Proof of VAT paid

[Tranona]

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:






Just a couple of quickly Googled examples.

Yes, nothing new here - they are only repeating what HMRC says. Can only say that it seems to make no difference. Boats are bought and sold and everyone seems to be happy.

Suggest you write to Mr Brown (or better still Lady Mandy) to get them to tell HMRC to change their advice. They have nothing else useful to do!

 

[Tranona]

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

I wonder what gave you that idea! Everything to do with officialdom that goes wrong in the UK is blamed on the EU! Just today it has been discovered that a law which covers the sale of pornographic videos to minors is not valid because the "EU" was not properly notified. Train companies are being taken to task for the constant stream of worthless computer generated announcements that are played after every stop - Why? EU Directive. Thank goodness they don't have to be in all official EU languages!

On a serious note, the whole problem with VAT and boats comes about because the "authorities" including politicians want to see a tax on the asset (taxing rich peoples' toys). Unfortunately VAT is not a tax on assets but on transactions. In countries where the ownership of the boat is formally registered it is possible to link the payment of the transaction tax with the asset because there is a record of the asset. In the UK with boats this is not possible because there is no legal requirement to register the asset (boat) so no way of telling that the tax has been paid. So the authorities rely on the next best thing which is the invoice covering the sale (which does not prove ownership). As we have seen this is imperfect because there is no legal requirement for the purchaser to keep the invoice. The responsibility for accounting for the tax to the authorities is not with the purchaser, but the vendor. I know because I do it for my own business and if I do not account for it correctly I have committed an offence.

So, it is a mess - unsurprising when you are trying to establish a universal system of tax across so many countries and covering so many different types of goods and transactions. There are bound to be anomolies and this is one of them. Unfortunately as it makes so little practical difference and affects so few people there will never be a political imperative to sort it out.

Great thing is that in the UK, because of legal system and our history, most of us are quite happy to deal with the ambiguity!

 

[NealB]

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

Despite your confidence, your first sentence is factually wrong.

Your third sentence is a value judgement with which I disagree, but you are entitled to your opinion.

 

[jfm]

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

Hey listen QG, you wrote something that was substantially wrong and I just pointed that out. Somewhat robustly perhaps, but it is a forum. When people write such utterly incorrect stuff, it's important for the good of the forum that it is corrected. Various folk use this place as a reference centre/library.

When I've written wrong stuff and others have kindly corrected it, I respond by acknowledging the correction with good grace an apologising for my mistake. It takes a pretty weak man ("omega male", is the technical term in English) to respond with a personal insult.

Please quote or point to a law (of any EU country, or a directive) that says that free movement of a boat (private property or business) is allowed only so long as (a) boat is registered on some ship registry and (b) owner can prove VAT is paid. Then I'll happily concede on open forum that you're right and I'll eat a restaruant full of humble pie and wont insult you.

 

[gjgm]

and of course this is really the problem. In some super efficient EU countries, the paper trail is robust, so its perfectly normal to have any (peceived,required) documentation. But in the UK, as you say, there is no onus on the purchaser to keep the original invoice.
So while any foreign inspector might well (incorrectly under law)expect to see on demand such paperwork, it might cause inconvenience if he is less than familiar with UK practices.
But the proof of this pudding is surely whether there is a history of owners being made to pay VAT if they cannot produce the original invoice. And as far as I know, there hasnt been any case (excepting I guess where fraud was suspected/proven/evident etc). And i assume various foreign Customs are not pursuing this because they have no case?

 

[quaelgeist2]

so what

I have written about the situation on European level and commented from a Netherlands perspective - where I live and boat, despite being a guest here myself.

The legal basis you are referring to is to be found here (http://www.minfin.nl/dsresource?objectid=53055&type=pdf) albeit in Dutch. Article 7.26 section 2 : Exemption from the compulsory payment of VAT shall only be granted if previous payment can be demonstrated.
It explicitly references the European Directive(s) that it is based on.

Dutch customs manual based on this legal framework (for customs people, they have some latitude but can also strictly apply): http://www.douane.nl/bibliotheek/handboeken/handboek_douane/hd_25-00-00-04.html#P450_38730
You have to pay VAT if you cannot provide acceptable proof of previous payment of VAT somewhere in the EU.

