Tax not applicable...how can it be ??

[Artic Warrior]

Hi all...
I'm talking old boats here , not company pre vat boats...


I see a lot of boats for sale around the world and if pre 1985 it will say tax not applicable....

It might not be applicable if the boat is kept in the country that is registered...

but as soon as you take it anywhere else in the world it's subject to vat...no matter the age isn't it...

And for example , if a boat was bought in the us with a purchase invoice lower than it should be And you brought it back to the uk for example.... Is the vat calculated on what customs think it's worth or what the invoice you says...

Thanks everyone

 

[westernman]

Hi all...
I'm talking old boats here , not company pre vat boats...


I see a lot of boats for sale around the world and if pre 1985 it will say tax not applicable....

It might not be applicable if the boat is kept in the country that is registered...

but as soon as you take it anywhere else in the world it's subject to vat...no matter the age isn't it...

And for example , if a boat was bought in the us with a purchase invoice lower than it should be And you brought it back to the uk for example.... Is the vat calculated on what customs think it's worth or what the invoice you says...

Thanks everyone

My boat was built for its previous owner in Canada in 1998. It had a few shake down sails there, before being sailed across the Altantic directly to Cowes IOW where it was imported. VAT was paid on what customs thought it was worth. This was less than 1/3 of the cost of the build.

When imported and inspected of course it had just spent weeks at sea. It was dirty, there were dirty clothes and kit all over the place, the varnish was worn in places and salt caked.

If the only thing that has happened between you buying it and importing it was it being put on a cargo ship and sent to the UK, you will probably be asked for the invoice and shipping cost invoice and you would pay VAT on that unless the purchase invoice does not tally with their idea of value. Of course you could say it was a private sale with no written contract - just a hand shake. (They might check your bank accounts if the value is high and there is a doubt).

The real and most significant cost might be getting the boat modified to bring it up to RCD II/2013. Yes it needs to conform to the 2013 version. Of course pre 1998 there was no RCD at all.

My boat was built in Canada to RCD and had a RCD certificate issue by a agency in the Netherlands before being sailed across to Cowes.

 

[nevis768]

My boat was built for its previous owner in Canada in 1998. It had a few shake down sails there, before being sailed across the Altantic directly to Cowes IOW where it was imported. VAT was paid on what customs thought it was worth. This was less than 1/3 of the cost of the build.

When imported and inspected of course it had just spent weeks at sea. It was dirty, there were dirty clothes and kit all over the place, the varnish was worn in places and salt caked.

If the only thing that has happened between you buying it and importing it was it being put on a cargo ship and sent to the UK, you will probably be asked for the invoice and shipping cost invoice and you would pay VAT on that unless the purchase invoice does not tally with their idea of value. Of course you could say it was a private sale with no written contract - just a hand shake. (They might check your bank accounts if the value is high and there is a doubt).

The real and most significant cost might be getting the boat modified to bring it up to RCD II/2013. Yes it needs to conform to the 2013 version. Of course pre 1998 there was no RCD at all.

My boat was built in Canada to RCD and had a RCD certificate issue by a agency in the Netherlands before being sailed across to Cowes.

Looks like you need not comply with RCD marking until 2027 now, see quote from updated Act

1. On 20 June 2022, the Government announced the provisions for importer labelling would be extended until 31 December 2025. On 14 November 2022 the Government announced it would be extending the provisions for importer labelling until 31 December 2027. The Product Safety and Metrology (Amendment and Transitional Provisions) Regulations 2022 (SI 2022/1393) give effect to this. ↩ ↩2
2. On 24 August 2021 the Government announced the transition periods for UKCA marking and UKCA labelling would each be extended until 31 December 2022 and 31 December 2023 respectively. The Product Safety and Metrology etc (Amendment) Regulations 2021 gave effect to this. On 20 June 2022, the Government announced the provisions for UKCA marking and labelling would be extended until 31 December 2025. On 14 November 2022 the Government announced it would be extending the transition period for UKCA marking until 31 December 2024 and the provisions for UKCA labelling and importer labelling until 31 December 2027. The Product Safety and Metrology (Amendment and Transitional Provisions) Regulations 2022 (SI 2022/1393) give effect to this. ↩

 

[Tranona]

Hi all...
I'm talking old boats here , not company pre vat boats...


I see a lot of boats for sale around the world and if pre 1985 it will say tax not applicable....

It might not be applicable if the boat is kept in the country that is registered...

but as soon as you take it anywhere else in the world it's subject to vat...no matter the age isn't it...

And for example , if a boat was bought in the us with a purchase invoice lower than it should be And you brought it back to the uk for example.... Is the vat calculated on what customs think it's worth or what the invoice you says...

