VAT again

pessimist

pessimist

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We are at the contract stage of our purchase of a vessel built in 1995. It has become apparent that there is no documentation proving the VAT status. The broker involved states that "there is a VAT deemed clause I can write on the bill of sale". I thought this applied only to vessels in use prior to 1985 and in the EU prior to 1993, clearly this is not relevant. Is the broker right or should I be searching for my running shoes?
 
A 1995 boat should have paperwork showing its VAT status. If it doesn't, then I think it is probably worth approx 16.6% less than if it did have the paperwork.
 
rszemeti said:
At a minimum, I would suggest a retrospective T2L is needed.
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The T2L is only a goods movement document. Some EU countries accept it (Croatia - or did)) but it is NOT proof of payment.

If you are going to spend years cruising the Med, you really do need VAT Proof, and you also must get the boat to one of the EU27 - by Jan 31 2020 if we crash out (unlikely) or by December 31st 2020 or when ever the transition period ends.

In order to maintain EU27 Goods Status in Europe ie be Vat Paid you will need to prove that you are in the EU over the end of Transition and that VAT has been paid. Dont rely on the T2L which the HMRC is handing out like confetti - its pretty iffy compared to an invoice.

So the boat is worth the amount you would have to pay in VAT (Over 20%...).

Brokers not pointing this out are mis-selling . or lying to you....:mad:

If you are not planning to keep your yacht in Europe, then the risk is much smaller - but it deserves a reduction in selling price to reflect this.
 
When we looked at our 2002 boat there was no vat invoice which people told us is not a problem but, since so many others, like in this case, think it is a problem I wanted to have something in writing for when we eventually sell. While we really wanted to go ahead with the purchase we insisted on the broker obtaining a letter from the VAT office, which they did, confirming that they were satisfied that the VAT had been paid. In your shoes I would get the broker to obtain written confirmation from the vat office that they will be satisfied by this VAT deemed clause .
 
Even if you decide you’re not concerned, remember that some day you will come to sell it - so you want to know that the documentation you get now will be satisfactory to the next purchaser. So you want satisfactory evidence or a price adjustment.
 
Chris_Robb said:
The T2L is only a goods movement document. Some EU countries accept it (Croatia - or did)) but it is NOT proof of payment.
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Correct, but after Jan31st (or possibly sooner) that is irrelevant, as (presuming it is moored in the UK on the day) it then becomes a UK VAT paid boat (which the T2L will be sufficnet for the UK customs), and as far as the UE is concerned it is then "foreign goods" and we'll have to pay VAT again if it spends too long in the EU.
 
pessimist said:
We are at the contract stage of our purchase of a vessel built in 1995. It has become apparent that there is no documentation proving the VAT status. The broker involved states that "there is a VAT deemed clause I can write on the bill of sale". I thought this applied only to vessels in use prior to 1985 and in the EU prior to 1993, clearly this is not relevant. Is the broker right or should I be searching for my running shoes?
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What you need is a written statement from the broker agreeing to pay any vat that might become due. If he wont give this then walk away. Brexit is likely to sharpen the pens of French, Portugese etc beurocrats. Expect some harrassment at the border.
 
rszemeti said:
after Jan31st (or possibly sooner) that is irrelevant, as (presuming it is moored in the UK on the day) it then becomes a UK VAT paid boat (which the T2L will be sufficnet for the UK customs), and as far as the UE is concerned it is then "foreign goods" and we'll have to pay VAT again if it spends too long in the EU.
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Not so. Assuming it's followed by a transitional period, nothing much changes on Brexit day. The crucial date for determining future VAT status will be the end of the transitional period (last day of 2020, or up to two years later by agreement). Freedom of movement and pretty much everything else continues in the same way.
 
