VAT Buying a boat advice required.

[boatfun]

Hello

Currently in the process of buying a boat, we have agreed on a price and I was just about to send through deposits when I decided to check out the VAT situation a little further.

The boat was constructed outside the EU in 2001 but was registered to a business in the state of Delaware.
It was then sailed into the EU in 2006 or 2007
It was used for a short while in the EU
It was then put on the hard in 2011 for work to be completed on it which the owner never managed to complete.

I am now buying the boat off the owner or was planning to and was actually just about to send deposits today, the problem I have is they do not have any evidence that VAT has been paid they say it has been paid but they do not have evidence of this.

The other problem is it seems from speaking to HMRC that most VAT records are only legally kept for 6 years so no one seems to be able to prove either way.

My main worry is once the boat has some work carried out on it and it eventually gets sailed out of where it is the next port or country it goes to may try and charge VAT import duty on the boat which could be quite a substantial amount.

The boat is British part 3 registered on the UK small ships register, but the boat is currently not in the UK, it is owned by a British citizen but is currently moored in another EU country. The sale will be between two private individuals of which neither of us are VAT registered so there will be nothing on the bill of sale that will involve VAT.

The current boat owner originally purchased the boat from an american company so there is no VAT paid on that bill either, it seems like this is a bit of a grey import with no proof of VAT paid.

Any help or advice would be great.

 

[Dave100456]

Hello Boatfun and welcome to the forum.

Sorry no one has replied earlier as there are many on these forums with more knowledge of VAT than me. However, my view would be that there can be no VAT on your transaction with the current owner. If the boat is in the EU and has an EU owner then it should be VAT paid. The responsibility for ensuring the boat is VAT paid rests with the person who imported it.
I do not think you can be held legally responsible for its non VAT status, having said that, I would not like to be in a postion of explaining that to a VAT authority especially if not in my home country!!

 

[jonic]

Do not pay the deposit.

You have several VAT issues here and a potential RCD issue. VAT sounds most certainly like it could be due and customs can in theory come after the goods to recoup it.

There is some basic info on my website at http://www.jryachts.com/VATandRCD.html but I need to have more detail from you.

Call me tomorrow and I'll give you some free advice. The number is on the site.

 

[Tranona]

Do not touch it with a very long barge pole unless you see a receipt from an EU state for VAT and duty plus a CE mark showing that it complies with the RCD. Registration on the SSR is irrelevant as it proves nothing. The person who imported it into the EU is responsible for paying VAT, and if he does not, the liability remains attached to the boat and customs could seize the boat to recover the unpaid VAT. Also the boat cannot be imported legally without complying with the RCD.

As John says to give more definitive advice, more information is needed as the status will depend on the facts of the boat and its ownership.

Suggest you also read the RYA FAQ sheet as it explains in more detail the process of paying VAT on private imports and the HMRC VAT Notice no8 which has the rules on import. You will find that it is the importer's responsibility to keep the VAT receipt from Customs. The 6 year reference is a red herring as this applies to VAT registered traders requirements to keep records and does not affect a private importer's need to keep his receipt.

 

[Tony Cross]

I think you need professional advice if you intend to complete the purchase of this boat. If there is no documentary proof that VAT has been paid on the boat then you must assume it has not and reduce your offer price accordingly. Without proof of VAT payment on a boat built in the USA sooner or later you are going to be stung. You may, as has been suggested, also run into RCD problems because the boat was built outside the EU.

Personally I'd walk away unless the price was low enough to be able to pay VAT and an the RCD survey and still end up with a good deal.

 

[jwilson]

+1 - as Jonic and Tranona say, assuming this is a boat of some significant value, you need to have the 2006/7 VAT receipt, which may well be a flimsy pro-forma - doesn't necessarily look like an important document. Again, it should also have an RCD certificate. The lack of this is fixable at a (substantial) price, and there are also a few special cases where lack of RCD in a pre-1998 boat is legal.

Do not assume you can just buy it at 20% discount and go and pay the VAT, either, as your purchase does not generate a VAT due transaction. Only the person importing it can normally do this, unless you can persuade a Customs official to take your money and give you a receipt. He should not do so - your transaction does not create a "VAT event".

The whole VAT business is rife with inconsistencies, and the advice you get from one Customs man may differ from that by another. From your description this does however look to be a case where VAT has been evaded. If the importer paid a substantial sum to Customs, wherever and whenever in the EU he paid it, he would surely have remembered to keep the receipt.

 

[boatfun]

+1 - as Jonic and Tranona say, assuming this is a boat of some significant value, you need to have the 2006/7 VAT receipt, which may well be a flimsy pro-forma - doesn't necessarily look like an important document. Again, it should also have an RCD certificate. The lack of this is fixable at a (substantial) price, and there are also a few special cases where lack of RCD in a pre-1998 boat is legal.

Do not assume you can just buy it at 20% discount and go and pay the VAT, either, as your purchase does not generate a VAT due transaction. Only the person importing it can normally do this, unless you can persuade a Customs official to take your money and give you a receipt. He should not do so - your transaction does not create a "VAT event".

The whole VAT business is rife with inconsistencies, and the advice you get from one Customs man may differ from that by another. From your description this does however look to be a case where VAT has been evaded. If the importer paid a substantial sum to Customs, wherever and whenever in the EU he paid it, he would surely have remembered to keep the receipt.

Thanks. I started a new thread as I did not realise this one was live think it is because i was a new user, it has a some more details in it. is is at: http://www.ybw.com/forums/showthread.php?352560-VAT-amp-Import-Duty-help any more advice would be much appreciated. Thankyou

 

[boatfun]

I think you need professional advice if you intend to complete the purchase of this boat. If there is no documentary proof that VAT has been paid on the boat then you must assume it has not and reduce your offer price accordingly. Without proof of VAT payment on a boat built in the USA sooner or later you are going to be stung. You may, as has been suggested, also run into RCD problems because the boat was built outside the EU.

Personally I'd walk away unless the price was low enough to be able to pay VAT and an the RCD survey and still end up with a good deal.

Thanks, it is a very good price. I started a new thread as I did not realise this one was live think it is because i was a new user, it has a some more details in it. is is at: http://www.ybw.com/forums/showthread.php?352560-VAT-amp-Import-Duty-help any more advice would be much appreciated. Thankyou

 

[boatfun]

Do not touch it with a very long barge pole unless you see a receipt from an EU state for VAT and duty plus a CE mark showing that it complies with the RCD. Registration on the SSR is irrelevant as it proves nothing. The person who imported it into the EU is responsible for paying VAT, and if he does not, the liability remains attached to the boat and customs could seize the boat to recover the unpaid VAT. Also the boat cannot be imported legally without complying with the RCD.

As John says to give more definitive advice, more information is needed as the status will depend on the facts of the boat and its ownership.

Suggest you also read the RYA FAQ sheet as it explains in more detail the process of paying VAT on private imports and the HMRC VAT Notice no8 which has the rules on import. You will find that it is the importer's responsibility to keep the VAT receipt from Customs. The 6 year reference is a red herring as this applies to VAT registered traders requirements to keep records and does not affect a private importer's need to keep his receipt.

Thanks. I started a new thread as I did not realise this one was live think it is because i was a new user, it has a some more details in it. is is at: http://www.ybw.com/forums/showthread.php?352560-VAT-amp-Import-Duty-help any more advice would be much appreciated. Thankyou

 

[boatfun]

Do not pay the deposit.

You have several VAT issues here and a potential RCD issue. VAT sounds most certainly like it could be due and customs can in theory come after the goods to recoup it.

There is some basic info on my website at http://www.jryachts.com/VATandRCD.html but I need to have more detail from you.

Call me tomorrow and I'll give you some free advice. The number is on the site.

Thanks sorry I never called the other day. I started a new thread as I did not realise this one was live think it is because i was a new user, it has a some more details in it. is is at: http://www.ybw.com/forums/showthread.php?352560-VAT-amp-Import-Duty-help any more advice would be much appreciated. Thankyou