelevant anyway if you purchased the boat from a private EU resident. There are hundreds of boats in the same situation and it does not cause any problems. You are never going to be asked to pay VAT. If a VAT offence was committed in relation to your boat it was by the charter company and does not involve you.

If you have a record of the original Greek registration number then you might be able to trace the de-registration documents. However, this will tell you nothing about VAT. The 6 years is a VAT rule for all transactions and not specific to boats so is also not relevant.

Presumably your boat is now UK registered. In which case the Greek authorities have no interest and the HMRC do not even know you own the boat!

I own an ex charter boat (in fact I owned it from new but formally it was owned by a Greek company). At the end of the contract full ownership was transferred to me with the normal documents of Bill of Sale, receipt for the contract payment, which I actually made in 2001 and VAT at the ruling rate. I also have a document from the registrar removing the boat from the Greek register and transferring it to me. You should have the same except for the VAT element if it was transferred to private ownership prior to approx 2002.

The only important documents are the Bill of Sale as this gives you legal title and your registration document to show the authorities in a foreign country that your boat is registered in the UK.

 

[ari]

In the whole tax scene the sums are piffling and HMRC has its hands full of lots more important things!

Quite possibly. But to a private owner who can't sell his boat without knocking 15% off because every "authority" on the subject is telling his buyer that it should come with an original VAT receipt it's quite a big deal!

 

[ari]

There is no way you can get it because VAT was never paid. Is completely irrelevant anyway if you purchased the boat from a private EU resident.

You are right, but we're constantly told that it is relevant.

There really does need to be some sort of official guideline on this matter.

 

[nimbusgb]

There is no way you can get it because VAT was never paid. Is completely irrelevant anyway if you purchased the boat from a private EU resident. There are hundreds of boats in the same situation and it does not cause any problems. You are never going to be asked to pay VAT. If a VAT offence was committed in relation to your boat it was by the charter company and does not involve you.

If you have a record of the original Greek registration number then you might be able to trace the de-registration documents. However, this will tell you nothing about VAT. The 6 years is a VAT rule for all transactions and not specific to boats so is also not relevant.

Presumably your boat is now UK registered. In which case the Greek authorities have no interest and the HMRC do not even know you own the boat!

I own an ex charter boat (in fact I owned it from new but formally it was owned by a Greek company). At the end of the contract full ownership was transferred to me with the normal documents of Bill of Sale, receipt for the contract payment, which I actually made in 2001 and VAT at the ruling rate. I also have a document from the registrar removing the boat from the Greek register and transferring it to me. You should have the same except for the VAT element if it was transferred to private ownership prior to approx 2002.

The only important documents are the Bill of Sale as this gives you legal title and your registration document to show the authorities in a foreign country that your boat is registered in the UK.

All very fine and well but try explaining that to some Italian, French, Spanish, Portugese or other harbourmaster or customs official that you may cross paths with in the med and who is intent on following some rule he has mis interpreted.

I may well be in the right but it's going to cost me more than my boat is worth in legal fees to prove it, even if I can!

 

[Tranona]

Quite possibly. But to a private owner who can't sell his boat without knocking 15% off because every "authority" on the subject is telling his buyer that it should come with an original VAT receipt it's quite a big deal!

That simply does not happen. As I have said many times, there is no way that HMRC can demand VAT from a private individual. The only way the value of the boat can be affected is if it was involved in an earlier VAT offence such as being imported without VAT being paid. This is unlikely, but possible, but I would suggest there would be something in the boats history that would indicate this early on.

The other way that values could be affected is if the purchaser wants to finance the boat with a mortgage and the finance company will insist on seeing the invoice. This may well restrict the number of buyers, but again whoever buys the boat will never be asked to pay 15% just because they do not have an invoice.

As I and many other people have said, not satisfactory but the world goes on and thousands of boats are bought and sold every year without difficulty.

 

[Tranona]

All very fine and well but try explaining that to some Italian, French, Spanish, Portugese or other harbourmaster or customs official that you may cross paths with in the med and who is intent on following some rule he has mis interpreted.

QUOTE]

How many times has this happened? If you are nerdish enough to follow the threads on this subject you will know that it is very rare to be asked for this document anywhere in Europe. And even if you are asked and do not have it, there is nothing the authorities can do to you. Customs are not in the least bit interested in an old low value boat because there is minimal chance of an offence. They are however interested in new high value boats of the type where VAT avoidance is a temptation.

