VAT on boats

[Sticky Fingers]

...
That illustrates the main casualty of Brexit for boaters - the trade in used boats to and from the UK and EU has been killed stone dead. So owners of boats now in the UK effectively have lost the opportunity to sell their boat to an EU buyer. ....

Unless it has VAT-unpaid status in either country I presume...?

Unusual in the UK, but there seems to be quite a few in EU listed as Tax Unpaid. So a UK buyer could find their perfect boat in the EU tax unpaid, ship to UK, and pay UK VAT on entry. And vice versa.

Presume there is a tax bond to pay whilst in transit.

 

[Hurricane]

Not quite. It depends on where you take it. If you bring it back to the UK under RGR it loses its status. If you take it to Morocco (or any other non UK third country, even the Channel Islands) you can take it into the EU under RGR. So in practical terms now you have an EU VAT status boat,.....

I'm a bit confused - in this case, why should the UK be any different to other third countries?
I'm not referring to UK RGR.
I am referring to my boat which is EU VAT paid and in EU waters on the 31st Dec 2020.
If I take it to (say) Morocco should be the same as taking it to the UK.
In the past, taking it out of EU waters was allowed for up to 3 years without triggering any extra VAT.
Is this still the case?
I am UK resident.

 

[Tranona]

Because as a UK resident you can't have it in the UK under TA (only available for non residents) so you would have to pay UK VAT. The EU rules about RGR are as far as I know the same as UK, although I don't know if their customs (all 27 individual states!) apply it in the same way as HMRC in respect of the exceptional conditions which make the 3 year bit flexible. As an example, EU boats move regularly to and from Greece and Turkey under RGR and I expect from now UK boats will do the same under TA. As JFM used to say, the devil is in the detail, but once you get your head around it the principles are simple. It is just the application to specific situations that take some thinking.

Scala. Most of the not VAT paid boats will be ex charter boats being sold by the charter company. However they could also be non resident owned boats (Swiss for example) in the EU under TA. If such boats are sold to an EU resident VAT becomes payable - seller's responsibility but effectively the buyer pays. If brought to the UK then VAT would be payable on Import as you say. If it came by road then it would need a carnet for which a bond would be payable. I guess that specialist boat transporters would be up to speed on this when the dust has settled from Brexit.

 

[Sticky Fingers]

OK thanks. Not a current problem I have, but I might go there in a few years. Sold my last boat in 2019 to a Danish buyer who was attracted by the excellent (from his POV) euro to sterling rates...!

 

[Hurricane]

Because as a UK resident you can't have it in the UK under TA (only available for non residents) so you would have to pay UK VAT. The EU rules about RGR are as far as I know the same as UK, although I don't know if their customs (all 27 individual states!) apply it in the same way as HMRC in respect of the exceptional conditions which make the 3 year bit flexible. As an example, EU boats move regularly to and from Greece and Turkey under RGR and I expect from now UK boats will do the same under TA. As JFM used to say, the devil is in the detail, but once you get your head around it the principles are simple. It is just the application to specific situations that take some thinking.

OK
My thinking was from the EU perspective.
If my EU VAT paid boat were to move to the UK, I agree that RGR/VAT would be triggered.
But if it then returned to the EU (within 3 years), would it have kept its EU VAT status (I hate that word "status" in this respect)?

The likelihood of my boat ever coming back to the UK is very small - she is a bit big for sensible UK cruising.
But it is more likely that she would venture outside of EU waters to other countries.
As I see it, as long as the time that she is outside of EU waters is kept to less than 3 years, she shouldn't be subject to future EU VAT when she returns to EU waters.

 

[DavidJ]

More questions than answers I’m afraid.
If I sold my boat (bought new in UK VAT paid, has been in Spain 15 years) to a EU national, does he have the same freedoms that he would have if he bought a EU VAT boat. I’m thinking of things like ability to visit the UK without triggering “stuff”

 

[Tranona]

Yes. The boat will then be an EU boat, and almost certainly have registered evidence of the EU resident ownership to show that. As I suggested above there may well be problems when you transfer the boat as the buyer (and his advisers) may well be sceptical. If the buyer is a UK resident he will have the same problem if he does move it to the UK as TA will not be available and VAT will be due.

 

[j24jam]

More questions than answers I’m afraid.
If I sold my boat (bought new in UK VAT paid, has been in Spain 15 years) to a EU national, does he have the same freedoms that he would have if he bought a EU VAT boat. I’m thinking of things like ability to visit the UK without triggering “stuff”

The EU National would be buying an EU VAT paid boat. If he wanted to bring it to UK, he could do so under a Temporary Admission, but it would not be deemed UK VAT paid, as the taxable event (sale to him) took place outside of UK.

