UK Purchase - no proof of VAT payment

[Andy and Lyn]

I am still looking at boats to return to the Med early next year!

Hopefully I am in position to buy soon - have found a 1986 boat -very nice but the owner has "lost" nearly all of the paperwork!

So no proof of VAT paid, depite his claim that it has been paid! Does anyone know of a way around this - either proof of payment records somewhere or does one just take the risk and accept that if one was to be asked to prove VAT payment and can't then one may have to cough up, wherever that might be! Of course selling would always be an issue subsequently!

 

[Tranona]

This is not unusual. In 1986, nobody was concerned about evidence of VAT payment - it only became an issue after 1992. So many older boats do not have evidence. If it was prior to 1985 and the boat was in the EU in 1992 then it is "deemed VAT paid".

In theory when you go outside the UK you could be asked to provide evidence of payment, but in practice this very rarely happens. It is not an offence per se not to have the receipt - it is only if customs believe the boat is being smuggled or involved in a transaction that would give rise to VAT that they may ask for proof. Remember that VAT is not a tax on boats but a tax on transactions. It would be virtually impossible, if the boat was sold in the UK/EU to a private individual for VAT not to have been paid when it was new, and subsequent sales if between private individuals are not subject to VAT.

So, if you have a clear ownership and title trail showing it has always been in the EU and owned by private citizens this is pretty good evidence that there are no irregularities. Warning signs are if the boat has spent any long periods of time outside the EU or has been owned by a VAT registered company as a business asset at some time in the past. So the important thing is to get as much history as possible.

There is little evidence that anybody gets asked routinely for the evidence when abroad, and the advice from the RYA and HMRC is to ensure you have evidence (Bill of Sale) that the last transaction took place in the UK, as any VAT issues are the responsibility of the state where the last transaction took place.

It all sounds complicated, but in reality it really is not a problem, otherwise literally thousands of people would not be able to travel freely in their boats - and clearly they do.

You will find more detailed explanations on the RYA site, put together with HMRC. It falls short of saying there is no problem at all, but makes it clear that the chances of problems are very, very, small. It is unlikely to have any significant impact on the value a boat as old as the one you are looking at. However, most important to get as much documented history as possible.

 

[jonic]

Customs will generally not be interested in a boat that old, unless as Tranona says it changed hands outside the EU and VAT was not paid again on re-importation. You may get the odd official who tries to impose a fine or asks you to move on for not being able to prove VAT status. Portugal and Holland have been known to be difficult in recent times.

If you went to the Caribbean and then came back with no VAT papers that could be awkward.

The greater problem will be re-sale. Lenders often won't lend or will impose restrictions if VAT docs are missing.

Are all the documents missing i.e. evidence of ownership via Bills of Sale?

 

[AndrewB]

Isn't this virtually the same question as you posted on 8th August about another yacht? And a not dissimilar one I recall back in April?

You had all the advice this forum is able to give back then, including links to the HMRC importation advice. But I'm intrigued as to why you seem so drawn to yachts with problematic documentation. If it troubles you so, isn't the answer obvious?

 

[BobnLesley]

As noted by others, we sailed for ten years around Europe with no VAT papers and nobody ever enquired; I think there's a lot of truth in the suggestion that the Customs are generally only interested in newish/expensive boats. The couple of first-hand (one never stops hearing third and fourth hand tales) reports that we've heard of people being hassled both arose because someone had done something silly to tick-off the authorities to begin with and a VAT status check was just an easy way of kicking back.

That said, if you've any qualms whatever, either negotiate a price that makes any future VAT hassle worth your while, or walk away and look elsewhere; as we discovered whilst buying last summer, there are plenty of boats available at some very attractive prices - though there's a lot of worn out rubbish too! - and I can't believe the market's anymore favourable to sellers a year on.