A call to customs today confirmed that view. The customs person stated that absent any special situation, a yacht would have to pay BTW (VAT) or at the very least deposit a guarantee of the same amount with the Douane (customs) if checked and found without proof.
They have promised to check whether there is a third way, but as it looks now, there isn't.

* * *

What may be misunderstood - I don't care either way, because I have what is regarded necessary where I sail and sail to.
I try to help, only - avoiding trouble for other sailors, as a kind of payback for help the online community provided, here and elsewhere.
And IMHO ranting about a lack of legal basis and thereby sending people into trouble doesn't help.

If customs come back to me and have a solution, I will post.

* * *

(to jfm: I don't state my personal opinion about you - please reciprocate)

 

[Hurricane]

I have written about the situation on European level and commented from a Netherlands perspective - where I live and boat, despite being a guest here myself.

The legal basis you are referring to is to be found here (http://www.minfin.nl/dsresource?objectid=53055&type=pdf) albeit in Dutch. Article 7.26 section 2 : Exemption from the compulsory payment of VAT shall only be granted if previous payment can be demonstrated.
It explicitly references the European Directive(s) that it is based on.

Dutch customs manual based on this legal framework (for customs people, they have some latitude but can also strictly apply): http://www.douane.nl/bibliotheek/handboeken/handboek_douane/hd_25-00-00-04.html#P450_38730
You have to pay VAT if you cannot provide acceptable proof of previous payment of VAT somewhere in the EU.

A call to customs today confirmed that view. The customs person stated that absent any special situation, a yacht would have to pay BTW (VAT) or at the very least deposit a guarantee of the same amount with the Douane (customs) if checked and found without proof.
They have promised to check whether there is a third way, but as it looks now, there isn't.

* * *

What may be misunderstood - I don't care either way, because I have what is regarded necessary where I sail and sail to.
I try to help, only - avoiding trouble for other sailors, as a kind of payback for help the online community provided, here and elsewhere.
And IMHO ranting about a lack of legal basis and thereby sending people into trouble doesn't help.

If customs come back to me and have a solution, I will post.

* * *

(to jfm: I don't state my personal opinion about you - please reciprocate)

Thanks for looking this up.

So, hypothetically, if I was an individual who had just bought a boat from another individual in the UK and transferred it to Holland, who would I pay VAT to and for how much - based upon VAT being a tax on a transaction.

Perhaps the Dutch customs would regard the boat as an import - which it obviously isnt.

There's something wrong in what you are saying.

BTW I'm not getting at you (and I'm sure jfm isnt getting at you either) - your evidence (although I've not even tried to read it) seems to be the first solid example that we've seen. Are there any actual cases of the Dutch authorities ever charging VAT in the example that I give.

 

[quaelgeist2]

for the lawyers amongst us with an interest in the subject

The Dutch customs framework is (apparently) directly linked to the Community Customs Code that applies across the EU. There must be English version as well, but not presented as handy as the Dutch sites. The numbering should be identical across the various languages, though.

The relevant articles cited in the Dutch customs rules are 7.26 and 7.28 within the section 7 for specific cases // 7.1 preferential treatment.

Within these articles the reference is made to
a) the articles 185 - 187 of the Community Customs Code
b) the articles 844 - 856 of the implementation rules
c) and specifically to 848 as boats fall under the transport media that may not need forms & documentation as other imports

Non-binding translation of the key article: "If the customs agent has doubts about the EC-status (read: "VAT paid") status of the goods in question, then it is treated as an import and either a bond payment or normal import duty/VAT is owed"

NB I will ask the customs guy -assumig they call back as promised- of any cases pursued under these rules.

 

[jfm]

The legal basis you are referring to is to be found here (http://www.minfin.nl/dsresource?objectid=53055&type=pdf) albeit in Dutch. Article 7.26 section 2 : Exemption from the compulsory payment of VAT shall only be granted if previous payment can be demonstrated.
It explicitly references the European Directive(s) that it is based on.

Dutch customs manual based on this legal framework (for customs people, they have some latitude but can also strictly apply): http://www.douane.nl/bibliotheek/handboeken/handboek_douane/hd_25-00-00-04.html#P450_38730
You have to pay VAT if you cannot provide acceptable proof of previous payment of VAT somewhere in the EU.

(to jfm: I don't state my personal opinion about you - please reciprocate)

You are substantially confusing the issue QG

1. you originally wrote
"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)"

2. I said that was just wrong, and i still say that

3. You then quote article 7.26(2) of a statement from Dutch finance ministry on how they apply the law (so is an authoritative doc). That Article 7.26(2) doesn't say what you claim it says. It does not constitute authority for what you assert in 1. above. It merely says that where exemption from Dutch VAT is claimed on returning goods by virtue of VAT having been already paid previously on those goods, then it should be substantiated that VAT was previously paid. That's obviously fair enough. But 7.26(2) has very limited application. It applies only to returning boats. Most boats in NL do not claim exemption from VAT on grounds that they're returning (from outside NL or EU). Most local boats aren't returning. If someone sails a boat from UK to NL they would not be returning and would be not liable to Dutch VAT by virtue of rules other than 7.26(2), and could substantiate the absence of dutch VAT liability merely by showing that the boat's history puts it in the UK VAT net, not the dutch. Of course if someone sails a Dutch VAT-paid boat to Caribbean, then returns to NL, then the boat is returning, and to avoid import VAT the importer needs to prove that VAT was previuosly paid. But that isn't what you wrote in 1. above.

4. And, of course, the items you quote do not say the boat has to be registered anywhere. (Flagging has nothing to do with VAT except in the case of TI, which is not free circulation, )

5. I dont attach any value to what a customs officer said. They often get confused, might be led by your question, might have their answers misinterpeted by you when reported here, and so on. And douanes generally don't know the law too well. Though, I doubt you'd get any Customs officer to confirm that what you wrote in 1. above is correct, verbatim

6. As for the "I don't state my personal opinion about you ", how disingenuous of you. You wrote that I inhabit a small world, which is unquestionably a personal insult (and kinda ironic coming from a Dutchman, but you probably didn't get that part). And you wrote a xenophobic comment saying UK people don't respect EU rules. Anyway, it's an open forum and you are free to say that you're not hurling insults if you wish.

 

[SRB]

Hi all,
This has been an interesting thread!
Going back to the original question, What type of proof is considered acceptable?
If you are asked to prove the VAT status and you produce an invoice, do they just look at it and accept it as proof of VAT paid, or do they investigate further?

If they do just look at it and accept it, what is to stop you from making up an invoice on your pc printing it off and producing it?

 

[gjgm]

depends if David Caruso is with them.

 

[Hurricane]

Hi all,
This has been an interesting thread!
Going back to the original question, What type of proof is considered acceptable?
If you are asked to prove the VAT status and you produce an invoice, do they just look at it and accept it as proof of VAT paid, or do they investigate further?

If they do just look at it and accept it, what is to stop you from making up an invoice on your pc printing it off and producing it?

Or, indeed, more legally, it could have been an invoice to a company - and the company reclaimed the VAT.

It farcical, really

 

[neale]

Hi all,
This has been an interesting thread!
Going back to the original question, What type of proof is considered acceptable?
If you are asked to prove the VAT status and you produce an invoice, do they just look at it and accept it as proof of VAT paid, or do they investigate further?

If they do just look at it and accept it, what is to stop you from making up an invoice on your pc printing it off and producing it?

That's a good point, especially if your boat is over 6 years old or, like mine over 20 years old and sold by a dealer who has long since gone bust. I don't understand how any foreign official can make a judgement on whether an item is VAT paid based on a piece of paper that could be printed out by just about anyone. If the company no longer exists, I don't see that there is even any investigation they can undertake that would prove it either way. Although, there is one trick ready to trip up someone planning on printing their own VAT receipt. VAT numbers are not random. They have a built in checker that can easily be read to see if the number is/was a genuine VAT number. See here: http://www.2-small-business.com/number_registration_vat.shtml for how it works.