Thanks everyone

Sweeping generalisations here. In the UK any boat imported is subject to VAT based on its market value which may be the purchase price if it is recently purchased or on a valuation agreed by customs. It will also need to be certified to the latest standards which in the case of older boats pre 2017 that do not comply with EU RCD is either technically impossible to achieve or costly.

As a consequence the UK is effectively a closed market and it is not economic or practical to import an older boat.

 

[nevis768]

Sweeping generalisations here. In the UK any boat imported is subject to VAT based on its market value which may be the purchase price if it is recently purchased or on a valuation agreed by customs. It will also need to be certified to the latest standards which in the case of older boats pre 2017 that do not comply with EU RCD is either technically impossible to achieve or costly.

As a consequence the UK is effectively a closed market and it is not economic or practical to import an older boat.

Nonsense....

 

[Artic Warrior]

Sweeping generalisations here. In the UK any boat imported is subject to VAT based on its market value which may be the purchase price if it is recently purchased or on a valuation agreed by customs. It will also need to be certified to the latest standards which in the case of older boats pre 2017 that do not comply with EU RCD is either technically impossible to achieve or costly.

As a consequence the UK is effectively a closed market and it is not economic or practical to import an older boat.

Hi...I'm glad you have answered as I know you are a knowledgeable chap...
my main question is thou...when you see these boats for sale worldwide and they quote tax exempt...vat will always have to be paid if not proven in the country it's registered and definitely have to pay vat in any other country it goes to if it stays beyond the vat free period otherwise it falls into importation rules....do you understand what I'm getting at..

 

[ylop]

Hi...I'm glad you have answered as I know you are a knowledgeable chap...
my main question is thou...when you see these boats for sale worldwide and they quote tax exempt...vat will always have to be paid if not proven in the country it's registered and definitely have to pay vat in any other country it goes to if it stays beyond the vat free period otherwise it falls into importation rules....do you understand what I'm getting at..

I think you are confusing yourself with country of registration and tax being due. Clearly someone selling a boat has no idea where the buyer is tax resident, or where they might take it or for how long. All they can comment on is any tax liability if it remains where it is immediately after the sale completes.

 

[ylop]

Nonsense....

Can you elaborate?

 

[Tranona]

Hi...I'm glad you have answered as I know you are a knowledgeable chap...
my main question is thou...when you see these boats for sale worldwide and they quote tax exempt...vat will always have to be paid if not proven in the country it's registered and definitely have to pay vat in any other country it goes to if it stays beyond the vat free period otherwise it falls into importation rules....do you understand what I'm getting at..

The tax exempt or not applicable bit in adverts is largely meaningless as any tax liability depends on where the boat is and where you intend keeping it.

From a UK perspective just about any boat already in the UK will be seen as VAT paid, although there are obviously exceptions (boats owned by VAT registered entities, boats belonging to non residents and here under TA for visitors as examples). Since leaving the EU just about any boat brought into the UK by a resident is subject to VAT and certification. The only significant exceptions are boats owned by people who qualify for RGR or returning residents, or taking up residence. The numbers who can use these reliefs is very small. Such boats are then assumed UK VAT paid and can be sold freely (with some time restrictions for returning residents) within the UK.

The upshot of this is that for a UK resident wanting to buy a boat outside the UK for use in the UK faces a big barrier which in some cases, for example newer high value boats can be overcome, but for most it is just not viable.

Just further clarification. As already suggested registration is irrelevant as is the citizenship or tax status of the seller or buyer. The only things that matter is the boat and the residency of the importer. Despite what you may read from other posts, the rules on both VAT and certification apply to both private and commercial importers, and have done since 1992 in the case of VAT and 1998 for certification. The rules are cut and paste from the EU rules with the exception that the UK seems to have removed the certification exemption for pre 1998 EEA/EU built boats.

Hope this helps.

 

[westernman]

The most important thing about importing a boat is, that unless you are entitled to RGR relief on it, is that it must be certified to the UKCA version of RCD II - 2013 version. Note it is the current version of the standard which applies. Not the standard when the boat was built.

For boats pre 2005 or so, this is likely to be a large hurdle as the engines will need to be certified to the new emissions standards. In most cases this means replacing the engines.

Also the rest of the certification process is a PITA but probably doable but will cost a fair bit to do (just for the inspections and paperwork alone), and some modifications will almost certainly be needed. Things were done in different ways by different builders before RCD harmonised a lot of stuff (not necessarily worse or better).

One off builds such as mine went through this process - mine in 1998. It was a PITA. It was expensive but it was achieved. Of course if my boat was going to be imported by some one else back into the UK, it would not pass the latest version, and the engine would have to be replaced.

20% VAT is the least of the worries.

Note RGR can be used by people who are non-resident in the UK who are moving to the UK to become permanent residents. It can be used for cars and boats which you owned for at least 6 months before your change of residence and that you are moving to the UK as part of your moving process.
This may well be the simplest and best process. Just move to the country where you are buying the boat. Stay there and pay taxes there for 6 months, then move back to the UK and bring the boat back with you.