Interesting.
So are we saying that all british registered boats that are vat paid in uk and based in the EU 27 will become liable for payment of VAT to the country in which they are based at the time of leaving , or maybe some short time later?
 
greeny said:
Interesting.
So are we saying that all british registered boats that are vat paid in uk and based in the EU 27 will become liable for payment of VAT to the country in which they are based at the time of leaving , or maybe some short time later?
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No. Any boat currently "union goods" (ie. tax-compliant) in the EU28 will take its future VAT status from its whereabouts at the end of the transitional period (or on Brexit day if there's "no deal", which now looks unlikely). There is no question of further tax payments to achieve this.

If in the EU27 on that day, it will retain the status of union goods.
If in the UK on that day, it will be considered VAT/duty paid in the UK, but not in the EU27.
A boat owned by a Brit (or, more accurately, a UK resident) which becomes EU27 union goods on the appointed day could subsequently return to the UK and pay no taxes under "returned goods relief".
The RYA website has several helpful pages on this, most of which do not require membership.
 
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I think there are possibly some awkward cases.
In the case of a UK flagged boat, belonging to a UK national (not resident in the EU27) which just happened to be in Portugal on Exit Day, I don't think there is anything compelling the Portugese to treat it as Union Goods. If you wanted to sell it to an EU National it might attract VAT.
In the case of a e.g. Greece based boat belonging to a Uk national, which has always been Greece based, I'm not sure it would qualify for 'returning goods' relief if it's never been to the UK let alone been based here?
Or if it has changed ownership while outside the UK.

I think the RYA are extrapolating from an HMRC opinion, and some people are extrapolating further from that.
 
You don't think, lw395?

Should you wish to try something that isn't merely an opinion plucked from nowhere in particular:
https://www.rya.org.uk/newsevents/news/Pages/status-of-vessels-lying-in-EU27.aspxI refer you, in particular, to this:
"The UK Government has undertaken that RGR will be available in respect of UK pleasure craft not moored in the UK on EU exit day. They may return to the UK after the exit and be subject to Returned Goods Relief as long as the person responsible has evidence that the VAT was paid on the purchase of the boat in either the UK or the EU."

It's also been made perfectly clear that any boat that is currently EU28 "union goods" will retain that status if present in the EU27 on the relevant date. Neither Portugal nor any other EU state has any discretion on this.
 
macd said:
"The UK Government has undertaken that RGR will be available in respect of UK pleasure craft not moored in the UK on EU exit day. They may return to the UK after the exit and be subject to Returned Goods Relief as long as the person responsible has evidence that the VAT was paid on the purchase of the boat in either the UK or the EU."
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As long as it is in the same ownership.
 
LW395, as Macd said, it is important to understand that VAT has NO connection to the nationality of the owner AT ALL. VAT Once is paid, the Goods have the right of perpetual (subject to non being exported) free circulation within the EU 28 now and the EU 27 on exit (end of transition). Thus any vat paid yacht which currently has EU 28 VAT Goods Status, will retain that EU VAT Status on the date of exit provided it is in a country of the remaining EU27.

Any yacht with EU28 Goods status on the date of exit which is in the UK waters will become UK Goods status. That potentially includes any yacht in which VAT was paid in the EU27 but was in the UK on B-day. So the Commission and HMRC dug out an old law "RGR", blew the dust off it and said it can be used to bring back these boats either to the EU27 or the UK .

This action actually confirms the hypothesis that Vat Status is dependant on location and NOT ownership. (IMHO)

Much more challenging is the 90 in 180 Schengen limits, but even that is not insurmountable and may be dealt with in the final settlement...........

You if you want to keep as large a market as possible for the sale of your yacht eventually, the EU 27 market is significantly bigger than ours and you need to retain access to it. So if you can retain your EU27 Goods status - you could have your "Cake and Eat It"
 
Chris_Robb said:
This action actually confirms the hypothesis that Vat Status is dependant on location and NOT ownership. (IMHO)
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What you say is correct except when a boat changes ownership and is then imported to another territory - a chargeable event takes place. Typical case now is if my boat is based in Turkey or somewhere else outside EU, I can bring it back with return goods relief but, if I sell it to someone else while there, then they have to pay VAT on entry. For this reason, many UK boats based in Turkey are or, appear to be, sold in Greece, to keep their status for the new owner.
 
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