Proof of VAT paid

[syd]

Not sure if this has been dealt wiyh before but if you bought an American boat from a dealer second hand and didn't get the VAT paid docs what do you do ?
Has the dealer got to supply proof ?

Syd

 

[gjgm]

No he doesnt have to offer them, but it would have been more helpful if he had them. I assume this is a UK/CE plated boat, and not some grey import, or private import, in which case I think things might be alot more tricky.
Crudely, if the boat was sold by a proper dealer in the UK, then VAT would have been charged on that first transaction. To that end , HMRC doesnt seem to find any point in rushing about checking bits of paper. It is possible that the original dealer can make you a certified copy of the original invoice.
So, unless HMRC have some reason to be highly suspiscious, they are not going to bother you. You have two smaller risks. One is when selling, you find a reluctance from buyers bcz you dont have this document (though they dont really need it either); the other is it is slightly possible that some foreign customs guy would give you some grief for not having docs that he would like to see.
So, as long as you are sure it was a normal first sale through a registered dealer, I wouldnt lose too much sleep.

 

[Tranona]

If you bought it from a "dealer" then it is unlikely that he is not VAT registered so there should be a VAT invoice from him on the sale to you. If he is VAT registered and has not accounted for VAT on the sale, he has committed an offence.

If, however, he is a broker (that is a representative for the owner) then you will not get a VAT invoice from him, but there would have been one originally when the boat was first sold in the EU. However, these things often get lost and as gigm says the chances of there being a problem if it was legitimately imported are very small. If you did buy through a broker, then your contract is with the private owner and no VAT is due on the transaction.

On the other hand, if it was imported by an individual, it is the individual's responsibility to pay VAT. If that was not done, HMRC could pursue payment. The importer should also have got a CE mark. It is illegal (in general terms) to sell a boat without a CE mark, so if the boat does not have it, your seller has committed an offence.

Suggest you get on the RYA site as there is good information on buying a second hand boat and particularly on importingboats with the associated legislation.

 

[Imperial One]

Put simply - no vat receipt available - do not purchase!

You need one to prove Vat has been paid and as and when you come to sell it again it will be a much easier task, especially if you want to p/x it against a boat from a dealer of any repute.

 

[Deleted User YDKXO]

Put simply - no vat receipt available - do not purchase!

You need one to prove Vat has been paid and as and when you come to sell it again it will be a much easier task, especially if you want to p/x it against a boat from a dealer of any repute.

You may have opened a can of worms there. As it happens, from the practical point of view, I agree with you 100%, not to mention also that if you or a future owner of your boat want to finance it, the finance co will probably want to see proof of VAT paid docs. However, there are some forumites who will argue that owners of a secondhand boat have no liability to prove that VAT has been paid on their boat any more than the owner of a secondhand car has to prove that VAT was paid on his car

 

[Tranona]

You may have opened a can of worms there. As it happens, from the practical point of view, I agree with you 100%, not to mention also that if you or a future owner of your boat want to finance it, the finance co will probably want to see proof of VAT paid docs. However, there are some forumites who will argue that owners of a secondhand boat have no liability to prove that VAT has been paid on their boat any more than the owner of a secondhand car has to prove that VAT was paid on his car

Sweeping statements like this do not help the OP. This is just as silly as saying that the VAT invoice is not important so ignore it.

As we have debated endlessly, it all depends on the circumstances surrounding the transaction. If it is a sale between two EU residents of a boat that was built in the EU and has always been in the EU, and will remain in the EU then it is of little relevance. If this were not the case there would not be a market for secondhand boats.

If on the other hand, as in the OPs scenario, the transaction will be between a trader and a private person then it is potentially a chargeable event. Also as the boat was built outside the EU, at the point of importation duty, VAT and CE mark will have been necessary, whether it be imported by way of trade or for private use - the requirements are the same. Therefore lack of documentation is suspicious. Extra care is needed in establishing the history of the boat, because of the potential penalties if the law has been broken.

There is nothing clever or difficult about this. A subscription to the RYA gives access to vast amounts of advice on the subject and a further £6.95 buys you a book which goes through the process of buying and selling a boat in great detail. Any intelligent buyer should have no difficulty in understanding where the pitfalls lie, and if they get stuck the subscription will give them access to the legal department.

There are of course, situations where there are additional issues, particularly when a boat has been outside the EU at some time in its history or has been owned by a corporate body, but again the basic rules are straightforward, just that unravelling history can be difficult.

And, yes, of course the advice is to walk away if you are unhappy about the history of the boat, in just the same way as you walk if there are unresolved issues about the physical condition.