Stop worrying about it. VAT was never paid on your boat because Greek law at that time did not require it. You acquired it legally (I assume) from an EU resident. So you are in the same position as thousands of others who move around Europe without any difficulty.

 

[ari]

That simply does not happen. As I have said many times, there is no way that HMRC can demand VAT from a private individual. The only way the value of the boat can be affected is if it was involved in an earlier VAT offence such as being imported without VAT being paid. This is unlikely, but possible, but I would suggest there would be something in the boats history that would indicate this early on.

The other way that values could be affected is if the purchaser wants to finance the boat with a mortgage and the finance company will insist on seeing the invoice. This may well restrict the number of buyers, but again whoever buys the boat will never be asked to pay 15% just because they do not have an invoice.

As I and many other people have said, not satisfactory but the world goes on and thousands of boats are bought and sold every year without difficulty.

Yes it does because that is the advice given by those who "know", boat mags, HM Customs, finance companies, etc etc etc.

The only way the value of the boat can be affected is if it was involved in an earlier VAT offence such as being imported without VAT being paid.

And you prove this isn't the case how? With a VAT receipt proving the VAT has been paid? But what if you've not got this?

And round we go again.

The situation regarding this issue is a farce, and there needs to be some clear concise guidance from an authority that deals with this.

Bluntly the matter needs putting to HM Customs, but couched not in terms of "what do I need" (for which the answer will be "A VAT receipt") but in terms of "can you please explain under which European laws I am liable if I do not have this?"

Until this is done by someone representing our interests (MBY, RYA, whoever) and the answer made very public this will remain a big issue.

No good saying to a potential purchaser "Oh don't worry, you'll probably be fine", it's not enough.

 

[quaelgeist2]

Sorry Tranona, that is simply rubbish. Sailing in/out of continental ports you are quite likely to be checked sooner or later.
Happened 3 times over and no, I do not know what they do, but I do know that you have quite some admin work to do to proof it SOON if the authorities have woken up.

Depending on tyour story and the country you are in, then yes, it is everything from "necxt time you have it" up to provisional payment.

Everyone to run that risk at their own assessment. To give advice to ignore it is not prudent.

High value boat is certainly a term that can be stretched. The average customs officer will look towards it differently than some high-flyer in the city ;-)

All very fine and well but try explaining that to some Italian, French, Spanish, Portugese or other harbourmaster or customs official that you may cross paths with in the med and who is intent on following some rule he has mis interpreted.

QUOTE]

How many times has this happened? If you are nerdish enough to follow the threads on this subject you will know that it is very rare to be asked for this document anywhere in Europe. And even if you are asked and do not have it, there is nothing the authorities can do to you. Customs are not in the least bit interested in an old low value boat because there is minimal chance of an offence. They are however interested in new high value boats of the type where VAT avoidance is a temptation.

Stop worrying about it. VAT was never paid on your boat because Greek law at that time did not require it. You acquired it legally (I assume) from an EU resident. So you are in the same position as thousands of others who move around Europe without any difficulty.

 

[Tranona]

Sorry Tranona, that is simply rubbish. Sailing in/out of continental ports you are quite likely to be checked sooner or later.
Happened 3 times over and no, I do not know what they do, but I do know that you have quite some admin work to do to proof it SOON if the authorities have woken up.




Can you give precise details of where and what actually happened?

I have said what I have said because there is no credible evidence that any private yachstsmen has ever had any difficulty other than sometimes being asked to show the document. This comes from such sources as the RYA, all the major magazines which regularly report peoples' experiences in foreign ports and endless threads on these fora. The advice from the RYA and HMRC is that foreign authorities have no interest in VAT issues on a UK boat - that is solely the concern of HMRC. So, if they do have concerns about VAT irregularities on a UK boat they will (if they can be bothered) refer to HMRC.

There is no way any payment can be asked of an individual unless there is some indication that the boat is being imported into the EU from outside. That is the only situation where an individual is required to pay VAT direct to the authorities. So if you turned up in the EU with a boat you bought in the US you would be required to pay duty and VAT unless you were able to claim relief or temporary importation.

As ari is saying in his posts, there is an unsatisfactory situation because of the HMRC advice in respect of needing the original document, but the RYA has been trying to get clarification for years without success. The only way to get the advice changed to reflect reality is to challenge it in the courts, but as there do not seem to ever have been any cases (which there cannot be because there is no offence) this has not happened.

This is like so many "myths" - once you ask to see concrete evidence the whole edifice collapses. I have no doubt there are cases where customs in countries such as Spain and Italy have impounded yachts where VAT may be an issue, but it is because an offence is suspected, not just because there is a lack of the original invoice.