 

[j24jam]

OK
My thinking was from the EU perspective.
If my EU VAT paid boat were to move to the UK, I agree that RGR/VAT would be triggered.
But if it then returned to the EU (within 3 years), would it have kept its EU VAT status (I hate that word "status" in this respect)?

The likelihood of my boat ever coming back to the UK is very small - she is a bit big for sensible UK cruising.
But it is more likely that she would venture outside of EU waters to other countries.
As I see it, as long as the time that she is outside of EU waters is kept to less than 3 years, she shouldn't be subject to future EU VAT when she returns to EU waters.

The question really is does bringing the boat back to the UK under RGR trigger the loss of the EU VAT paid status you currently have. Both Tranona and I differ on the answer to that...

 

[Tranona]

OK
My thinking was from the EU perspective.
If my EU VAT paid boat were to move to the UK, I agree that RGR/VAT would be triggered.
But if it then returned to the EU (within 3 years), would it have kept its EU VAT status (I hate that word "status" in this respect)?

The likelihood of my boat ever coming back to the UK is very small - she is a bit big for sensible UK cruising.
But it is more likely that she would venture outside of EU waters to other countries.
As I see it, as long as the time that she is outside of EU waters is kept to less than 3 years, she shouldn't be subject to future EU VAT when she returns to EU waters.

Again you have to go back to the principle that VAT is a tax on transactions, not on assets. Therefore look to what the situation will be and then determine whether a chargeable event will occur. The boat will have an HMRC receipt showing VAT paid when you brought it into the UK. When you declare to customs in the EU they will treat it as an import from a third country and charge VAT (and possibly duty - or allowed entry under TA as a third country boat Of course if you become non UK resident you could bring it into the EU under TA.

The principle of transaction rather than asset tax is the reason why an asset cannot have both EU and UK VAT "status" as the status is determined by the nature of the last transaction.

 

[Tranona]

The question really is does bringing the boat back to the UK under RGR trigger the loss of the EU VAT paid status you currently have. Both Tranona and I differ on the answer to that...

You really don't seem to have grasped the principles of VAT in respect of "means of transport" such as boats. I have explained it, but you seem unable to point to any evidence to show that what you say is true.

 

[Irish Rover]

You really don't seem to have grasped the principles of VAT in respect of "means of transport" such as boats. I have explained it, but you seem unable to point to any evidence to show that what you say is true.

I'm not sure you have explained it. So please indulge me.
A boat is bought new in the UK and VAT is paid. The owner takes it to Europe and it's in the EU on 31/12/20. So it's deemed EU VAT paid. The owner then brings it back to the UK and applies for and is granted RGR. So the boat is now deemed UK VAT paid. Does it lose its EU VAT paid status at the point of return to the UK and if so by what mechanism. What is to stop the owner going back to the EU next year and applying for RGR there?

 

[John100156]

As I have freely admitted, I am a complete novice when it comes to interpreting tax laws, I am just annoyed I might have to pay VAT twice - but if that's the case, so be it. Sadly, despite the best efforts of all those posting above, I am not wholly convinced we are getting anywhere that inspires confidence in the correct interpretation of all of the rules/laws.

Fortunately, it is not of significant importance to me, so I shall just wait to see how things pan-out, in the next year or two...!

 

[Tranona]

I'm not sure you have explained it. So please indulge me.
A boat is bought new in the UK and VAT is paid. The owner takes it to Europe and it's in the EU on 31/12/20. So it's deemed EU VAT paid. The owner then brings it back to the UK and applies for and is granted RGR. So the boat is now deemed UK VAT paid. Does it lose its EU VAT paid status at the point of return to the UK and if so by what mechanism. What is to stop the owner going back to the EU next year and applying for RGR there?

I see your point. I assumed that RGR has not been allowed and VAT has been paid on import. (The fear or many UK owners of boats in Europe.) That is the point at which EU status would be lost. Hurricane's boat has been out of the UK for over 10 years, so he could use the concession to bring it back before the end of this year without paying VAT, but otherwise he would have to fall back on the exceptional circumstance bit in the rules to get RGR.

So, I guess the answer is that it is unclear what would happen in this situation (of RGR being granted in the UK) as it would be the EU who would decide if he tried to take it back into the EU for more than 18 months under TA - which he could do as a UK resident. AFAIK their RGR rules are the same as the UK, so may well be open to interpretation.

 

[jrudge]

I think you are confusing things

Now we are out of the eu there is no connection between the tax system of the eu and uk.

The uk have rules as do the eu. They are not co dependent

If the boat has eu tax status it will retain that for 3 years whilst outside of the eu during which time it can claim returned goods relief if it comes back under the same owner. Longer than that it loses it.

In the same way if the boat has uk vat paid status it will retain that unless it leaves for 3 years etc.

