VAT -a further twist

[robbieg]

Most of the posts I've seen on this subject suggest that if you have the original invoice showing VAT has been paid everything should been fine. However can a boat loose its VAT paid status if the VAT is reclaimed by the first purchaser?

As an example if a UK company buys the boat new from the manufacturer or importer it will get a VAT invoice. If it is VAT registered it can reclaim the VAT. When it sells the boat it should charge VAT on the sale price & provide a VAT invoice to the second owner. In this case is it the first invoice (to the company) that proves VAT paid status or the second VAT invoice to the private buyer?

There must be quite a few boats in this situation since people wanting to charter often buy through a company, reclaim the VAT & then sell on. Counsel of perfection would suggest getting both invoices-however if you can't is the first invoice enough or is it the second one that is crucial.

This whole area seems to be a real can of worms. On a practical level I've not heard of anyone whose had their boat impounded & had to pay VAT as a result of poor VAT documentation but it can obviously be a real problem if your trying to sell.

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[David2452]

If the origional purchaser was allowed to claim V.A.T. input tax on the origional purchase then it MUST charge output V.A.T. on any susequent sale and provide a tax invoice for the purchaser it is this invoice that proves VAT paid status, so no problem arises from the situation.

David

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[AndrewB]

<blockquote><font size=1>In reply to:</font><hr>

<font size=1>This whole area seems to be a real can of worms. On a practical level I've not heard of anyone whose had their boat impounded & had to pay VAT as a result of poor VAT documentation but it can obviously be a real problem if your trying to sell. </font size=1>

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Yes, agreed. A few years back I saw a newish British registered yacht detained in Portugal that was unable to produce VAT receipts - despite what has been said elsewhere about this not happening. There was some doubt as to whether the owner was honest about his claim of having sailed it from England, but I don't know the outcome. However the Portuguese took no interest in our yacht, also without a VAT receipt, once we stated it was built before 1985.

HMCE issued the VAT SAD shortly after the new regulations came into force back in 1992, which helped many older yachts. But there are still many around that did not apply, or where proof of VAT status has been lost. Since 1994 it has seemed like HMCE don't want to know in such cases, but even so an unclear VAT status may well affect the second-hand price. I for one would not want to buy a yacht that was doubtful, without a reduction in price.

The RYA ought perhaps try to persuade the HMCE to be more positive in assisting yacht owners to provide buyers with documentation of an unambiguous VAT status. Maybe with an amnesty if they really don't want to bother with old boats.

 

[Gunfleet]

<<Maybe an amnesty if they really don't want to bother with old boats. >>
I'm sure this is the only way to deal with the situation. If the Rya was worth one penny of the subs it would be pushing for this. My boat was built well over 30 years ago and is on the Lloyd's register of yachts of the period. So it should be vat free - if only I can prove where it was on a certain date in 1992. How the hell am I supposed to do that? I've only owned it for 2 years and they guy who owned it before me bought it from a shed in a farm!


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[Rabbie]

Just a point of interest re your last paragraph. I seem to remember that the late Tristan Jones fell foul of VAT regs on return from one of his voyages and his boat was impounded. It was detailed in one of his books but I can't remember which. Anyone confirm this?.

<hr width=100% size=1>The line between balls and lunacy is very thin.

 

[rwoofer]

Having just bought a boat from a company, I had many discussions with C & E on this matter.

The conclusion was that if a VAT registered company sells a boat that it has reclaimed VAT on, it must by law, charge VAT. If it did not charge VAT when it should have, the C&E chase the company that sold the boat since they are the ones that should have paid the VAT!!

As an individual buying privately in the UK, you never pay C & E for the VAT (because you are not VAT registered). The only situation where you do, is if you import from outside the EU.

Seemed to make sense to me.

RB

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[David2452]

If the company did not charge VAT and (say) sold you the boat for £117,500.00 then C&E would seek to recover £17,500.00 VAT output tax from the selling company effectivley reducing the actual selling price to only £100,000.00 for the boat. This would mean the company issuing you with a new VAT invoice. If they were reluctant to do this because the only got 100k for the boat C&E can compell them to do so.

A private individual always pays VAT to C&E, it is collected on behalf of C&E by the seller and declared as output tax to C&E.

David

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[rwoofer]

David,

I think we agreed in that the VAT does not directly go from the private individual to C & E. The situation you describe is the situation I was/am in. I'm have felt comfortable with the situation working on the basis that C & E will only bother the company not me and consequently any seller I would sell the boat to.

I didn't realise you can compel a company to provide a VAT receipt by law.

How do you make this happen?

RB

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[wishbone]

If you have bought any item which is vat rated the seller is legally bound to issue a vat invoice (providing they are vat registered) (turnover threshold about 50k)stating vat amount. if the seller refuses to issue a vat reciept then you can contact your local customs & excise office, give them the suppliers vat no. if known they will do the rest.

Wishbone
Rolling, rolling, rolling keep them doggies moving!
Where’s me chuck wagon gone?



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[robbieg]

One of the things that started me thinking about this was that I looked at a boat where it seems a VAT registered company had purchased a boat,reclaimed the VAT & then sold it a couple of years later when they had degistered for VAT (t/o had dropped below the threshold). They did not charge VAT on the sale since not registered. The owner thought he was fine since he had the original VAT invoice when the company bought the boat and this is what C & E guidance suggests he needs.
However, it seems to me that what he has is a boat which has lost its VAT paid status and on which C&E could require him to pay VAT.

What do others think? The broker btw thought the VAT situation was fine since the Vendor had the original invoice to the Company showing VAT had been paid.


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[PeterGibbs]

Re: VAT -what it looks like

What we're actually talking about here is a piece of paper containing the following minimum information:

1. Name of vendor, registered company number (if applicable) registered address and VAT registration number
2. net price of goods being sold and description, vessel hull number etc
3. VAT raised thereon at whatever rate (?17.5%)
4. Total paid by purchaser
5. Date transaction is deemed to take place (tax point)
6. Signature of vendor as receipt for remittance
7. Copy of instrument of payment (copy cheque etc) desirable not essential

There are other descriptor details, but these are the action points. I would not accept anything less than the above.

It follows that if the vendor fails to remit the VAT raised on behalf of the C & E it is of no consequence to the purchaser, provided he can show the transaction was fully satisfied.

PWG


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