There is also an EU wide site for checking valid VAT numbers, although this only seems to work with current VAT numbers so will show an old defunct number as invalid. See here: http://ec.europa.eu/taxation_customs/vies/vieshome.do

 

[Tranona]

That is the whole point about this checking business. Officials are only interested if they consider an offence has been committed. A boat in the EU owned by an EU citizen is not committing an offence. VAT offences are committed at the time the boat is first sold or first comes into the EU, and the offence is commited by the vendor or importer.

This can, of course involve a boat now legally owned by a private citizen, but there must be something in the history of the boat that arouses suspicion to justify any investigation.

Remember that they will have to prove that VAT was not paid, so they have the same disadvantage as us. It is easier if the boat was privately imported because VAT is paid direct to HMRC so they have a record!

But all these scenarios are at the margins so effectively irrelevant for the majority!

 

[Nick_H]

If they do just look at it and accept it, what is to stop you from making up an invoice on your pc printing it off and producing it?

Nothing, but then what's to stop you falsifying your income tax return, or printing off a degree certificate to get a better job? It only matters if you get investigated, or if you don't like breaking the law

 

[bencarlos]

VAT on a Boat registered in Gibraltar and owned by Gib company

hi, very confusing this situ;

Boat owned by a Gibraltar company and reg in Gib, kept in Gib most of the time.

No vat paid, no matricualtion paid.

One of the users has been in Spain for more than 6 months so now a Spanish resident.

The boat has been to Spain and Canary Islands.

Spanish Customs put a "precinto" on the boat and insisted matriculation to be paid (+ fines) as the user at the time was Spanish resident. This is now paid (forced) to release the boat (or we would have had to go to court taking approx 2 years). NOW Customs want IVA/VAT (+fines) to be paid and then POSSIBLY IGIC which is the Canary Islands VAT!

So 11% matriculation (Canary Islands) + 16% IVA + 13% IGIC - Any ideas anyone? Total 40% tax's (+ fines which can be 75% of the tax's) never right? Long gone are the days of the sleepy Spanish..!!

 

[Tranona]

hi, very confusing this situ;

Boat owned by a Gibraltar company and reg in Gib, kept in Gib most of the time.

No vat paid, no matricualtion paid.

One of the users has been in Spain for more than 6 months so now a Spanish resident.

The boat has been to Spain and Canary Islands.

Spanish Customs put a "precinto" on the boat and insisted matriculation to be paid (+ fines) as the user at the time was Spanish resident. This is now paid (forced) to release the boat (or we would have had to go to court taking approx 2 years). NOW Customs want IVA/VAT (+fines) to be paid and then POSSIBLY IGIC which is the Canary Islands VAT!

So 11% matriculation (Canary Islands) + 16% IVA + 13% IGIC - Any ideas anyone? Total 40% tax's (+ fines which can be 75% of the tax's) never right? Long gone are the days of the sleepy Spanish..!!

Welcome to the forum

Quite right too! The law is very clear. If a boat is imported into the EU VAT is payable on the first port of entry - unless the owner qualifies for exemption under the temporary importation rules. End of story.

 

[bencarlos]

Vat/iva/igic

Welcome to the forum

Quite right too! The law is very clear. If a boat is imported into the EU VAT is payable on the first port of entry - unless the owner qualifies for exemption under the temporary importation rules. End of story.

Ok I understand with an EU person but the owner of the boat is Gibraltar company.

 

[bencarlos]

VAT on a Boat registered in Gibraltar and owned by Gib company

hi, very confusing this situ;

Boat owned by a Gibraltar company and reg in Gib, kept in Gib most of the time.

No vat paid, no matricualtion paid.

One of the users has been in Spain for more than 6 months so now a Spanish resident.

The boat has been to Spain and Canary Islands.

Spanish Customs put a "precinto" on the boat and insisted matriculation to be paid (+ fines) as the user at the time was Spanish resident. This is now paid (forced) to release the boat (or we would have had to go to court taking approx 2 years). NOW Customs want IVA/VAT (+fines) to be paid and then POSSIBLY IGIC which is the Canary Islands VAT!

So 11% matriculation (Canary Islands) + 16% IVA + 13% IGIC - Any ideas anyone? Total 40% tax's (+ fines which can be 75% of the tax's) never right? Long gone are the days of the sleepy Spanish..!!