UK flagged yachts returning to the UK/Europe

[Peroo]

I've tried the search but not really found what I was looking for.....

We have been in the Caribbean for a while are are returning to the UK next year. We have been told by several other yachties that UK flagged yachts returning to the UK or indeed Europe may be liable for VAT. Sounds very odd and not what I thought the situation was but I thought I would ask the more knowledgeable of this parish whether things have changed.

If VAT was paid when built or whether exempt because of the age of the boat and when it was constructed, it seems strange that simply returning to the UK or Europe suddenly makes you liable for VAT.

Can anyone advise or clarify - it may simply be folks misinterpreting the current rules, but I'd be grateful if anyone can help? Tried the interweb thing and couldn't see anything relevant, but of course it could just be me........

Cheers

 

[rivonia]

how long have you / the boat been out of the EU?

 

[Peroo]

Left the EU in 2010

 

[rivonia]

Ahh then you MAY have to pay VAT then. The way round this as others will come and say is to go back to the EU via the Azores calling into HORTA on the Isle of Fial. We did it checked in no questions asked.

Good luck

Peter

 

[SteveSarabande]

Why would he have to pay vat again if it was paid on purchase

 

[Peroo]

+1

What has changed?

Incidentally we do plan to return via the Azores but the implication from Riviona as that we may have to pay VAT - how firm is may?

 

[Tranona]

I've tried the search but not really found what I was looking for.....

We have been in the Caribbean for a while are are returning to the UK next year. We have been told by several other yachties that UK flagged yachts returning to the UK or indeed Europe may be liable for VAT. Sounds very odd and not what I thought the situation was but I thought I would ask the more knowledgeable of this parish whether things have changed.

If VAT was paid when built or whether exempt because of the age of the boat and when it was constructed, it seems strange that simply returning to the UK or Europe suddenly makes you liable for VAT.

Can anyone advise or clarify - it may simply be folks misinterpreting the current rules, but I'd be grateful if anyone can help? Tried the interweb thing and couldn't see anything relevant, but of course it could just be me........

Cheers

First, the registration of the boat is largely irrelevant in relation to VAT. VAT is a tax on transactions, termed "chargeable events" and bringing a boat into the EU is classed as a chargeable event so triggers a potential VAT liability. However there are a number of reliefs available, the most obvious one in this situation is Returned Goods Relief which is available where the goods are being imported by the same person that exported them from the EU (assuming they were VAT paid or deemed VAT paid when they left). This relief is available normally for 3 years from the date of export. This relief is not available if the boat changes ownership during the period outside the EU. So, if you sell your boat the new owner is potentially liable to pay VAT if he brings the boat back in. The rules on when VAT is payable or not can be found in HMRC VAT Notice No 8 and a FAQ explanation of the practical implications can be found on the RYA website.

You do not say what your personal status is, but this can also be relevant. If you are classed as non resident in the EU and are returning to take up permanent residence in the EU you may be able to bring the boat in free of VAT as your personal chattels. However this is much more restrictive, so the Returned Goods Relief is the one to investigate.

As rivonia has suggested it seems that these rules (which are in theory EU wide) might be difficult to enforce consistently! Having said at the start that state of registration is irrelevant in respect of VAT, what is important is the state where the last transaction took place as that determines where the responsibility lies for VAT. Assuming you bought the boat in the UK another state has no responsibility. However if you stop in the Azores (Portugal) coming from outside the EU a new chargeable event arises so it would become their responsibility, but your red ensign and bill of sale may well deter them from showing any interest!

 

[Toutvabien]

And could we have a show of hands from anybody who has actually been charged VAT when bringing their boat back into the UK after being away on it for over three years?

 

[Peroo]

Many thanks for this - it helps quite a bit.

So assuming the folks in Horta are happy with my boat papers and passport etc. as I'm re-entering the EU, they may or may not take an interest in the yachts VAT status?

Presumably once past this step, then does the question of VAT status arise again when sailing between EU countries or only when the boat is next put up for sale?

I will check the RYA web site as suggested.

