Prooving VAT Paid on a 1987 yacht

superheat6k said:
I would add that it is IMHO quite reasonable. It is for the seller to ensure he holds reasonable title, if not the value becomes subject to further negotiation, especially in today's buyer's market.
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VAT has nothing to do with title. The value of the asset does not change because there is no VAT evidence, nor does the title. The only thing that changes is the perceived value if the buyer then wants to sell the boat somewhere where possession of the evidence is essential - which is not in the UK unless possibly a buyer intends getting finance. Finance companies for some peculiar reason seem to believe that lack of proof implies an outstanding liability which it does not.

Misdescribing of any sort between the signing of the contract and completion is however a reasonable basis for renegotiation as the goods are no longer as described and agreed in the contract. Still has no effect on the real value, so any reduction is a penalty to the seller for not being honest in the first place. If you know up front that there is no proof then it is not a basis for later renegotiation.

Therefore important to see all the documentation before making an offer and signing a contract as I am sure John would confirm.
 
Caveat emptor

With Jonics expert help I am slowly getting thru the murk.

I can't give an update yet, but it is certainly worth bookmarking this thread.

A simple query on VAT has thrown up so much more, which may, or may not, help others in the future.

Keep watching...............
 
How does all this apply to a pre-vat boat that has been kitted out with modern electronics etc which has had VAT paid ? ... do receipts for every item purchased need to be carried all the time ?
 
winsbury said:
How does all this apply to a pre-vat boat that has been kitted out with modern electronics etc which has had VAT paid ? ... do receipts for every item purchased need to be carried all the time ?
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No. In fact there is no legal requirement to keep the receipt for a boat of any age. The responsibility for accounting for the tax is with the seller, not the buyer. Part of the pressure to keep the receipt for a boat is that there are many ways in which a boat can be used without VAT having been paid by the user that the law is open to abuse. This is particularly an issue if boats move across borders both within the EU and from outside in.

The lack of a receipt does not however mean that a private owner can receive a bill for unpaid VAT. That can only happen if there was a "chargeable event" that gave rise to a VAT liability.

In other words, for most people - forget about it and enjoy your boat and the spending of all your spare beer tokens on new goodies for it.
 
This was told to me directly by a senior officer:

If customs feel VAT has not been accounted for and they can not easily trace ownership, they CAN seize the goods (i.e the boat) to pay the VAT and leave it to the current owner to bring a civil action against any previous owner.



However in practice this doesn't seem to happen much in this country.
 
jonic said:
This was told to me directly by a senior officer:

If customs feel VAT has not been accounted for and they can not easily trace ownership, they CAN seize the goods (i.e the boat) to pay the VAT and leave it to the current owner to bring a civil action against any previous owner.



However in practice this doesn't seem to happen much in this country.
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John - that's a lovely example of customs trying to show they have power! The situations where that is likely to happen are extremely rare and would not be just because you don't have a receipt. It is an empty threat, but might worry somebody whose experience is influenced by television dramas (or even documentaries about customs work)!
 
Actually Customs have much greater powers than say the police, such as the right to search premises without need of a search warrant. Although in the UK it hasn't proven to be an issue in reality, there is a constant worry should things change as even having a VAT receipt doesn't prove that VAT isn't chargeable. The law is completely unworkable as a chargeable event can occur at any time after the initial sale. An incomplete set of papers could indicate that something is being hidden, but doesn't prove that to be the case.

In practice, most privately owned boats don't go on world girdling journeys so it may well be possible to find witnesses to the fact that the boat has been regularly berthed within the UK and not sold outside the EU. My own boat was built by its first owner, so the accepted proof of VAT status would be a compete set of receipts for the materials. I very much doubt that the builder kept these and he certainly didn't pass such a file on to the subsequent purchaser - but then he didn't plan on selling, until his circumstances changed.

Rob.
 
Yes, they do have wide powers, but considerably reduced compared with what they used to be before we joined the EU. Now that they are merged with the IR many old style officers resent the loss of their powers in relation to individuals. As for the most part individuals in their private capacity have no responsibility for accounting for VAT HMRC has very little real power.

As you say the basic problem is that VAT is transaction based and not asset based and as the record of transactions is the responsibility of VAT registered sellers, and record keeping does not require attaching tax to a particular asset other than at an individual invoice level it is impossible ever to be clear about what tax has been paid related to that asset - much as HMRC would like to know.
 
Some boats have a few skeletons in their wardrobes - this one had many. Many thanks to Jonic for his help and advice, which finally led to me withdrawing my offer.

I do not doubt the seller was genuine, but ........

Basically the boat was from 1987. The current owner had bought it from the administrators of a company that had gone bust. The current owner was rather inexperienced and only got a non-vat invoice from the administrators.

So Problem 1 - no current Bill of Sale

The current owner was not using a broker but was relying upon a willing wheeler dealer type amateur friend.

So Problem 2 - willing amateur seemed to struggle to remember the tales he had told (if you know what I mean)

A Part 1 historical transcript threw up that the boat had been owned by several sailing schools, all of which had probably reclaimed VAT, but of course there were no papers to do with any transaction other than the recorded Part 1 entries.