 

[lustyd]

when you see these boats for sale worldwide and they quote tax exempt

The phrase is “deemed VAT paid” in reality but many people say exempt as they don’t understand the detail. In reality HMRC don’t care too much about soggy old boats anyway. Even in my tax return they didn’t care about a bunch of things I tried to pay tax on.

 

[Jim@sea]

I bought a boat which was sold to a UK resident in the UK a month before UK Vat was introduced, ( March 1973) In 1983 the boat was sold to a resident of the Channel Islands, I bought it in Alderney in 1989 and sailed it to Southern Ireland and then the UK.
When I arrived in the UK I filled in a Customs Form declaring that I had brought it in from S Ireland. (The form did not ask where it had been previously) I sold it 2 years later and the buyer took it down to a UK South Coast marina.
A year later at my business in the North West I had a visit from a Vat Inspector who it turned out was based at the marina on the south coast where my yacht had ended up and he had come the 250 miles purely to check out the boat I had sold.
He did a full Vat Inspection and when finished said "I believe you have an interest in boats" !!!!!!!
Fortunately I still had the Customs Form from when I brought it in from S Ireland.
I had made a small profit on the boat and I had to pay 15% VAT on the profit,
I asked what would have the position been if I had not kept the Customs Form and he said that I would have had to pay Vat on whatever the sale price was,
He also said that they check the history of every boat which arrives at their marina,

 

[Refueler]

Can you elaborate?

I actually agree with him in part ....

There is NO actual ban on brining in any boat to UK .... the way you do it is up to you and authorities.

 

[ylop]

I actually agree with him in part ....

There is NO actual ban on brining in any boat to UK .... the way you do it is up to you and authorities.

Tranona never said there was a ban. In fact he quite clearly describes how it is possible, just prohibitively expensive. The VAT is not the expensive bit (an old boat will be cheap so 20% of cheap is ok) but in theory at least you need to compliant with the RCD (as copied into uk law) which may well involve a new engine and depending on the age of the boat other expensive changes and professional certification. Now local trading standards are responsible for enforcing this, likely have little interest in a UK private buyer bringing in for their own use, especially for examples of models that are quite legally already on the market. I don’t know if HMRC and trading standards talk to each other, do you? If you did manage to bring a boat in without too many questions being asked then at the point of resale you might find it harder to sell on if buyers are concerned about paperwork (some will not, at the right price); presumably in the event of a significant insurance claim an insurer might suddenly show an interest in the rules too? and of course if the MCA enforcement team had many reason to look into you (following a serious incident) a “smuggled boat” is likely going to be the sort of thing that makes them dig deeper.

So none of Tranona’s factual comments seem to be nonsense, so it would be helpful if the poster had or could clear up what he believes is wrong? As for what is clearly an opinion, that the U.K. is effectively a closed market - the reality from those living in the U.K. considering buying older used boats seems to be that in real terms Tranona is right. Probably some people do it on a very small scale, low key way and nobody notices. Those people aren’t the sort of people who post questions on forums asking for advice on tax status (not least because if HMRC join the dots then knowingly breaking the rules really upsets them).

So if there is an affordable and legal route do share it with the forum - because there’s lots of people who would quite like a Swedish/Baltic boat in Scotland, a Dutch boat on the East Cost of England or a Mediterranean boat in the solent because the desirable design attributes share a lot in common.

 

[Frank Holden]

Well, I think the answer is 'it depends'.
My boat was built in the UK in 1986 and was on completion sold by the builders to another division of the company for '£1 and other considerations'. Sold private in 1990 she promptly left the UK and when I bought her 4 years later the owners could offer me no proof of VAT having been paid so I have always assumed none had been.

Moving right along we arrived soon thereafter in Australia. Despite her being UK flagged I was an Australian citizen and resident so had no choice but to pay sales tax and duty ( about 20% in total ) muy pronto.A survey for value was required, the surveyor accepted the price I had payed as the value of the boat.
Now they have GST in 'straya I believe it would be 10% GST plus 5% duty.

Anyway, about 10 years later we quit Australia for 'the southern cone' and apart from one trip back to NZ and the covid years in Ecuador that is where she has been ever since.
In NZ - if as an NZ cit you arrive with a boat you have to import on arrival. If not an NZ cit you have 2 years but if you list her 'for sale' you have to pay GST/Duty when you list, not when you sell ( willing to stand corrected on that). Value is agreed on first arrival. Dunno if asking price affects that value or not.
Same applies in Chile and Ecuador re temporary import . It's 2 years in Chile, not sure in Ecuador as we were allowed to stay for 3 years due to the covid business. They were very understanding. Argentina? Easy to just pop over to Uruguay for a spell.
So yes you can stay clear of import taxes as long as you keep moving and avoid your country of residence.