As to checking by foreign authorities, they are only interested in confirmation of the state of registration of the boat and the status of the crew (passports and visa if necessary) to allow you into their territorial waters or land without restriction. They may also require evidence of competence of the skipper, but this is variable.

 

[gjgm]

actually, while I support the gist of what you are saying, I think the RYA did find a few cases where the lack of VAT documentation led to delays/stress/pain in the butt etc, with unhelpful foreign officials. But if you mean, they could find no cases of where VAT had to then be paid, I think that is correct.
So, to my mind there are two remaining issues.
1. the small risk of stressful inconvenience in an EU foreign port
2. there is a risk that you might find it harder to sell without the VAT docs.
Neither merit a 15% decrease in value.

 

[Tranona]

Yes the RYA did have some reports in their survey, but it was some time ago and I have not seen anything recently. Their conclusion was that there was insufficient evidence to make an issue.

 

[quaelgeist2]

background

By way of the 1993 EU VAT Directive/Agreement, boats can be moved freely between the EU countries. The boats can now also stay in a third country for an unlimited period.

Previously they had to follow extensive import/export procedures - unless there were bilateral agreements between individual states. And leaving your boat indefinitely in another country was not easily possible either.

That free movement under the 1993 VAT Agreement is contingent upon
a) the boat being registered in the country of origin
b) proof can be produced that VAT has been paid in the EU (at some stage)

So, clear deal: Historic cumbersome import/export procedures being abandoned and in turn we carry evidence (prima facie) of prior VAT payment for the boat.

My opinion: A great deal and if it wasn't for some negligent and/or obstinate owners who second guess the arrangement, we could all just pass on the VAT proof or get one from our respective customs/IR.

 

[Tranona]

or get one from our respective customs/IR.

That is the whole point of this nonsense - YOU CANT.

HMRC has no record of whether VAT has been paid or not so therefore cannot issue any letter of confirmation. It used to for that narrow group of boats that were "deemed VAT paid" by vitue of being in use in the EU on the critical date - evidenced typically by mooring bills etc. However it stopped doing that years ago.

The only records of VAT being charged on the transaction are the original purchasers copy of the invoice - and there is no legal requirement to keep that - and the vendors copy. The vendor is only required to keep his copy for 6 years.

So, if you do not have the original and the builder/dealer has not kept a copy (or more likely no longer exists) you will never be able to prove that VAT was paid.

On the other hand if it was sold new in the EU to a private person (that is not exported from the EU) nobody can prove that it was NOT paid so it is all completely irrelevant!

 

[ari]

So, to my mind there are two remaining issues.
1. the small risk of stressful inconvenience in an EU foreign port
2. there is a risk that you might find it harder to sell without the VAT docs.
Neither merit a 15% decrease in value.

I'm sure they don't if you're selling.

But I suspect they suddenly might if you're buying...

 

[ari]

I have no doubt there are cases where customs in countries such as Spain and Italy have impounded yachts where VAT may be an issue, but it is because an offence is suspected, not just because there is a lack of the original invoice.

If an offence is suspected, how do you prove the VAT was paid? With the original VAT receipt. What if you've not got it/can't get it? Err...

And back we go to the beginning.

I'm not trying to be belligerent or disagree with you mate, honestly! But the fact remains that without this document currently you are at risk of big expensive issues.

And you shouldn't be.

 

[jfm]

By way of the 1993 EU VAT Directive/Agreement, boats can be moved freely between the EU countries. ...
That free movement under the 1993 VAT Agreement is contingent upon
a) the boat being registered in the country of origin
b) proof can be produced that VAT has been paid in the EU (at some stage) .

This is just nonsense and has no basis in any laws. Neither a nor b are conditions to free movement of goods in the law of any EU member state. I don't have time to write an essay, and this has all been done to death, but it is just remarkable how utterly incorrect statements like this get made on internet forums so I felt the need to correct (as Tranona has correctly done on another aspects of quaelgiest's post)

Incidentally, a while ago we logged cases on here where folks had been stopped by Customs. Just to add to that list, I was stopped in Corsica in 1st week August 2009. 3 customs guys in a Rib. They boarded. I had charter guests onboard. They asked lots of questions (courteously), examined lots of papers, cellphoned HQ for advice and went to check something and came back 45mins later (I was anchored), and said all was fine. Their check was whether I was correct in not having accounted for French VAT on a large charter fee for a charter that started and ended in French waters. I asserted there was no French VAT, which I know to be correct, and they eventually agreed. Anyway, not once during all this did they ask if the boat was VAT paid and they didn't request/ook at any documents on that question. If I'd had more time I'd have asked them "Aren't you gonna check on the hull VAT as it's a brand new boat worth loads more than a poxy charter fee?" just to see their reaction. But I didn't have time - needed to get rid of them as they were spoiling lunch by this stage...