So problem 3 - the boat probably had a history of VAT reclaim, with no evidence of VAT payment

The part 1 also showed that the boat had a chequered mortgage history (all short term) , again with no documents to show any of the mortgages had been satisfied other than changes to the Part 1 Register

So problem 4 - the possibility that liens existed was high

There was no paperwork to show that the company claiming to be administrators had actually been instructed, and none was forthcoming. Not a huge problem BUT the administrators had filed for insolvency themselves a year ago at roughly the time they were handling this case, and a subsequent credit check showed that the company that had allegedly been insolvent only filed for administration in April this year. The strange thing was that the administrators were still in business and replying to phone calls, but were not prepared to do a Bill of Sale to the current owner to repair the ownership trail.

So problem 4 - no evidence that the company that sold the boat to the current owner actually had any right to, and a concern about their voracity.

The owners friend had said on numerous occasions that the boat had been taken off Part 1 - de-registered - and yet the paert 1 still showed the bust company as owner, with the entry expiring next year.

So problem 5 - on the only bit of paper that really counts, a bust company owns the boat, so its creditors would potentially have a call on it.



All the problems could have been solved simply by the owner:

a) ensuring he had a Bill of Sale when he bought the boat.
b) ensuring he had a bit of paper that showed the administrators were acting on behalf of the dead company
c) ensuring he had a VAT invoice from the administrators

Sadly their was a reluctance to sort the issues, so I bailed.

I think with this failed purchase I have learnt a huge amount of the pitfalls, and also how broker can earn their money, whether on the buyers side on a fixed fee document check service, or as a seller.
 
Comrade

I'm glad we were able to help. You certainly did the right thing digging deeper and it was interesting to see how one unturned stone led to another.

I too believe the seller was genuine but sadly the history was not supported by the documentation, and once you know where to look and what to look for, it can quickly unravel. Even with a significant discount you would have had some difficulty repairing that paper trail- if at all.

Good luck with your continued search.


As an aside we had a yacht with good solicitor checked VAT papers almost fail in it's sale this week, as the finance house involved required additional and very in depth multi agency/professional verification of the VAT history. Fortunately we we are able to go back over a decade and overseas to the various agencies to obtain the documents required. But it took an immense amount of co-operation from all sides and the willingness of those not directly involved to do some very painstaking, costly and time consuming work.

As comrade says it is in these areas that a good broker is earning his fee. Professional brokerage has never been about just producing advertising - and as EU legislation changes, good brokers have to be on top of it and know how to drive the sale through on the legal side.

Equally buyers need to know that a good professional broker has completed all of this preliminary work BEFORE the yacht is even marketed, so they can shop with confidence and have no nasty surprises once committed to surveys etc.
 
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My boat is 1981 and was imported into the UK in/prior to the cut off rule, I have a few stamps to say this is correct but no proof of VAT exemption.

Now, I did speak to HMRC at the time (I got my accountant to back it up!) and asked about it and what I should do when I went overseas and returned to the UK. They gave me a reference number, which I duly recorded and told me to tell any EU customs officer to call HMRC and quote the number and it will be fine. At the time they were not interested in older boats witch had chance of finding papers and in reality are not worth much in any case.

I was also told that any VAT due is the responsibility of the original seller, not the current owner. If you've dealt with HMRC/VAT then this does make sense.
 
''I was also told that any VAT due is the responsibility of the original seller, not the current owner. If you've dealt with HMRC/VAT then this does make sense.''

but i bet they have the right to hold boat till it is paid, which could be a pain!
 
Well HMRC have to right to do lots of things that could be a pain, but normally they can see reason.

As for older boats, my guess is (unless it's worth many hundreds of thousands of pounds, and then it'll most likely be a business) they are not really interested, and it would actually cost them more to take it to court, etc than they would get back in revenue. They certainly were not interested in my boat - maybe it was the Accountants approach, who knows.

As for our EU cousins, I'm going to stick with what I was told by HMRC, "This is UK issue with a UK flagged vessel, we will deal with any revenue issues. Please call us and quote this reference."
 
Ariadne said:
As for our EU cousins, I'm going to stick with what I was told by HMRC, "This is UK issue with a UK flagged vessel, we will deal with any revenue issues. Please call us and quote this reference."
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The flagging bit is irrelevant. Their responsibility is for transactions which are chargeable events that took place within their jurisdiction. So in your case all they are saying is that at the time your boat was exempt from VAT because you had the required evidence of age and location in 1992.

This does not mean that a new VAT liability will not arise anywhere in the EU if you bring the boat back into the EU without getting returned goods exemption. Or if you sell it while you are out of the EU, a subsequent owner may incur a liability if it is brought back into the EU.

VAT is a tax on transactions, not on assets so liability is determined by the transaction, not on anything that happened in the past. It may be worth you exploring the various exemptions if you intend bringing the boat back into the EU as you could be in for a nasty shock.
 
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