So given the eu and uk have their own rules there is not reason why both status can’t be retained in the medium term. I know of many boats who traveled to the eu from the uk with professional skippers to be in eu on 31/12 and then came back quite rightly claiming returned goods relief.

 

[dunedin]

I'm not sure you have explained it. So please indulge me.
A boat is bought new in the UK and VAT is paid. The owner takes it to Europe and it's in the EU on 31/12/20. So it's deemed EU VAT paid. The owner then brings it back to the UK and applies for and is granted RGR. So the boat is now deemed UK VAT paid. Does it lose its EU VAT paid status at the point of return to the UK and if so by what mechanism. What is to stop the owner going back to the EU next year and applying for RGR there?

That indeed seems to be the process many are hoping to rely on, if they were lucky enough to be able to get their VAT paid boat into the EU for 31/12/20 and back to the UK before 31/12/21. Then hop back and forward between UK and EU no more than 3 years gap in each case.
Whilst loosely referred to as “retaining both UK and EU VAT status”, I think technically it is more retaining both UK and EU VAT ”RGR eligibility” - but may be able to achieve the same effect in practice.
Again based on what I have read, not a legal expert.

 

[Tranona]

I think you are confusing things

Now we are out of the eu there is no connection between the tax system of the eu and uk.

The uk have rules as do the eu. They are not co dependent

If the boat has eu tax status it will retain that for 3 years whilst outside of the eu during which time it can claim returned goods relief if it comes back under the same owner. Longer than that it loses it.

In the same way if the boat has uk vat paid status it will retain that unless it leaves for 3 years etc.

So given the eu and uk have their own rules there is not reason why both status can’t be retained in the medium term. I know of many boats who traveled to the eu from the uk with professional skippers to be in eu on 31/12 and then came back quite rightly claiming returned goods relief.

The wording of the rules is still as far as I know identical with the exception of the 1 year grace period. What is not known is how the rules will be used by the EU states in the future. For example the rules have an "exceptional circumstances" which means the 3 years is not an absolute. Exceptional is not closely defined but my understanding is that it has in the past been liberally interpreted in the UK such that very few boats actually have to pay VAT on return, even after long periods away.

The idea that boats can pop back and forward every 3 years does seem to be far fetched. Indeed it is difficult to see the benefits such a strategy might bring. I would guess the owners of the boats you talk about are hedging their bets and thinking they will have an option of choosing where they sell their boat which would not be available to a boat that is only EU or UK.

 

[Irish Rover]

I think you are confusing things

Now we are out of the eu there is no connection between the tax system of the eu and uk.

The uk have rules as do the eu. They are not co dependent

If the boat has eu tax status it will retain that for 3 years whilst outside of the eu during which time it can claim returned goods relief if it comes back under the same owner. Longer than that it loses it.

In the same way if the boat has uk vat paid status it will retain that unless it leaves for 3 years etc.

So given the eu and uk have their own rules there is not reason why both status can’t be retained in the medium term. I know of many boats who traveled to the eu from the uk with professional skippers to be in eu on 31/12 and then came back quite rightly claiming returned goods relief.

I don't think this is the case at all. There are Double taxation Agreements between the UK and all EU countries and lots of cooperation and sharing of information. These agreements are designed, among other things, to prevent evasion of taxation. Your last sentence is telling. The customs authorities in any of the EU countries may well see that as an attempt to play the system and refuse RGR in cases where RGR had previously been availed of in the UK. VAT was paid only once [when UK was a member of the EU] and I can well see a customs officer saying "you can't have your cake and eat it" so refused and see you in court, if you're that rich and brave..

 

[DavidJ]

Whilst loosely referred to as “retaining both UK and EU VAT status”, I think technically it is more retaining both UK and EU VAT ”RGR eligibility” -

If you did choose to go for the 3 year back and forth haven’t you just made your boat unsellable. You haven’t retained a permanent UK or EU “status”

 

[jrudge]

If someone can show my legislation that illustrates goods cannot have dual VAT status then please do so.

Double Taxation is about income reliefs, not VAT. The UK has no record at all if any goods are are are not VAT paid. The sole proof is a VAT invoice form the vendor. The Vendor reports VAT as totals, not details of a boat called xxx.

A unique position was created whereby goods in the EU were Eu tax paid and in the UK could return within a year and get RGR.

You will have followed to the letter the requirements of the both the Uk and the EU.

Tarona as to your question - the issue is exactly that - it gives people freedom as to where they sell their boat - which is why I personally know people who had their boat in the EU on 31/12 and then bought it back.

You cant go back in time, but if you boat was in the EU and you can bring it back to the Uk either under RGR normal rules, the 1 year extension or the exceptional circumstances then it has valid status in both.