VAT Invoice on 2nd hand boat

[Boo2]

Why can there not be a small card similar to the SSR which can be issued at the time of paying VAT we could show rather than different bits of paper.

AIUI HMRC (or whoever they were back in the day) used to issue a certificate of VAT paid status but stopped doing so. The reason is that the VAT paid status is subject to changing if the boat is exported and re-imported so it is unfortunately not possible to settle the status once and for all.

Boo2

 

[Tranona]

Why can there not be a small card similar to the SSR which can be issued at the time of paying VAT we could show rather than different bits of paper.

Because VAT is not a tax on boats but on transactions. VAT predated all this current fuss that came from the 1992 treaty. In the UK VAT dates back to the 1970s when having evidence of payment was irrelevant.

The basic problem arises from trying to treat a tax on transactions as a tax on identifiable individual assets. The two are incompatible as we see. The controls on VAT centre on the proper accounting for the tax by the people responsible for collecting it, that is the trader/vendor, not the private purchaser or owner of the asset.

It is rare for any offence to be committed by an individual in relation to VAT as there is no such offence, with the exception of transactions where an individual is reponsible for paying VAT direct to the revenue. The most common example is the private importation of goods, including boats. This is why your friend is experiencing difficulties.

Should also add that French customs are more active where you are because of the proximity of a non EU territory (CIs) and the fact that it is a major port of entry from outside the EU. Therefore there is a greater likelihood of non VAT paid boats exceeding their temporary import terms or trying to avoid paying VAT on import.

 

[SailorBill]

OK, found it (the relevant legislation) - it says:

...

Thank you. Interesting...

 

[Tranona]

AIUI HMRC (or whoever they were back in the day) used to issue a certificate of VAT paid status but stopped doing so. The reason is that the VAT paid status is subject to changing if the boat is exported and re-imported so it is unfortunately not possible to settle the status once and for all.

Boo2

You are correct. However, the letters they issued were only confirming the evidence presented met the requirements for exemption as defined in the rules. If you had a boat that was not exempt, but had lost the original VAT invoice you would not get a letter. They dropped the idea partly for the reason you state and partly because if you had the rquired evidence there was no need for a letter.

Their legal advice is that issuing the letter was "ultra vires" that is outside their remit because they could not be certain of whether VAT had been paid correctly without the original invoice as that is the only record, further compounded by the fact that a boat could be involved in another chargeable event at a later date than the original sale, usually in the way you describe, but also if the boat is bought and sold by and to VAT registered traders.

 

[Swagman]

Our boat was built in Cape Town in early 90's and had changed hands twice before we bought her. There was no VAT invoice amongst the paperwork. In France we were boarded by officials who wanted to see the VAT invoice. How do we go about obtaining one? We do have paperwork to show the various changes of ownership. This aspect of boating is new to us as in S Africa, there is no paperwork required for VAT on secondhand goods. Anyone who can shed any light on this?

One yacht we once purchased from a Belgian in Holland had been purchased originally by a German from it's Italian manufacturers. We initially took it to the UK before heading for the Med. All we ever had were photocopies of other photocopies showing the original invoices showing VAT paid, and they passed muster with several authorities. British, French, Portuguese and lastly, Spanish, despite being very difficult to read.

It struck me more than once that the vendor could have easily fabricated those documents using photoshop / word processing packages, and neither I nor the authorities would have easily been able to pick that up.

There is an interchange of info on boat entry / exit from the EU, but no, repeat no, interchange of tax paid information on boats between the member states. Which is why they need you to carry the paperwork around, and why proving the validity of copied invoices is tough.

Cheers
John

 

[Nostrodamus]

So, if the original invoice for the boat has been lost what other means of showing the VAT has been paid is there.
If authorities ever suspect that the invoice is not genuine (even though it may be) they have a power, as they do in the UK, to seize it, leaving us only with that copy we made for such eventualities. It is a system open to abuse with modern copies/ printers/ computers and unscrupulous sellers.
When you buy a boat how do you know that the document you get is genuine and could it leave you with an impounded boat because of the previous owners wrong doings?

 

[Tranona]

So, if the original invoice for the boat has been lost what other means of showing the VAT has been paid is there.
If authorities ever suspect that the invoice is not genuine (even though it may be) they have a power, as they do in the UK, to seize it, leaving us only with that copy we made for such eventualities. It is a system open to abuse with modern copies/ printers/ computers and unscrupulous sellers.
When you buy a boat how do you know that the document you get is genuine and could it leave you with an impounded boat because of the previous owners wrong doings?

None. HMRC are very clear in that the only evidence acceptable is the original invoice, although certified copies, for example if you are able to get access to the builder's/dealers originals have been accepted.

However, you have to temper this rather bleak picture by recognising two things. Firstly your lack of evidence is their lack of evidence, so the absence of an original means there is no "proof" of anything. Secondly that it is virtually impossible for a private individual to commit a VAT offence - offences are related to accounting for the tax, which is the responsibility of the VAT registered vendor. Add to this in general customs do not just seize assets, they will need to get a court order first.

