VAT on New Boats

[Danny_Labrador]

Someone will probably find interest in this :-

British boat builders also see the withdrawal of VAT concessions on boats bought by UK residents for use outside the UK. They will now be charged 20pc VAT unless they are exported by the manufacturer. HMRC estimated it would raise £3m in tax.

Robin Campbell, sales director at Ipswich-based Oyster Marine, said buyers used to sail the boats to the Channel Islands themselves. “It will be an absolute pain in the neck. They all head over there in April and May time. I am sure we can work around it but right now we put the onus on the buyer to get it out of the country.”

Howard Pridding, executive director of the British Marine Federation, which represents boat manufacturers, said: “We have had no communication from HRMC about this to date. Many boatbuilders have UK customers who wish to keep their boat outside of the EU and, as such, we will be looking closely at the impact this could have on the UK leisure marine industry and making appropriate representations to Government.”

John Bryning, HMRC policy adviser, said: “We recognise that boat manufacturers may have to make adjustments and will offer a 12 months period of notice before the concessionary treatment formally comes to an end.” He said HMRC was “discussing the impact of these changes with the boat industry.”

 

[Boo2]

Someone will probably find interest in this :-

Excuse the dumb question, but does that mean that any UK citizen can currently register their yacht in the CI and thus avoid VAT ? If so would that apply to boats imported from overseas as well ?

Boo2

 

[Tranona]

Excuse the dumb question, but does that mean that any UK citizen can currently register their yacht in the CI and thus avoid VAT ? If so would that apply to boats imported from overseas as well ?

Boo2

No, it does not mean that. It means that if you buy a new yacht in the UK and intend to permanently keep it outside the EU there is a system whereby you have a period of grace to commission the boat and sail it away without paying VAT. This is an alternative to having it shipped directly outside the EU which would not be subject to VAT.

As soon as it re-enters the EU VAT is due unless it is subject to the very limited exemptions.

Registration is irrelevant t VAT. Liability for VAT depends solely on the nature of the transaction.

 

[sailorman]

there is / was a "Lease back" scheme where by the owner claimed or was vat exempt & only paid vat on the times he "leased" the boat.
i may not be totally correct but its along those lines. JFM would know all about it.
Not many Oysters have vat paid status & i would guess neither do Fairline or other high value new MoBos

 

[Tranona]

Yes, there are (or have been) all sorts of lease schemes designed to reduce VAT liability. They all tend to involve some sort of commercial activity alongside personal use and tend to be exploited by rich people who are mobile and the hassle involved to try and avoid tax is part of their way of life. Flavio Briatore springs to mind - having had "his" boat impounded in Italy by customs claiming he owed several million euros in VAT if he wanted to use the boat in the EU.

A number of EU countries such as Malta and France have such schemes, designed to encourage commercial charter activities, but they fight a running battle with Brussels over legality.

 

[timbartlett]

As soon as it re-enters the EU VAT is due unless it is subject to the very limited exemptions.

Registration is irrelevant t VAT. Liability for VAT depends solely on the nature of the transaction.

Tranona doesn't know what these exceptions are, and can't be bothered to look them up, but he disapproves of anyone buying anything without handing over lots of money to the government, so he's quite sure the limitations must be limited, and will argue that black is white with anyone who dares to quote the actual legislation. If they post a link to to the original statute, he will resort to personal abuse.

 

[gardenshed]

Now girls, put the handbags down....

 

[Tranona]

Tranona doesn't know what these exceptions are, and can't be bothered to look them up, but he disapproves of anyone buying anything without handing over lots of money to the government, so he's quite sure the limitations must be limited, and will argue that black is white with anyone who dares to quote the actual legislation. If they post a link to to the original statute, he will resort to personal abuse.

Tim

Why are you so rude?

What I have stated is absolutely true.

Of course I know what the exemptions are. They are all clearly laid out in HMRC VAT Notice number 8 which anybody can look up on the HMRC website.

I do not approve or disapprove of any actions anybody takes. In this case, knowledge of what the exemptions are could avoid somebody committing an offence or equally give them the opportunity to import a boat into the EU without paying VAT if they and their boat qualify.

And when you make the effort to read the notice (which is also summarised on the RYA site) you will find that the exemptions are limited and are usually subject to limiting conditions.

So, get off your soapbox and pursue some more useful activity.

 

[Sybarite]

In France it is related to the navigational category of the boat. Categaory A boats (offshore) are deemed to spend half of their time outside territorial waters and therefore only pay the relevant VAT rate X 50%. This only applies to leasing payments.

 

[DownWest]

Local Friend bought a high value new French Yacht on a leasing system, saved him half the TVA (VAT) He is not French resident, but I am not sure of the details ( seems normal here)

 

[Tranona]

Don't know the latest position with regard to that scheme, but it has not been promoted for some time.

France has a history of allowing tax saving schemes linked to the purchase of French built boats. In the early days of charter fleets, many were financed by a scheme that allowed an individual to offset the cost of a charter boat against personal income tax. Reason given was that it helped to promote tourism in developimg countries. As a result Sunsail and the like got cheap boats financed by others on their fleet in say Turkey and Beneteau "sold" another boat. Eventually EU stopped it. There is still a scheme whereby Charter yachts can operate in France without paying VAT, which partly explains the large number of big yachts based there.

 

[Kurrawong_Kid]

Tranona doesn't know what these exceptions are, and can't be bothered to look them up, but he disapproves of anyone buying anything without handing over lots of money to the government, so he's quite sure the limitations must be limited, and will argue that black is white with anyone who dares to quote the actual legislation. If they post a link to to the original statute, he will resort to personal abuse.

Can't quite see the relevance of this post.

 

[BobnLesley]

S'Obvious

"Can't quite see the relevance of this post."

Tim doesn't like Tranoma, because on occassion he has the temerity to disagree with Tim in what Tim seems to believe is his own playpen, so from time to time Tim makes snide and usually ill considered digs at Tranoma; simple once you've seen a few.

 

[Sybarite]

<< Don't know the latest position with regard to that scheme, but it has not been promoted for some time.>>

I believe it still exists.

<< France has a history of allowing tax saving schemes linked to the purchase of French built boats. In the early days of charter fleets, many were financed by a scheme that allowed an individual to offset the cost of a charter boat against personal income tax>>

These schemes were designed to develop the tourism, infrastructure in the overseas departments (DOM) and territories (TOM). It also applied to holiday homes there. In fact it was even better than what you describe. Firstly you could deduct the initial cost from your revenue but then subsequently you could depreciate it as well. So the final impact was that you didn't just recover the tax from the investment but you recovered potentially 100% of the cost.

<< As a result Sunsail and the like got cheap boats financed by others on their fleet in say Turkey >>

Not Turkey : only the DOM/TOMs.

They also had another scheme for larger yachts which could be assimilated to the catering industry (ie serviced by a crew). A tax transparent vehicle (a type of unlimited partnership - called a quirat when it applied to boats) was set up which meant that the results were taxed in the hands of the members of the quirat but not the quirat itself. As it was not difficult to arrive at a deficit (through depreciation) the loss could be set off against other earnings. Moreover the following year there were the accounting loss carry-forwards in the accounts of the quirat which meant that the loss got passed through a second time; this loophole though was closed pretty quickly. We had a tax audit on the question and they had to admit that the treatment was correct.

<< There is still a scheme whereby Charter yachts can operate in France without paying VAT, which partly explains the large number of big yachts based there. >>


Are you sure? I would have thought that they could only escape French VAT if their charter activity took place outside of French waters.

 

[Tranona]

The first yacht I chartered was from Sunsail in Turkey - and it was brand new owned by a French doctor and with French registration. When I got interested in buying a charter boat the explanation I was given for the preponderance of French owned boats on the fleet was as I described - but of course it was a long time ago and they could have been wrong!

My source for the other issue is again secondhand - but from a more reliable source. jfm who posts on the MOBO forum and is both the owner of a big MOBO in Antibes and a legal expert on VAT matters.

Incidentally there was an article in the house magazine of one of the major accounting firms about a European wide crack down on VAT in relation to charter/private boats - suggestions of billions of euros unpaid. However, think this is all beyond normal people!