 

[Tranona]

I first got engaged with this issue when I bought my boat in Greece and wanted to make sure I was getting it done correctly given the different rules that applied in Greece at the time (since changed to come in line with the rest of the EU). And like you the more I looked the more I thought "something should be done" to clear up what many perceive as a mess. However, after a while you realise that annoying though it is for almost everybody it is irrelevant and not worth getting worked up about. If the RYA can't get any change how are you and I?

The risk of you ever getting into trouble with VAT on your boat is as close to Zero as makes no difference - provided you keep away from personally importing a boat, buying one that has been personally imported, getting involved in one of the VAT reduction schemes or owning a boat through a VAT registered business. And I am sure none of these apply to you.

Posting about it on fora does, however, give one something to fill the gaps between waiting for calls from the USA as I am doing at the moment

 

[quaelgeist2]

This is just nonsense and has no basis in any laws. Neither a nor b are conditions to free movement of goods in the law of any EU member state. I don't have time to write an essay, and this has all been done to death, but it is just remarkable how utterly incorrect statements like this get made on internet forums so I felt the need to correct (as Tranona has correctly done on another aspects of quaelgiest's post)

Incidentally, a while ago we logged cases on here where folks had been stopped by Customs. Just to add to that list, I was stopped in Corsica in 1st week August 2009. 3 customs guys in a Rib. They boarded. I had charter guests onboard. They asked lots of questions (courteously), examined lots of papers, cellphoned HQ for advice and went to check something and came back 45mins later (I was anchored), and said all was fine. Their check was whether I was correct in not having accounted for French VAT on a large charter fee for a charter that started and ended in French waters. I asserted there was no French VAT, which I know to be correct, and they eventually agreed. Anyway, not once during all this did they ask if the boat was VAT paid and they didn't request/ook at any documents on that question. If I'd had more time I'd have asked them "Aren't you gonna check on the hull VAT as it's a brand new boat worth loads more than a poxy charter fee?" just to see their reaction. But I didn't have time - needed to get rid of them as they were spoiling lunch by this stage...

Free movement of goods only applies commercially.
We are talking about private property moving between countries here.

I know that there is not much consideration for EU Directives and Agreements in the UK, but ignorance does not resolve the issue either.

have a good day, i will not disturb your little world any further

 

[ari]

That may be so, but whilst received wisdom is that you need this document, people will continue to ask for it and be put off or wish to re-negotiate if you've not got it:

Ensure VAT has been paid on the boat
Ask to see the original Sales Invoice that shows that VAT has been paid on the boat. If you can, make a note of the original seller and buyer's details. You can contact these people at a later time to obtain useful information about the boat and its performance.

http://www.boatshop24.co.uk/security_checklist.php

What documents will be required to provide proof of the VAT status on a used vessel?

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 in other Member States to provide evidence of your vessel's VAT status. Documentary evidence might include:

•original invoice or receipt;
•evidence that VAT was paid at importation; and/or
•invoices for materials used in the construction of a 'Home-Built' vessel.
A registration document on its own does not prove the VAT status of the vessel, as there is no link in the UK between the registry of the vessel and the payment of VAT. If you have difficulty in providing the information, you should contact our National Advice Service.

http://www.boatmatch.com/buying-your-boat-for-sale.php

Just a couple of quickly Googled examples.

 

[quaelgeist2]

Dutch situation

There is a similar (;-) ) situation being discussed right now in a German forum with many Dutch participants.
This year, so the joint experience, the Dutch and German customs officials appear to be focused on two things:
- radio certificate and registration
- VAT status

Unfortunately none of the participants owned up to being caught without either. Partly, of course, because the warnings that ari mentions above are common knowledge on the continent and many people would not even consider a boat without such doc status (unless it is so cheap that paying again becomes an option).

Incidentally, Dutch and German fiscal entities are a bit more helpful and issue papers or accept on a case by case basis some documentation and issue a proxy paper based on that.

Sorry that I do not have a solution and thus come across as a wet blanket, but I have had to show my customs doc a few times and was happy each time that things were OK.