As I suggested earlier the real problem for an individual is if s/he owns a boat that has been privately imported where the responsibility for payment lies with an individual. VAT is then collected in a different way from normal transactions and has more of the characteristic of an ad valorem duty where the level of liability is determined by the value of the asset. If the liability is not met, it stays with the asset as well as with the individual.

Even in this situation there is often not a problem (which is why some people take a risk and don't pay) in that there is no systematic method of checks, so if the boats stays, say in the UK the chances of being caught are low. The next problem comes from the fact that the 1992 harmonisation included the requirement that evidence of VAT payment was required to travel freely around EU, but without considering the practicalities, nor of establishing the requirement in law. For many countries this was not a problem because they put in place a system that recorded VAT payment before a boat could be registered. This was not the case in the UK, partly because there was no registration system and partly because VAT had already been in use for nearly 20 years.

For your friend's boat, it could have arrived in the EU in a number of different ways and not all of these trigger a VAT liability. If it was commercially imported the importer was responsible. If, as is more likely it arrived by sea, there are 3 scenarios. If the person bringing it in was a non EU resident, he could use it without paying VAT under temporary importation at the first point of entry. If he subsequently sold it he would be liable to pay VAT. If he were a VAT resident, temporary importation is not available so duty and VAT would be payable immediately. A third possibility is that he met the requirements of a returning resident or taking up residency in the EU in which case he could import it without paying VAT and at a later date sell it with no further liability. The "rub" with all of these is that customs issue a certificate at the time confirming its status. So, if the first or last of those situations apply to the boat, then there is a certificate from customs confirming VAT has been paid, or there is no liability.

As your friends do not seem to have that, French customs could suspect that the boat is illegally imported. The potential liability is based on the value at time of importation and due to the state of first entry. I don't know what their action is likely to be, which is why your friends need to take legal advice once they have all the information they can get. Ideally finding the person who imported the boat is the best outcome, but there will be other possible courses of action as well.

Sorry to go on at length. Most of this, at least in terms of what the rules say and some commentary on implications is on the RYA website in the form of a FAQ sheet where the "answers" are provide by HMRC. You won't find the solution there, but it will give useful background.

 

[lille_bee]

VAT and all that

If you bought the boat through a broker and the issue of VAT and WRITTEN DOCUMENTED PROOF wasn't highlighted by them at the time, I would be knocking on their door (read camping out on their desk). I say this as an ex-broker who always warned my clients (in writing) that not having VAT paperwork from the previous owner would one day come back to haunt them.

There is another way of looking at the whole issue..... PAY THE TAX and stop looking for ways to not pay it. There are enough people avoiding/evading paying taxes without us yachties and our luxury toys joining in. Politics aside, all the cuts in services etc. usually stem from a lack of money, sorry I mean tax revenue.

Have fun with that last paragraph; it's a subject that usually gets bloods boiling.

Regards to all

John

 

[Bobobolinsky]

4.2 What documents will be required to provide proof of the VAT status on a used vessel?

A registration document on its own does not prove the VAT status of the vessel, as there is no link in the UK between the registry of the vessel and the payment of VAT. QUOTE]

This statement alone tells you that the whole system is open to fraud and abuse

Of course if the boat is their Sole Habitation, it is not liable for VAT

 

[Tranona]

If you bought the boat through a broker and the issue of VAT and WRITTEN DOCUMENTED PROOF wasn't highlighted by them at the time, I would be knocking on their door (read camping out on their desk). I say this as an ex-broker who always warned my clients (in writing) that not having VAT paperwork from the previous owner would one day come back to haunt them.

There is another way of looking at the whole issue..... PAY THE TAX and stop looking for ways to not pay it. There are enough people avoiding/evading paying taxes without us yachties and our luxury toys joining in. Politics aside, all the cuts in services etc. usually stem from a lack of money, sorry I mean tax revenue.

Have fun with that last paragraph; it's a subject that usually gets bloods boiling.

Regards to all

John

You are quite right about the broker bit - but it would be a pretty crass broker who would not have advised directly of the potential problem.

The difficulty with the advice to pay is that there is no easy mechanism to do this. HMRC can only accept VAT payments of there is a chargeable event, so would still have to identify when the boat was imported, by whom and where - plus agreeing the value at the time. If it was imported through another state then the payment to HMRC would not clear that liability. (There was a long thread on the MOBO forum recently on this very subject). Extra complication, the boat and owners are now in France and it is the French that are raaising the issue.

 

[Tranona]

Of course if the boat is their Sole Habitation, it is not liable for VAT

Pretty sure the OPs boat would not meet the definition of a houseboat to be zero rated. See VAT Notice 701/20 Section 7

 

[Leif-J]

4. As Austria, Finland and Sweden joined the EU later, the relevant dates for vessels in these countries are ‘in use’ before 1 January 1987 and moored in EU on 31 December 1994.

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This is very interesting for me:
I bought a Swedish built boat in Sweden in 2010. Boat was first launched 1986 and has been in Sweden all the time. But I cannot prove it since only the last two Swedish owners are known to me.
As you can see, I am in Denmark and trying to get a VAT-certificate issued for my upcoming trip to Shetland.
Where in EU regulations are these dates specified? Any help would be highly appreciated!