 

[Tranona]

That said, if you've any qualms whatever, either negotiate a price that makes any future VAT hassle worth your while,

It is impossible to quantify any potential hassle. The purchaser can never be guilty of any offence, nor can he be called upon to pay any VAT. If there has been any offence it will have been committed by a seller, as it is the seller's responsibility to account for VAT. The only remote possibility is if the boat has been illegally imported and the VAT not paid. The person importing is responsible for the tax, even if he sells the boat, but the liability also in theory can be attached to the boat in the event of a default. So, provided there is a clear trail that showed the boat has always been in the EU, then that possibility does not arise. Realistically on an old lower value boat the chances of anybody official asking questions, let alone pursuing the owner for the tax liability are pretty remote.

 

[GrahamM376]

I've never had proof of VAT paid for any of my boats, just transfer documents and brokerage receipts (with a VAT number) for money paid. With DTP it shouldn't be a problem producing one if ever asked.

 

[Jamesuk]

Get the VAT sorted before doing the purchase. And do it properly. A bank note saying VAT paid is not sufficient. Speak to a lawyer/ accountant

 

[Tranona]

Get the VAT sorted before doing the purchase. And do it properly. A bank note saying VAT paid is not sufficient. Speak to a lawyer/ accountant

There is no way to get it "sorted". If no invoice exists, then there is no other form of accepted evidence that it has been paid - at least in the UK. The original invoice is the only record unless you are lucky and the builder/dealer who first sold the boat to a private person still exists and you might be able to get a copy. However, there is no legal requirement to keep records for more than 6 years - and in this case the transaction was 27 years ago. No lawyer or accountant will be able to do anything different.

 

[vyv_cox]

Two or three years ago the RYA asked members to submit cases in which non-posession of VAT paid evidence had caused them any problem or inconvenience. I understand that they failed to find any significant examples. I have heard that the occasional owner of large, new, expensive boats arriving into the EU from Gibraltar and the Channel Islands has been asked to show documentation proving VAT paid status but for most of us there is no need to be concerned. Although I have been asked by port police and customs officers to present passports, registration document, ICC and occasionally other paperwork, none has ever asked for anything to do with VAT.

 

[jordanbasset]

I would agree with much of what has been said, particularly about no officials being interested in proof of VAT being paid, certainly not on my trip through France, Spain, Portugal, Italy, Malta and Greece.

That said when we bought our boat we saw a number of others, some with VAT paid proof and some without. The ones without proof tended to be between 10-20% cheaper than the ones with. The ones that were not discounted, subject to condition etc, if I was interested in, I would have made a discounted offer based on the fact I needed to factor in the cost of the VAT.

So although it will probably cause you no issues, you may find when you come to sell others have similar feelings to me. If boat already discounted not an issue.

 

[Tranona]

Not sure there would be any direct connection between a lack of VAT invoice and any significant difference in price, except perhaps on a recent high value boat where lack of same would raise questions about the boat in general. On a boat of the age being discussed, an original invoice would be the exception rather than the norm. Asking prices, and more particularly selling prices can vary by as much as 20% on outwardly similar boats for all sorts of other reasons.

As I suggested earlier, it is virtually impossible for a buyer of a boat ever to be asked to pay VAT - there is no mechanism to do this, so most of the concern on that specific issue is not real - but of course the urban myth bit means it is a perceived issue.

 

[jonic]

Not sure there would be any direct connection between a lack of VAT invoice and any significant difference in price, except perhaps on a recent high value boat where lack of same would raise questions about the boat in general. On a boat of the age being discussed, an original invoice would be the exception rather than the norm. Asking prices, and more particularly selling prices can vary by as much as 20% on outwardly similar boats for all sorts of other reasons.

As I suggested earlier, it is virtually impossible for a buyer of a boat ever to be asked to pay VAT - there is no mechanism to do this, so most of the concern on that specific issue is not real - but of course the urban myth bit means it is a perceived issue.

I do know of a skipper who took an oldish boat with little history to the Caribbean and had to pay VAT on return to Europe in the Azores, as he had no proof it was EU VAT paid and he was re-entering.

