VAT Paid and then......

[derekbland]

If VAT is paid on original purchase in the UK and is then taken to a non EU VAT state, how long is it before it loses it's VAT status? I seem to think I read 3 years and then somewhere else 7 years. Does anyone have the definitive answer?

 

[Tranona]

If VAT is paid on original purchase in the UK and is then taken to a non EU VAT state, how long is it before it loses it's VAT status? I seem to think I read 3 years and then somewhere else 7 years. Does anyone have the definitive answer?

Read the section on returned goods in HMRC VAT Notice No8

3 years is stated as "normal" but as you will see it is not definitive. The key thing, though, is that the relief can only be claimed by the same person who takes the boat outside the EU. If it changes hands outside then relief is not available and VAT is charged on import. This is why any boat leaving the EU becomes potentially liable for VAT on return.

 

[derekbland]

Read the section on returned goods in HMRC VAT Notice No8

3 years is stated as "normal" but as you will see it is not definitive. The key thing, though, is that the relief can only be claimed by the same person who takes the boat outside the EU. If it changes hands outside then relief is not available and VAT is charged on import. This is why any boat leaving the EU becomes potentially liable for VAT on return.

Thank you. So in summary, if the boat was taken form the UK but has not had longer than 3 years in a non-VAT state and, the vessel has not had relief (refund) of VAT back to the owner and, the boat has not been sold outside of an EU VAT state and, provided I purchase it in a an EU VAT registered state then the VAT paid status should remain in place. I think that is what I glean form your post and HMRC VAT Notice No8.

If I have got any of that wrong please advise.

 

[Tranona]

Thank you. So in summary, if the boat was taken form the UK but has not had longer than 3 years in a non-VAT state and, the vessel has not had relief (refund) of VAT back to the owner and, the boat has not been sold outside of an EU VAT state and, provided I purchase it in a an EU VAT registered state then the VAT paid status should remain in place. I think that is what I glean form your post and HMRC VAT Notice No8.

If I have got any of that wrong please advise.

Correct, except that there is no refund of VAT if a boat leaves the EU unless it is a new boat under the sailaway scheme for an EU resident. Such a boat then becomes liable if it is imported into the EU.

The usual scenario is that an owner takes his VAT paid boat out to go cruising, or to base it in a non EU country such as Montenegro or Turkey and subsequently wants to either return or sell the boat. That is what the relief is designed to facilitate. So to avoid paying VAT again it should have a record of being back in the UK within the time limit, and if sold the sale should take place in the EU. It can be useful to make trips periodically back into the EU as the clock starts from the time it last left. So a trip to Greece for example with a record of doing it restarts the clock.

When considering a boat with a chequered history like this you have to assess it on the facts and the documentary evidence.

 

[derekbland]

Correct, except that there is no refund of VAT if a boat leaves the EU unless it is a new boat under the sailaway scheme for an EU resident. Such a boat then becomes liable if it is imported into the EU.

The usual scenario is that an owner takes his VAT paid boat out to go cruising, or to base it in a non EU country such as Montenegro or Turkey and subsequently wants to either return or sell the boat. That is what the relief is designed to facilitate. So to avoid paying VAT again it should have a record of being back in the UK within the time limit, and if sold the sale should take place in the EU. It can be useful to make trips periodically back into the EU as the clock starts from the time it last left. So a trip to Greece for example with a record of doing it restarts the clock.

When considering a boat with a chequered history like this you have to assess it on the facts and the documentary evidence.

Fantastic, thank you. The boats history isn't chequered as there is a chronological order of where the boat has been. It has not been in the non-VAT state for more than around 2 years 2 months and would be moved to an EU country to complete the transaction.

Unfortunately, I have just received an email stating the owner would not be prepared to pay for anything coming out of survey. I agreed very close to the asking price based on a turnkey solution or very close to. Based on this, I am not going to risk the expense of the trip, lift, survey, move home over a number of visits, the cost of flights travel etc. It is now not so attractive.

Thanks again.

 

[DavidJ]

So under the sail away scheme could you pay VAT in UK then go to a lower VAT EU country and claim a rebate
What happens if you return to the UK

 

[Tranona]

So under the sail away scheme could you pay VAT in UK then go to a lower VAT EU country and claim a rebate
What happens if you return to the UK

The whole point of the sailaway scheme is to avoid paying VAT if you intend using the boat outside the EU. It is not a rebate. The supplier is still responsible for charging VAT, but if the buyer complies with the rules when the boat leaves the EU the supplier cancels the VAT. He may well, though ask the buyer to indemnify him for example through a bond with a bank just in case he does not actually export the boat.

If the boat returns to the EU it is liable for VAT, but at the current value, not the original purchase price. The value may, of course be substantially less so the VAT will be lower.