 

[Tranona]

This is very interesting for me:
I bought a Swedish built boat in Sweden in 2010. Boat was first launched 1986 and has been in Sweden all the time. But I cannot prove it since only the last two Swedish owners are known to me.
As you can see, I am in Denmark and trying to get a VAT-certificate issued for my upcoming trip to Shetland.
Where in EU regulations are these dates specified? Any help would be highly appreciated!

The dates are in the transitional arrangements. I don't know here you will find the revised dates for Sweden but the relvant dates for the UK (1985 and 1992) are in the VAT Notice No8 issued by the UK HMRC - I expect the Swedish customs authorities will have aa simlar notice. I doubt you will be able to get any kind of certificate, although some countries will issue a letter confirming that the evidence required to meet these dates is available.

However, don't worry about it. Nobody will be the least bit interested in your boat's VAT status when you get to the Shetlands. Just make sure you have registration, passports and the Bill of Sale to show you bought the boat in Sweden (or Denmark if thet is where you bought it).

Enjoy your trip.

 

[Bobobolinsky]

Thanks for that. From the OPs point of view lack of a CE mark might also imply that duty and VAT hasve not been paid either. We also don't know where the boat came into the EU - we are just making an assumption it is the UK.

That is why it is important to trace the detailed history. VAT would be liable at the rate and the valuation at the time and place of first entry. In theory if VAT has not been paid and it was due in another state, HMRC would not be able to accept a payment to remove that liability as no chargeable event has taken place within its jurisdiction.

No the logic is flawed, it could have been imported prior to RCD, it's not a new boat

 

[Bobobolinsky]

So, if the original invoice for the boat has been lost what other means of showing the VAT has been paid is there.
If authorities ever suspect that the invoice is not genuine (even though it may be) they have a power, as they do in the UK, to seize it, leaving us only with that copy we made for such eventualities. It is a system open to abuse with modern copies/ printers/ computers and unscrupulous sellers.
When you buy a boat how do you know that the document you get is genuine and could it leave you with an impounded boat because of the previous owners wrong doings?

Big problem of course is that this is retrospective legislation, which is what HMRC has just used on Barclays. When you bought the boat if you needed the documents at a later date, you would have made sure they were kept safe. However the boats were bought before the legislation, many of them have lost the documents.
Since as with RCD custodial sentences are involved, is a perfect case for "Court of Human Rights"

 

[Bobobolinsky]

The dates are in the transitional arrangements. I don't know here you will find the revised dates for Sweden but the relvant dates for the UK (1985 and 1992) are in the VAT Notice No8 issued by the UK HMRC - I expect the Swedish customs authorities will have aa simlar notice. I doubt you will be able to get any kind of certificate, although some countries will issue a letter confirming that the evidence required to meet these dates is available.

However, don't worry about it. Nobody will be the least bit interested in your boat's VAT status when you get to the Shetlands. Just make sure you have registration, passports and the Bill of Sale to show you bought the boat in Sweden (or Denmark if thet is where you bought it).

Enjoy your trip.

Assume that you are Swedish, just get the Swedish authorities to issue a letter about the status. In Swedish preferably. Even if it is not definitive it has a Swedish customs logo. I had a Polish friend who spent years driving around europe on the docket from a Polish traffic fine, instead of a driving licence.

 

[Tranona]

No the logic is flawed, it could have been imported prior to RCD, it's not a new boat

Suggest you read the whole of the thread. The boat was built in 1991 - it is unclear when it came into the EU and I have made the point about the date the RCD rules came in.

 

[Tranona]

Assume that you are Swedish, just get the Swedish authorities to issue a letter about the status. In Swedish preferably. Even if it is not definitive it has a Swedish customs logo. I had a Polish friend who spent years driving around europe on the docket from a Polish traffic fine, instead of a driving licence.

He says he is Danish, not Swedish. Of course he can ask the Swedish authorities, but they may have the same policy as in the UK where they will not issue any form of letter or certification in respect of VAT.

 

[BurnitBlue]

He says he is Danish, not Swedish. Of course he can ask the Swedish authorities, but they may have the same policy as in the UK where they will not issue any form of letter or certification in respect of VAT.

This thread is getting very close to my pet rant. The EU residancy garbage with its "not born here but lives here" contrasted with "born here but lives somewhere else" not to mention "not born here, and doesn't live here" and its effect on law abiding population.

The result for me is that I own two boats, a Swedish built Marieholm kept in Sweden which has to wear the British ensign. The second boat is a British built Moody kept in Greece which must wear the Swedish ensign. This is to match their registration.

Just suffice to say that the EU is solely for the benifit of the politicians. No one else. Sorry for thread drift.

Back to VAT and good luck.

Or you can do what I do now and put a folder together with papers in seven languages (at the latest count). If the uniforms get too insistant, hand over the folder.

 

[Tranona]

You cannot blame registration anomolies on the EU - nothing to do with the EU, but bigger fish, the UN - if there is anybody to blame for a registration regime that is not primarily designed for pleasure boats but for commercial ships.