I have also been told by an HMRC spokesman that in theory if they doubted the history of a yacht, they could seize the goods to pay the VAT and the owner would have to make a civil case against any previous owners.

As far as i know this has never occurred in the UK .

The problem is that because it could happen, no-one can ever guarantee you would be immune without proof of payment, however in practice HMRC or foreign customs seem less interested than the finance houses.

 

[Chris_Robb]

I am still looking at boats to return to the Med early next year!

Hopefully I am in position to buy soon - have found a 1986 boat -very nice but the owner has "lost" nearly all of the paperwork!

So no proof of VAT paid, depite his claim that it has been paid! Does anyone know of a way around this - either proof of payment records somewhere or does one just take the risk and accept that if one was to be asked to prove VAT payment and can't then one may have to cough up, wherever that might be! Of course selling would always be an issue subsequently!

I thought you were going to persevere in your current Westerly? And you were off very soon.

 

[Tranona]

I thought you were going to persevere in your current Westerly? And you were off very soon.

If the proposed "new" boat is also a Westerly, then there was a bit in this month's Sailing Today advising that Trafalgar Yacht Services have all the old Westerly sales ledgers so can trace the original paperwork.

 

[Andy and Lyn]

Isn't this virtually the same question as you posted on 8th August about another yacht? And a not dissimilar one I recall back in April?

You had all the advice this forum is able to give back then, including links to the HMRC importation advice. But I'm intrigued as to why you seem so drawn to yachts with problematic documentation. If it troubles you so, isn't the answer obvious?

and yes, the advice then was very helpful and was taken. This question is slightly different as it relates to lost paperwork rather than a boat coming from a non-EC country and I have found the comments and advice here also very useful.
Regarding my perceived draw to problematic documentation it has become apparent that when one looks at lots of boats, I have noticed that many have far from complete documentation and as Traona points out that paticularly in the mid to late 1980s it is very often the case.

 

[Andy and Lyn]

If the proposed "new" boat is also a Westerly, then there was a bit in this month's Sailing Today advising that Trafalgar Yacht Services have all the old Westerly sales ledgers so can trace the original paperwork.

David and Caroline Hardy at Trafalgar Yacht Services have been excellent and provided much useful advice thank you. A recommended port of call for anyone needing Westerly advice.

 

[gavin_lacey]

I have VAT paperwork but have never been asked for it. However last week I obtained a T2 document to allow me hassle free entry and exit from switzerland with a car load of gear for the boat. The very helpful lady in customs asked me if I had a T2 for my boat. She said that there should be no need for one for a boat but because people had had problems in Portugal and Greece they had been told to issue them if requested. Since it was free I got one on a belt and braces principle. This might be a route for those worried about VAT status paperwork.

 

[temptress]

I am still looking at boats to return to the Med early next year!

Hopefully I am in position to buy soon - have found a 1986 boat -very nice but the owner has "lost" nearly all of the paperwork!

So no proof of VAT paid, depite his claim that it has been paid! Does anyone know of a way around this - either proof of payment records somewhere or does one just take the risk and accept that if one was to be asked to prove VAT payment and can't then one may have to cough up, wherever that might be! Of course selling would always be an issue subsequently!

Complicated topic. I've sailed several boats in and out of the Eu over the years and only ever been asked for VAT proof once. That was in Cameret, France in 2001, I had the paperwork so they moved on to a Swedish boat next door that turned out to be non-vat paid, new and too long in the EU...........

 

[AntarcticPilot]

and yes, the advice then was very helpful and was taken. This question is slightly different as it relates to lost paperwork rather than a boat coming from a non-EC country and I have found the comments and advice here also very useful.
Regarding my perceived draw to problematic documentation it has become apparent that when one looks at lots of boats, I have noticed that many have far from complete documentation and as Traona points out that paticularly in the mid to late 1980s it is very often the case.

That is because in the 1980s such documentation wasn't seen as necessary, and so wasn't preserved.