Most helpful

 

[phantomlady]

I find it quite funny all this talk of VAT being payable on return to EU. When I worked at Falmouth Harbour Commissioners' visitors pontoons I was often asked about 'checking in' to both the EU and the UK by yacht crews returning from the caribbean (Falmouth is a pretty popular port). My superiors, when referred to, looked at me askance and merely told me to tell them there were no customs facilities at Falmouth and to 'try and check in at the next stop'. Meanwhile, they were allowed onshore, no passports checked or anything let alone VAT status !!
Incidentally, when we returned on our own yacht after 4 years in the caribbean we just sailed straight back to our own mooring (but don't tell anyone...)
It seems that what happens in reality is often very different to the so called 'rules and regulations'. However, if you don't follow the 'rules' it's all at your own risk.

 

[Koeketiene]

It seems that what happens in reality is often very different to the so called 'rules and regulations'.

And long may it remain so :encouragement:

 

[charles_reed]

And long may it remain so :encouragement:

Alternate view "One man's delightfully unbureaucratic application of rules is another man's anarchy"

 

[Koeketiene]

Alternate view "One man's delightfully unbureaucratic application of rules is another man's anarchy"

I go sailing to get away from rules and regulations.

Anarchy according to Websters:

Webster’s Unabridged: Anarchy: [Gr. anarchia, lack of ruler or government, from anarchos, without chief or ruler, an private; and archos ruler.]

Private rule. Formal government is uneccessary. That is, we rule ourselves. Each and every one of us, as adults, are capable of doing so. This is, after all, what we mean by adult. Without direction or laws from any outside source.

I'm all in favour :encouragement:

 

[GrahamM376]

Presumably, they only act on what they're told by the skipper. Has anyone ever been asked to produce their log book?

 

[jonic]

If the boat was VAT paid and yours when you left, you are unlikely to encounter any problems as you will be bringing the yacht in under returned goods relief.

If you have been away for more than three years there is a possibility that VAT can be charged again, but you would then likely claim transfer of residency.

The reality is that as long as you left with a VAT paid boat, it's still yours and you return with it, then you will likely not even be asked to claim the reliefs.

I have only ever heard of German customs enforcing the three year rule and that was only on one or two occasions.

As Tranona stated earlier if a VAT paid boat leaves the EU and changes hands outside the EU (even to another EU citizen) that is when the problems start and VAT is due again on re-entry (and depending on the size of the yacht, import duty may be due as well)

PM me or give me a call if you like.

 

[jonic]

As rivonia has suggested it seems that these rules (which are in theory EU wide) might be difficult to enforce consistently! Having said at the start that state of registration is irrelevant in respect of VAT, what is important is the state where the last transaction took place as that determines where the responsibility lies for VAT. Assuming you bought the boat in the UK another state has no responsibility. However if you stop in the Azores (Portugal) coming from outside the EU a new chargeable event arises so it would become their responsibility, but your red ensign and bill of sale may well deter them from showing any interest!

Tranona this bit has changed recently and member states can now collect on behalf of other states.

 

[Tranona]

Tranona this bit has changed recently and member states can now collect on behalf of other states.

But only if the first state can show a liability exists. The second state is only acting as an agent. It would not be relevant in this case if the OP stopped in the Azores it is there that the liability (if any) would arise as the first state of entry.

 

[jonic]

But only if the first state can show a liability exists. The second state is only acting as an agent. It would not be relevant in this case if the OP stopped in the Azores it is there that the liability (if any) would arise as the first state of entry.

Unfortunately if a chargeable event occurs they will (and have) collected even with representation to the contrary from the other state. And that was told to me directly by a customs spokesman.

 

[Koeketiene]

If the boat was VAT paid and yours when you left, you are unlikely to encounter any problems as you will be bringing the yacht in under returned goods relief.

If you have been away for more than three years there is a possibility that VAT can be charged again, but you would then likely claim transfer of residency.

The reality is that as long as you left with a VAT paid boat, it's still yours and you return with it, then you will likely not even be asked to claim the reliefs.

If this is indeed common practice (as I believe it to be) than this entire thread about the mooter points of VAT law is comparable to medieval discussions about the sex of angels.

 

[JumbleDuck]

How would HMRC know that the boat had been away and has now come back?