VAT on Used Boats.

oldgit said:
..............me and one or two others must have missed the the fact that written in grate big letters on the other side of that bus was
PS. You, WILL be paying 20% more to bring in a boat from the EU to UK post BREXIT. :)
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Which side we’re you looking at ? :unsure:


I saw painted on the red bus wearing boating specs ……You WILL get a 20 % reduction from Sunseeker next time you buy a boat from Poole and have it moved to the Med .:)

Guess that 20;% reduction applies to ALL boats made in Britain and exported into the Med under the TI scheme.

No wonder the builders have record lead times , full order books .No wonder the builders are taking on more workers , no wonder unemployment is down , no wonder inflation is under pressure everyone’s gotta job and flashing it around .No wonder property values are still rising ………..no wonder …….etc etc etc .

Yes I have just had an eye test and still see a 20 % reduction that was not open before 31-1-20 .
 
Tranona said:
You are confusing two completely different issues here. The original question was about evidence of VAT payment on an old boat that changed hands in the UK. Guess like many (the majority?) of such boats there is no record of VAT payment simply because when the boat was new few people bothered to keep the record - and even now there is no legal requirement to keep it. For a boat that has never left the UK and has always changed ownership here there is no chance that HMRC would ever show any interest because all those transactions between private owners do not involve VAT. Knowing where the boat was on 31/12/2020 is a comfort (there were similar qualifying dates in 1992) but in reality for UK based boats and owners irrelevant.

The second issue concerns boats that are now potentially moving from one customs and VAT area to another. In this case VAT is normally payable in the destination area subject to some very limited reliefs of which the most common is Returned Goods Relief. Nothing new about the principle but since the UK left the EU it now applies to boats coming from the EU in addition to from outside the EU. RGR has been time limited (to 3 years) right from 1992 subject to a "normally" which HMRC have commonly exercised for returning long term cruisers. The relief has always been limited to the person who took the boat out of the country. All that the proposed new change does is remove the time limit to reflect the fact that there are many boats in the EU where the owners would qualify for the relief but have exceeded the time limit. Good news for those people even though in reality the number who might benefit is probably small. This is not to belittle the efforts of the CA and RYA in getting the change as it does mean a big change in thinking at the treasury, but I would imagine the loss of revenue would be small as many of those affected would not have returned their boats if they had to pay VAT.

In no way does this change the fact that the norm is that boats can have VAT paid on them more than once. This is because VAT is a tax on transactions NOT on assets, and moving a boat from one customs area to another is a transaction - and always has been. There is no argument for not paying VAT twice, it is perfectly logical once you understand what VAT is. Of course you may think it unfair but that does not change the facts.

Not a chance the rule will be extended to all boats that originally paid VAT in UK being allowed to enter the UK without paying VAT. Under the terms of the withdrawal agreement these are now EU goods - that is deemed EU VAT paid and entitled to free circulation within the EU. Just think it through with an example going the other way. My last boat had VAT paid in Greece in 2007 but moved to the UK in 2010. If it was still in the UK on 30/12/2020 it would be UK VAT paid and if an EU resident wanted to buy it for use in the EU VAT would be payable on entry to the EU. However I sold it in 2015 to a UK resident who subsequently took it to Spain. Although it is now EU VAT paid he could bring it back into the UK under RGR even though VAT was never paid in the UK!

You have to forget all about past VAT payments - who paid and where. The withdrawal agreement determined the status of boats and it is the nature of the current transaction that determines if VAT is payable.
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I agree with you that this has always been the case.
But that isn't an excuse not to correct a bad tax.

Value Added Tax is just that "Tax on Added Value"
If a company buys goods at (say) £100 and sells it at (say) £150 the Added Value is £50.
By charging VAT on their sales and reclaiming VAT on their purchases, the company pays tax on its "Added Value" (profit)
Which is what the tax was intended to be.

It is wrong that people can pay this tax more than once.
It also applies to goods transferring back and forth between countries.
For example, if I bring my life raft from Spain for servicing, it will attract VAT on its return to the UK.
And then when I return it to Spain after it has been serviced, it will AGAIN attract IVA (Spanish VAT) when it returns.
This is not a morally fair tax.

This whole fiasco is because the system uses VAT when they actually mean Import Tax.
Maybe if it were referred to as an Import tax, people might find it more acceptable.
But to charge VAT on an item that has already had VAT charged on it doesn't make any sense at all.

I think that if the matter is looked on in this light, the CA and (perhaps) the RYA might be able to persuade the system to be altered.
So your comment "not a chance" is certainly worth challenging.
After all, TA exists to address this type of stupidity - in other words you wouldn't expect to pay VAT (or Import Duty) on your caravan when you take it on holiday to the EU.
I know that TA is quite different but it is all about changing stupidity.
 
Hurricane said:
I agree with you that this has always been the case.
But that isn't an excuse not to correct a bad tax.

Value Added Tax is just that "Tax on Added Value"
If a company buys goods at (say) £100 and sells it at (say) £150 the Added Value is £50.
By charging VAT on their sales and reclaiming VAT on their purchases, the company pays tax on its "Added Value" (profit)
Which is what the tax was intended to be.

It is wrong that people can pay this tax more than once.
It also applies to goods transferring back and forth between countries.
For example, if I bring my life raft from Spain for servicing, it will attract VAT on its return to the UK.
And then when I return it to Spain after it has been serviced, it will AGAIN attract IVA (Spanish VAT) when it returns.
This is not a morally fair tax.

This whole fiasco is because the system uses VAT when they actually mean Import Tax.
Maybe if it were referred to as an Import tax, people might find it more acceptable.
But to charge VAT on an item that has already had VAT charged on it doesn't make any sense at all.

I think that if the matter is looked on in this light, the CA and (perhaps) the RYA might be able to persuade the system to be altered.
So your comment "not a chance" is certainly worth challenging.
After all, TA exists to address this type of stupidity - in other words you wouldn't expect to pay VAT (or Import Duty) on your caravan when you take it on holiday to the EU.
I know that TA is quite different but it is all about changing stupidity.
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it is not the same people paying the tax twice necessarily. The person who paid VAT on the boat originally is highly unlikely to be the person paying it the second time. The reasoning behind RGR is to prevent that and it applies to all goods that move in and out of customs areas. RGR allows people to take goods out temporarily and not pay VAT when they come back. The only unfair bit arguably was the time limit which limits long term cruisers, although as I said HMRC regularly waived it.

In general terms the tax is applied to the value added by the trader because he reclaims the VAT he paid on his input and the private customer pays the total applied by all the contributors to the process. This works fine and logically internally but not for import from outside where there has been no tax collected on the way. If a tax was not applied to imports then they would have a 20% price advantage (as we see now with suppliers from China who ship direct to consumers without any tax). This is clearly unfair so imports are taxed at the same rate as domestic products at that stage and the mechanism used is VAT - logical because the vert fact of importing a boat adds value. The importer reclaims that as an input and charges VAT on the total sales value to the end consumer.

As I said, once you understand how VAT works in respect of imports there is not a chance of it being changed - because it would be a change to one of the fundamental principles of VAT as used in both the EU and UK. Quite reasonable for the Treasury to modify the RGR rules which were always intended to deal with unfairness, partly because we now have the freedom to do this and partly because of the unique circumstances. In fact the trend is the other way, drawing more importers into the net with the new rules on private imports by mail order - which is EU wide not just the UK, although it was implemented here first.
 

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Tranona said:
it is not the same people paying the tax twice necessarily. The person who paid VAT on the boat originally is highly unlikely to be the person paying it the second time. The reasoning behind RGR is to prevent that and it applies to all goods that move in and out of customs areas. RGR allows people to take goods out temporarily and not pay VAT when they come back. The only unfair bit arguably was the time limit which limits long term cruisers, although as I said HMRC regularly waived it.

In general terms the tax is applied to the value added by the trader because he reclaims the VAT he paid on his input and the private customer pays the total applied by all the contributors to the process. This works fine and logically internally but not for import from outside where there has been no tax collected on the way. If a tax was not applied to imports then they would have a 20% price advantage (as we see now with suppliers from China who ship direct to consumers without any tax). This is clearly unfair so imports are taxed at the same rate as domestic products at that stage and the mechanism used is VAT - logical because the vert fact of importing a boat adds value. The importer reclaims that as an input and charges VAT on the total sales value to the end consumer.

As I said, once you understand how VAT works in respect of imports there is not a chance of it being changed - because it would be a change to one of the fundamental principles of VAT as used in both the EU and UK. Quite reasonable for the Treasury to modify the RGR rules which were always intended to deal with unfairness, partly because we now have the freedom to do this and partly because of the unique circumstances. In fact the trend is the other way, drawing more importers into the net with the new rules on private imports by mail order - which is EU wide not just the UK, although it was implemented here first.
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Yes, I see that.
But tax is CLEARLY being paid twice on second hand goods/boats.
 
What irks me is the term Transaction. What transaction? Importation? When you buy a boat you have a clearly defined sale price, on which VAT is charged. When simply moving a boat there is no such transaction? Who values the boat? Engines shot - cough up. Severe osmosis - cough up? Boats been to the bottom - cough up! A complete travesty IMHO.

Am I bothered, not really my boat will be sold in the EU I expect..... it is a complete farce, not properly thought out, hence recent changes constructed by lazy or rather dumb bureaucrats. Oh dear I am sounding as if I am bothered :rolleyes:
 
Portofino said:
You mean like stamp duty on property and land and CGT on other eligible stuff if the goods are passed between owners ? So what ??
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No - thats the point the goods are not transferring between two owners. That would include a clearly defined transaction value between two parties - a sale!

If I return my UK VAT paid boat back to the UK, there is no such fixed value transaction, yet I am being asked to pay VAT to UK twice? Would I need to pay stamp duty on my own home twice, if not selling to another?
 
John100156 said:
No - thats the point the goods are not transferring between two owners. That would include a clearly defined transaction value between two parties - a sale!

If I return my UK VAT paid boat back to the UK, there is no such fixed value transaction, yet I am being asked to pay VAT to UK twice? Would I need to pay stamp duty on my own home twice, if not selling to another?
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You would pay property taxes if you moved it .
Eu back to U.K. or U.K. to EU .
But folks ( NZ excepted ) tend not to move houses .They sell up and buy again locally feeling the full force of local taxes .

It you move your boat back it’s due import taxes the VAT .
If you buy in the U.K. and move it to the EU you could play the TI game and save VAT .Effectively never pay any VAT .
Would have thought the further S down the Costas you go , the nearer Africa the more attractive this becomes .

Why not sell yours to a EU guy .
Move S buy a vat free boat ….take advantage of TI .

Turkeys looking Fex attractive to run a VAT free boat playing the TI game when venturing into GR .
 
John100156 said:
Yes, of course, that's precisely what I would do; or even a UK boater like me that wants to keep their boat in the Med..! Just be good to see changes to this grossly unfair double VAT penalty, I don't think anyone will ever convince me otherwise!

Then all we need to change is the 90/180 rule ;)
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I think the UK boater is our market.
I wouldn’t expect a EU buyer to understand our Brexit arrangements (I’m hardly there myself) so showing them a UKVAT sales invoice and a marina letter showing you were there on what would seem a random date to them, not forgetting the dated photo just to add to the mystic. I would run a mile (kilometre).
 
John100156 said:
Yes, of course, that's precisely what I would do; or even a UK boater like me that wants to keep their boat in the Med..! Just be good to see changes to this grossly unfair double VAT penalty, I don't think anyone will ever convince me otherwise!

Then all we need to change is the 90/180 rule ;)
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Those were all part of what a small majority voted for apparently! Actually, nobody was asked to vote on leaving the single market/customs union so the obvious solution would be to rejoin those. Is that what you had in mind?
 
A majority never the less...! Nooooooooo, we're out now, we just need to get on with it, or wait for all the others to join us :)

They just need to sort out the 90/180 rule, so I can spend longer and hence more of my very hard earned UK tax paid free cash, in the EU...!
 
John100156 said:
A majority never the less...! Nooooooooo, we're out now, we just need to get on with it, or wait for all the others to join us :)

They just need to sort out the 90/180 rule, so I can spend longer and hence more of my very hard earned UK tax paid free cash, in the EU...!
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Agree. Spare a thought for those poor Europeans who can only spend 90 in 180 days in the UK:unsure:
 
gordmac said:
Those were all part of what a small majority voted for apparently! Actually, nobody was asked to vote on leaving the single market/customs union so the obvious solution would be to rejoin those. Is that what you had in mind?
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It was very clear from the start that leaving meant leaving the single market and customs union as staying in them would mean accepting all the EU rules without having any say in how they are made. In the phrase of the time "no cherry picking".
 
The MED
.....still trying to work out why anybody would want to spend anytime in an airport lounge with 180 other people all desperately trying not to sneeze or cough, all clutching a flowtest and wondering how many times they will be wearing the same underpants cos taking a weeny bag tripled the cost of that "cheap flight" :)
Sorry forgot, they have just cancelled all the flights and no refunds either, if it was under £100.00 forget getting it back from the credit card company and of course it will be less than the excess on the flight insurance.
Might wander down to the boat later , the sun is out.
Chio.
 
Tranona said:
It was very clear from the start that leaving meant leaving the single market and customs union as staying in them would mean accepting all the EU rules without having any say in how they are made. In the phrase of the time "no cherry picking".
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Not according to the leading lights of the leave campaign at the time.
 
oldgit said:
The MED
.....still trying to work out why anybody would want to spend anytime in an airport lounge with 180 other people all desperately trying not to sneeze or cough, all clutching a flowtest and wondering how many times they will be wearing the same underpants cos taking a weeny bag tripled the cost of that "cheap flight" :)
Sorry forgot, they have just cancelled all the flights and no refunds either, if it was under £100.00 forget getting it back from the credit card company and of course it will be less than the excess on the flight insurance.
Might wander down to the boat later , the sun is out.
Chio.
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Is for those precious moments like changing your elbow joints in the sunshine or doing an oil change or two. That’s my memories of a week in the last two years….keeps me going yer know! :sneaky:
 
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