Unable to fully prove VAT paid status of old boat - what risks and implications?

[mlt2819]

Hi,

I am looking to purchase a boat built in the UK in the 1970s (it's a private sale, but I'm dealing with a broker to handle the paperwork). After checking out dozens of boats, I'm certain that I'm keen on it (it'd be my first boat), but I have some concerns regarding some of the paperwork, specifically relating to proof that the boat is VAT paid. I don't doubt that it is, but I want to be cautious as it's a large sum of money (by my standards!).

My main concern about the paperwork/tax paid status is that there is (1) no original sale invoice (not surprising for the age of the boat, I guess), and as far as I'm aware there's only a bill of sale between the current and previous owner (but none before that) and (2) no proof that the boat was in the UK on 31st December 1992.

On the flipside, there are some other receipts and old paperwork, such as relating to when the boat was previously Part 1 registered (with the previous owner), and a certificate to support the registration. I'm currently looking at getting a transcript of the closed register from the MCA (who seem pretty helpful so far). I figure this will be a useful document to have to help support proving its history and establishing the age of the boat if anyone tries to scrutinise the paperwork. From what I understand, it's unlikely a boat of this age will attract any unwanted attention from authorities overseas unless I do something to tick them off or raise suspicion... is that (mostly) true?

My main questions based on what I've outlined above are:

- What's your opinion on the current level of paperwork? If I can't fully prove the tax paid status of the boat, do you think I'm taking a risk with owning this boat (especially if I want to take it elsewhere in the EU and beyond)? I know there are dozens of views one could take on this, but I would be interested to hear your own personal opinion if you were in my position.
- Aside from obtaining a historic transcript from the MCA, what other official bodies could I approach for paperwork to help support my potential future ownership of the boat? I'm assuming there's nothing I could request from HMRC? I've tried finding extra yard receipts without any luck, and contacting the broker on the current bill of sale.
- If/when I exit EU waters with the boat and then re-enter back into the EU... what problems could I face with not being able to prove the tax status of the boat? If I was charged VAT on the boat, would it be a one-off payment, or could I get stung over and over again when exiting and re-entering EU waters multiple times over the years?
- If I wanted to sail the boat extensively in foreign waters outside of the EU, are non-EU countries usually concerned with the tax status, or are they more interested in ensuring I have proper ownership/title of the vessel?
- Based on the current paperwork/situation, do you think I would have an issue selling this boat on in the future?

Any input, wisdom, encouragement, discouragement etc. would be much appreciated and very helpful.

Thanks.

 

[Tranona]

Absolutely nothing to worry about. The lack of paperwork is not unusual and you actually have more than many.

The boat is what is known as "deemed VAT paid" by virtue of being built prior to 1985 and (presumably) being in the EU in 1992.

Nobody is in the least bit interested and you will be no different from the many thousands of owners of older boats. Just make sure that the title is good - your broker will advise on that. title is nothing to do with tax and you would be looking for a history of Bills of Sale, which are the normal record of transfer of title to support the sellers claim to title. if the Part 1 has lapsed there will be no additional information available from MCA other than the name of the person who had last registered title as on the the certificate. There is no other record of title. Anything previous to that is actually irrelevant and you are only interested in any changes in titles since then. MCA would have been satisfied that the title was clear before it registered the last owner.

As to travel outside the EU, no other country is in the least bit interested in any EU tax. although leaving the EU does mean the boat potentially loses its EU tax paid status, and it will do if you sell it outside, if you bring it back in you will qualify for returned goods relief so will not have to pay VAT. Although the rules say there is a time limit of 3 years, this is subject to discretion, and on a (presumably) low value boat doubt HMRC would be interested.

So, to summarise, the Bill of Sale you get from the seller is your title to the boat. There is no need for any additional confirmation from others, but you must be satisfied that the seller has title and it seems he has from what you say. you may wish to consider re-registering on Part 1, but you will need a new survey, but the maintenance costs are modest, but in all practical situations as you move abroad, particularly in Europe the SSR is fine. However, the recommendation is if you intend spending a lot of time out of the UK you may use your eligibility for the SSR so Part 1 is advisable. It has the added advantage of confirming that you have registered title which can make it easier to sell in the future as some buyers like the added security.

Hope this helps.

Just a little addition. Depending on when in the 1970s it was first sold it may not even have had VAT added! I have a 1963 built boat long before VAT (and paid for in pounds shilling and pence!)

 

[peteK]

I dont think anyone will be chasing you for vat on a 50 year old boat

 

[PCUK]

Yep, basically VAT exempt at that age. Get on and buy it!

 

[jwilson]

Tranona is correct. A few more details:

Pre-1985 build and in EU on end of 1992 makes her "deemed VAT paid", but to have proper proof of this you need either a boatyard/mooring bill showing her location on that point (midnight 31st Dec 1992), or a letter from a flag officer of a club saying the boat was on their premises/mooring at that time.

If the old lapsed Part I registration shows her build date as before 1st April 1973 she is VAT exempt. A surprising number of new boats were taken delivery of in January/February 1973 to avoid VAT payment - some of these were not actually that complete but paid for and receipted pre-VAT introduction.

If you do decide to reinstate Part I registration you will need an unbroken chain of bills of sale going back 5 years at least. Personally I'd just put her on the SSR and sail her.

Unless you really really piss off a customs official no-one is going to argue about the VAT status of a small 1970s boat.

 

[LittleSister]

Personally I'd just put her on the SSR and sail her.

Unless you really really piss off a customs official no-one is going to argue about the VAT status of a small 1970s boat.

+1

I too worried about this when I was first in a similar position to yourself, but now as the current and past owner of several small 70s boats I can assure you it really is not a real life problem, or even an issue at all, in UK and near EU countries. (I know nothing about outside the EU. I hear there be dragons!)

 

[superheat6k]

Has anyone on here ever been asked to 'prove' presence in the EU 31st December 1992 in the past 20 years ?

Doubt it.

Buy, sail, enjoy.

 

[Deleted member 36384]

My own personal opinion owning a yacht launched in 1974 is that the refit costs have paid more vat today than what she would have cost new.

 

[Tranona]

My own personal opinion owning a yacht launched in 1974 is that the refit costs have paid more vat today than what she would have cost new.

That is because VAT is a transaction tax and every time you buy something it is a "chargeable event" so subject to VAT. nothing to do with the fact the product is going on your boat and has no impact on the VAT status of the boat.

Just think of all the things you pay VAT on and then consume in such a way that the goods underlying the tax no longer physically exist - never mind the services that did not have a physical existence at any point.

 

[Deleted member 36384]

Thanks Tranona, yes, I know all that. The post is just a play on old boat vat worries and the cost of owning old boats. I should have used a smiley

 

[mlt2819]

Thanks for all of your input, very helpful indeed! :encouragement: