VAT on return to UK?

[davec]

There's a rumour going round the Caribbean that on returning to the UK in one's yacht after more than 3 years away, VAT is payable. Even on a VAT-paid, UK registered boat!
Is there any truth in the rumour?

 

[LadyJessie]

Absolutely not. This is a rumour that has gone around some time but it is without any base. I am an accountant and have worked many years on European VAT issues and I was very surprised when I first heard this rumour. There is nothing in European (or UK) VAT legislation to support this. To be sure (I have been retired some years now) that nothing has changed from my time, I did check this with HMC&E last year and they confirmed that if you can document that your yacht has had VAT paid somewhere in the EU you will have no problems. VAT can never be paid twice (unless you lose your documentation, but that is another story...)

 

[Talbot]

[ QUOTE ]
if you can document that your yacht has had VAT paid somewhere in the EU you will have no problems. VAT can never be paid twice

[/ QUOTE ]

That is only true if you were the owner when the boat had vat paid status in the EU. If you purchase outside of the EU you will still be liable for VAT (robbin barstewards)

of course even in the west indies, provided you do the handover at one of the French Islands that are considered to be part of the EU, then you are covered.

 

[LadyJessie]

Agree, but that is a different scenario than the one in the original question. Let me try to be more precise: VAT can never be paid twice on one purchase, i.e. you will never pay twice on your own boat. However, anything you buy outside of the EU and import into the EU is liable to VAT on that purchase transaction, regardless of the original VAT status.

If you buy a yacht outside the EU and live on it for an extended period prior to returning, there is a loophole in the VAT legislation that I would be interested in exploring: you are allowed to import "household goods" bought outside the EU without paying VAT and duty if you have lived outside the EU for more than two years. This is the "expatriate rule" and it even covers cars. Now, I don't think this has been done yet but I would be happy to argue that a yacht bought outside the EU that you have lived on for more than two years should be exempt from VAT and duty. Get a good VAT accountant and good luck trying!

 

[Bajansailor]

I saw that rule in the Book of Rules issued by the Customs folk - and I asked them about it at Southampton Boat Show, and they scratched their collective heads, and eventually admitted that yes, it was very feasible.
Ie, if you are an ex-pat living outside the EU, and you buy the boat at least 6 months before bringing it back to the UK, and then keep it for a minimum of 1 year in the UK before (eg) selling it, then no vat should be payable.
But I think that this only applies to boats that are already British registered (according to my interpretation of the rules).
And I saw on another thread that only folk with an address in the UK can have a boat registered with the SSR (and hence, I presume, Part 1 registration as well).
And if you have an address in the UK for whatever reason, then presumbly you are not an ex-pat anymore?

Lady Jessie, what do you reckon?

 

[rogerthebodger]

When I left the UK in 1982 to move permanently to South Africa all my household affects came into SA without duty or sales tax or VAT. That includes cars, yachts, aeroplanes providing owned for a period of time normally 6 months to a year.

If and when I return to the UK the same will apply and I deal with C and E in southern africa daily.

The issue is, is it a permanant move, the loop hold is what is permanant and for how long or if some form of other tax paid in the UK i.e. income tax.

I do not think the registstion of the yacht is an issue but if the yacht was registered outside the UK / EU it can be temporarily import like a car from outside the EU which can be imported temporary to a short period of time (3 to 6 months)

 

[LadyJessie]

Bajansailor; I do not think you need the yacht to be British reg at purchase. On the contrary, the rule is set up to allow you to buy stuff in the country where you live while you are an ex-pat and return with it tax free. The situation with the British reg should not matter. As far as I understand the rule of registration, you need to be a British citizen but not necessarily a British resident to carry the red ensign. This should have no bearing on the VAT status. Ie, you should be able to buy a yacht outside the EU and register it in the UK while you are resident outside the EU. If you then move back into the EU you should be able to claim the ex-pat exemption and it should not matter when you actually registered the boat.

 

[DavidJ]

[ QUOTE ]
.....without paying VAT and duty if you have lived outside the EU for more than two years. This is the "expatriate rule" and it even covers cars.

[/ QUOTE ]

Household goods certainly ok because I have been an expat in the past but not so sure about cars (or boats)
A friend of ours returned from Dubai, after a couple of years expating, with a Mitsubishi Pajero (bought out there) and had to pay VAT on it.

 

[Lizzie_B]

Though, of course, depending on other factors you may have the thorny issue of RCD to consider

 

[LadyJessie]

Your friend must have bought the car less than 6 month prior to moving. The rules on cars are very clear and tested, not so on yachts. When I was an accountant, I always made a very firm recommendation to all ex-pats in our companies that they should buy a car (or two) before returning to the EU. You can usually buy tax-free for export within a year and then it is taxfree when you return to the EU - sometimes a saving of 50% on new car value. Absolutely legal tax-avoidance.

 

[npf1]

From recent and personal experience, repratriating personal effects upon change of residence back to the UK does apply for boats. The VAT people were helpful providing you manage to get through to the correct department. I can dig out details should you wish. Notices 3 and 8 are the ones to read. If I recall correctly, there are also some guidance notes available.

 

[LadyJessie]

I see now that I have not been clear in presenting the issue regarding tax-free importation of a yacht. We have above discussed three scenarios:

1. You buy a VAT-paid yacht in the EU and cruise outside. When returning, there is no VAT or duty payable. Clear case.

2. The "normal ex-pat" situation: you live and work permanently in a country outside of the EU for a minimum of 6 months, preferrably longer to establish "permanance". When you eventually move back into the EU, all of your household goods will be imported free of VAT and duty. This certainly includes cars, yachts, aeroplanes, etc. provided you can prove that you have owned them for at least 6 months and continue to own them after the move for another year. The rules and practice in these cases are clear: you should get your foreign purchased yacht tax-free.

3. This is the case that I am not so sure about, but would be happy to argue: you are a cruising live-aboard and you buy a yacht outside the EU for your cruise. You live on it for at least 6 months, preferrably longer and then you return to the EU. I would strongly argue that the same ex-pat rules as in situation 2. applies and you should import your yacht tax-free. I do not personally know of any case like this but some posts above gives me comfort that it should work. Would love to have that argument with HMC&E.

 

[Saguday]

As a recently returned ex-pat having spent 2 1/2 years in the US and with a (US -bought) boat we've owned for >6 months I can confirm that I had this very same conversation with C & E over a year ago (twice, talking to two separate people on each occasion and getting the same answer) and yes indeed you can include a yacht in household possessions when you return and it is both import duty and VAT free. As mentioned by npf1 Notice 3 is the key one to read. C & E very helpful on this point in my experience. You mustn't sell said boat for at least one year upon return but outside that you're ok /forums/images/graemlins/smile.gif

I looked into this very carefully before we bought and to deal with the RCD issue we bought (one of the few) posh US boats with CE Cat A approval. Just need to change the electrics and robert est son oncle as they say... as long as they don't change the rules on me before I can get her over here /forums/images/graemlins/frown.gif

 

[macd]

Lizzie_B: Part 1 register it on the Isle of Man as a non-resident. IoM is not part of EEA and thus RCD does not apply (in fact when I asked them, the IoM registry had never heard of RCD). Registration requires a one-off £500 fee, plus production of seaworthines survey.
I gather that registration in Gib has similar benefits.

LadyJessie: thanks for that rare clarity. Hope you get a volunteer to be guinea pig.

 

[Lizzie_B]

You don't need RCD to register in UK either. You only need RCD if your boat fails to meet certain criteria and you wish to either use it in EU waters or sell it within the EU - it is not actually an issue about being able to register, and it is very unlikely that you would be challenged over it in the UK - be an interesting post that, to find out)

but the French seem to have a reputation in certain parts for pursuing these matters.
Even if registered in IOM you would not have a very big cruising area before you entered EU waters. /forums/images/graemlins/grin.gif

 

[macd]

Agreed, you don't need RCD to register a craft in the UK. But my understanding is that you are committing an offence if you "place on the EEA market or put into service within the EEA" a vessel registered in the EEA which isn't RCD compliant.

If it's Manx-registered, you don't need RCD, end of story.

 

[macd]

Sorry, Lizzie_B -- only just got the gist of part of your message.
My cruising area is just fine, thanks.
There is no absolute requirement for all vessels entering EU waters to be RCD compliant (whether by age, home build, certification or whatever). If it were otherwise, many a US-built yacht, US-registered, owned and crewed, could not enter EU waters. This is patently absurd. A specific exemption applies to vessels "visiting the EEA for reasons of tourism or in transit".

Secondly, the relevant area is not the EU. It is the EEA (European Economic Area). The Isle of Man is an associate member of the EU (it's part of the same VAT area as the UK, for instance). But it is not part of the EEA. A Manx-registered vessel has free movement within the EU. But it need not be RCD compliant.

 

[Lizzie_B]

Yes. That's basically what I said. However, there are time limits on some things after which a boat is deemed to have been imported ( and if in use - been put into service). At such time, if the vessel is not exempt under the RCD it will be required to become compliant.

 

[macd]

Sorry, but you don't seem to get it. And your posts were quite wrong in using EEA and EU as synonymous. In Customs & Excise terms, the Isle of Man and the UK are the same place. It is not possible to 'import' something between one and the other (unlike Channel Isles to UK, for instance). The Treaty of Rome gives me (and my boat) free movement within the EU.