V.A.T. problem.

[Maurice55]

Hi all,
I bought a wreck of a boat about 6 years ago of Littlehamton Marina for very little monney. The only history I have of her is what I have been told there so do not know when she was built , although it probably was in the early seventies, in Holland and was sold new to an English man.
She was in Littlehamton for many years before I bought her and apparently in Arundel before that.
Now she is done up, we want to go cruising in Europe and as the informations on the RYA site and the VAT site were not that clear, I called their help line and was told that I would have to pay VAT for her when ever I first enter a european country, at the local rate and as it seems on the value they decide !
It doesn't sound right to me, any educated view and advice most welcome...

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[xstucker]

Hi,

This is a very confusing area and one which will yield many opinions. I have bought ex-charter yachts for some time and imported them to the UK, so I have some idea about the rule.

The basic premise VAT is that:

Legally all privately owned boats built after 31/12/84 owned and kept in EC waters must have VAT paid.

Any boat built before 31/12/84 and in EU waters in 31/12/82 and which is privately owned is exempt from VAT.

However, if you are buying a boat from a Company, then things are a little different. When the company originally buys a boat, they claim the VAT back. When they sell the boat, they must charge VAT (as with any other VAT-qualifying product they sell). The Company is legally responsible for paying the VAT, whether they charge you or not (although they always do).

It sounds like you have a boat which should qualify as exempt from VAT, if you can prove in some way that it was built before 31/12/1984 and was in the EU at that time, then you do not need to pay VAT. It used to be possible to go to the Customs and Excise Department and produce your documentary proof, at which time they would give you an officially stamped certificate to say that VAT is exempt, but that is no longer possible.

I hope that this helps, but let me know if you are still concerned, as I have done a good deal of research into this.

Simon

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[Maurice55]

Thanks Simon, you're giving me a bit of hope.
I'm goig to have to go back to Littlehamton and do some sleuth work !!!

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[Paragon]

Hi Simon

Assuming that you have the proof that the vessel was built before '84, can you still get the certificate from the VAT office or do you just carry said proof around to show if challenged?

Regards

John

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[xstucker]

Hi John,

Unfortunately you have to carry the paperwork with you for production if challenged. I used to have a 1984 Jaguar 25 which of course was exempt, but I had the original invoice and some marina receipts showing that she was indeed in the EU during 1984. I was never challenged, despite making more than 10 trips from the Solent to France over a 3-year period.

European and national law does not allow any nation to systematically demand proof of VAT payment. They may only challenge you if they have cause to believe that the yacht should be subject to VAT and that it may not have been paid. In other words, you are unlikely to be challenged, especially if you are sailing around in a boat of European origin. Turning up in Falmouth on a new Island Packet with the Stars and Stripes fluttering behind would warrant a few questions.

Simon

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[xstucker]

Hi,

If you can find something that establishes that the yacht was built in Europe then that is a good start. Then you need to show that she was in Europe around 31/12/84 if possible. That's enough to dispell any reasonable doubt.

Simon

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[AndrewB]

The moral of your story is that if you buy a yacht without proof of its VAT status, then it is worth less than one with.

Although as the RYA say in theory you have a potential problem with Customs, in practice this may not be too much to worry about. It is comparatively rare for a check to be made on this, unless they have reason to think you are trying to import a newish yacht from outside the EC. I have twice been questioned by foreign customs about the VAT status of my yacht, both several years ago, when this was more of a live issue. Both times were in places that yachts returning from the USA regularly make a landfall. In each case they were satisfied by registration particulars and a statement of its age, and did not ask to see documentary proof. However even if you are not questioned, from time to time you still will have to sign forms confirming that the yacht is VAT paid.

Have you contacted UK Customs about this? There is always a risk that if you do they may make a demand. But I think that provided you have the invoice from when you bought the yacht, invoices for the major expenses in renovating it, and its age is fairly self-evident: then this is a very small risk, and with luck you might just get a written statement from them that may be helpful. Incidentally, If you paid less than £4,000, such yachts were originally exempt at the time the new VAT regulations were effected, and Customs take little interest.

Probably the real trouble will occur when you try to sell this yacht. Prospective purchasers will be wary of inheriting the same problems as you now face, and will demand a corresponding reduction in the price.

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[Maurice55]

Thank you all for this,at least it doesn't sound so bad and there is good hope of finding her history, so I shall cross my fingers and get on with it...

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