 

[Adrianwool]

As Tranona states, this has been 'debated to death' on this forum, whatever the 'rights and wrongs' are, you cannot (in my humble opinion) have too much provenace for any one boat. Good for zealous customs officials, (especially foreign ones), 'comfort factor' for a potential purchaser when you come to sell on, which generally makes for an easier deal with higher returns.

 

[gjgm]

Put simply - no vat receipt available - do not purchase!

You need one to prove Vat has been paid and as and when you come to sell it again it will be a much easier task, especially if you want to p/x it against a boat from a dealer of any repute.

That is too sweeping a statement. I admit I would not buy the present boat without the VAT doc, but that was bcz for me it was a noticeable amount of money. But I cant say I bothered much about it on smaller/cheaper boats.

You do not need a VAT doc to sell the boat as a private individual
Tranona, is that correct that if a dealer sells (his own) second hand boat, he charges VAT on that, and it is shown on any invoice?

 

[Imperial One]

I do not think it is too sweeping a statement at all.

As a broker and dealer I will not take any boat, no matter how big or small in part exchange unless we have full provenance on it and this will always include its Vat status, be that vat paid or Vat free.

As said elsewhere in this thread, this topic has been debated to death but in simple terms, if you want to buy a boat with little or no paperwork from a private seller then it's your risk.

And it is a risk, especially if you go over the channel - you may well get asked to prove vat payment be it on a trailed boat or one on her own bottom. If you stay in the local waters you probably will not be asked to prove the vat situation.....until you come to sell it again.

As an example of why I take this position, we have recently sold one boat where the paperwork chain with it included a letter from HMRC asking the previous but one owner to prove the Vat situation as they had 'noticed' the boat being used in a UK Harbour. Fortunately the Vat paperwork existed (actually from our original invoice!) but even here in what many consider waters unpoliced by the HMRC, you may well get asked for proof.

It would be interesting to see the posts on here about me (or my fellow brokers) if I sold a boat with no Vat paperwork....how acceptable a situation would that be I wonder.

I accept all other peoples views but as a concientious broker I stay with my advice of 'no paperwork proving Vat payment, or not, then do not purchase'.

 

[PaulGooch]

That is too sweeping a statement. I admit I would not buy the present boat without the VAT doc, but that was bcz for me it was a noticeable amount of money. But I cant say I bothered much about it on smaller/cheaper boats.

You do not need a VAT doc to sell the boat as a private individual
Tranona, is that correct that if a dealer sells (his own) second hand boat, he charges VAT on that, and it is shown on any invoice?

A boat purchased from a VAT registered dealer (not acting as a broker) should show VAT separately listed.

 

[gjgm]

A boat purchased from a VAT registered dealer (not acting as a broker) should show VAT separately listed.

How does that work then? This is a second hand boat, right.

 

[jimmy_the_builder]

A boat purchased from a VAT registered dealer (not acting as a broker) should show VAT separately listed.

I don't think that's necessarily correct. If you buy a secondhand stock boat from a vat reg dealer then he's almost certainly going to sell it to you under the vat margin scheme. In which case vat is not separately shown (although a statement will be made about the vat status of the boat). This has certainly been my own experience when buying such a boat.

Cheers
Jimmy

 

[PaulGooch]

How does that work then? This is a second hand boat, right.

New or second hand. Where a VAT registered company is selling boats they are all subject to VAT. If you buy a used boat from a dealer, the sale will be subject to VAT, the invoice must show the VAT.

Brokerage sales are different, the broker is only acting as agent for the seller. The only VAT due is on the brokers fees.

 

[gjgm]

So a new boat is sold for £100k +17.5k VAT.
I sell it back for £90k, and the dealer sells it for £100k. How much VAT does he pay, and how would that show on the invoice?

 

[PaulGooch]

So a new boat is sold for £100k +17.5k VAT.
I sell it back for £90k, and the dealer sells it for £100k. How much VAT does he pay, and how would that show on the invoice?

Depends, if he's selling it under the margin scheme Jimmy talks about, the 10k margin will be treated as being VAT inclusive and the dealer will be liable to pay this amount to HMRC, same as second hand cars, and that won't show on the invoice.

If it's not part of the margin scheme, VAT would be due on the whole sum and shown on the invoice.

I'm not too sure how it's determined which boats/dealers are eligible for the margin scheme (to be honest i hadn't realised that the scheme extended to boats until Jimmy mentioned it), but looking around i see plenty of boats that are plus VAT and many the are advertised as VAT inclusive (presumably part of the scheme).

 

[EugeneR]

Just to give some comfort...

Unlike boats being sailed across, in my experience motor boats like the one in the picture goes into a customs holding area in the port of arrival from where it will only be released once VAT and duties have been paid.

I know, this does not prove that VAT has been paid but it makes it more likely to have been paid, possibly giving a bit more sleep for people worried about their situation.

 

[Tranona]

I do not think it is too sweeping a statement at all.


It would be interesting to see the posts on here about me (or my fellow brokers) if I sold a boat with no Vat paperwork....how acceptable a situation would that be I wonder.

I accept all other peoples views but as a concientious broker I stay with my advice of 'no paperwork proving Vat payment, or not, then do not purchase'.

While I admire your position, it is an example of the neurosis that has become attached to this subject. It is not an offence to own or use a boat that does not have a VAT invoice. neither is it an offence not to be able to produce one - as a private individual.

Ignoring private imports, it is just about imposssible for a private individual in his private capacity ever to commit a VAT offence. This is because VAT offences can only be committed by VAT registered persons or entities.

The need for a VAT invoice (as evidence) only arises if HMRC believes an offence has been committed involving a transaction related to the boat - note, not the boat itself but the transaction. Then they will look for evidence that VAT was charged on the transaction. The only evidence is the invoice, as no other reliable record exists.

So the risk in buying a boat is not in the piece of paper (or lack of) but in the probability that it has been involved in a transaction where an offence has been committed. In a normal purchase from new by a private individual in the EU, always kept in the EU and always bought/sold by private EU residents then it is impossible for an offence to be committed. Many boats with this kind of history lack a VAT invoice, simply because until recently it was never considered important, as indeed it is not.

The opportunity for VAT offences increases when a boat (or any other VATable asset) is owned by a corporate body, is a business asset, is imported from outside the EU or spends some time outside the EU. Then it is important to know more about its history and ensure that VAT was accounted for correctly in any transactions involving the boat. Once again the only evidence normally available is the invoice on the last transaction when it was sold to a private individual. Lack of an invoice in these circumstances is indeed a cause for concern and a reason for not buying the boat - or buying it at a lower price to make allowance for the (unlikely) event that HMRC will require payment from you as the current owner.

The need for a VAT invoice to satisfy foreign authorities is again a myth. There is no credible evidence that this happens except in cases where the authorities have suspicions of an offence. It will be something "non-normal" in the history of the boat that will trigger suspicions, but once they see the last transaction as being in the UK, there is no action they can take, but refer it to HMRC.

So, please keep a sense of proportion. Arguably, in addition to boats with particular histories, there are particular types of boats where the potential and rewards for committing an offence may be greater. Large, expensive, highly mobile yachts owned by sophisticated internationally orientated people might be in this category. 30 year 25 footers owned by Jo Bloggs from Shoreham are not!

 

[tinkicker0]

Agreed. Not a problem if the boat has been in the UK for a number of years.

As an example, my little 20 footer was built in the US, bought new at a dealers on Lake Windermere in 1992 and I do not have a copy of the original invoice or VAT receipt.
I do however have all the original maintenance receipts going right back to 1992, along with the credit card stubs. Don't need no CE mark as it wasn't around then.

I'm unlikely to sail down the Ouse, thru the Humber, down the North Sea and go to a foreign land, so I do not lose any sleep over not having a VAT receipt.

To say that my boat is unsellable because it does not have this bit of paper is ridiculous.

 

[pheran]

While I admire your position, it is an example of the neurosis that has become attached to this subject. It is not an offence to own or use a boat that does not have a VAT invoice. neither is it an offence not to be able to produce one - as a private individual........



So, please keep a sense of proportion.

Succinctly put, Tranona. I started to sleep a lot easier over buying and selling boats when I managed to get it through my thick skull that VAT and all the EU variants, apply to the transaction not the boat itself.

When I sold my boat last December, British owned and registered, in Holland, to a German, the issue of BTW was not even raised. I actually had proof of status but thought I would just let things run just to see. Never mentioned, although I did send said proof on to the new owner after the event with a 'look what I've just found' letter!

 

[Tranona]

Yes, Flavio Briatore (of Renault F1 fame) and his problems put things into perspective.

He is a fairly typical yottie, owning a multi story, multi everything else called Force Blue that cost £17m (or was it Euros - doesn't matter really). Sensible lad has it owned by an off shore company as a charter boat registered in the Cayman Islands. Everything on board is branded FB, which sort of gives the game away.

Anyway, at a bit of a loose end, cos he's not allowed to play motor racing and even does not feel safe going to Crystal Palace (which he also part owns), he decides to pop into his home country, Italy. Picky customs folk there promptly impound "his" boat and ask for £3.4m VAT. Wife, 30 years younger than him, promptly has problem feeding two month old baby - milk dried up through stress.

Morale, pay your VAT or your baby has to go on Formula (or have a wet niurse)

And all fact (according to the Daily Mail).