Vat Paid Invoice????

[wasnotwas]

Hi im looking at trading by boat in for an aquador 28c the guy selling the aquador has asked me for a vat paid invoice i bought my boat second hand and dont seem to have this what is the best way to obtain this invoice or because when i bought my boat second hand maybe i wouldnt have this invoice thanks in advance

 

[Nautibusiness]

If the Aquador is with a dealer / broker then he will be able to help you track down a "Certified Copy" of the original invoice when the boat was supplied from the original dealer or you / he can go back to previous owners and ask if they still have the invoice.

In theory, the owners of any boat produced from 1985 onwards should be able to produce a VAT invoice for the boat. Either from when it was new or from when it had it's first private (not for commercial purposes) sale.

The idea being that there is a very slim chance (in the UK a slim chance, far greater in Spain, France etc) that Customs may ask for proof of VAT payment. If you cannot prove VAT has been paid on the vessel they can ask for it to be paid there and then. The amount to pay will be based on the valuation on the day that Customs ask you.

In addition, if the boat is to be sold out of the UK then a VAT invoice will almost definitely be required when the boat is imported to her new home.

It is not the end of the world if you cannot produce this invoice, but the buyer will very sensibly try and negotiate off the VAT element as a "just in case" provision for the future.

What is the current boat and how old is she?
Do you know where she came from originally?

Tom

 

[gjgm]

Hi im looking at trading by boat in for an aquador 28c the guy selling the aquador has asked me for a vat paid invoice i bought my boat second hand and dont seem to have this what is the best way to obtain this invoice or because when i bought my boat second hand maybe i wouldnt have this invoice thanks in advance

I assume you are trading in with a dealer, not with a private individual. so its perfectly fair that he will require proof of VAT, as he will be expected to have those docs when he sells your boat. After all, its his reputation theoretically on the line.
Assuming your boat is another manufacturer, your only chances are
1. the previous owner (unlikely, I reckon)
2. seeing if the original importer/dealer can raise a certified copy for you. (possible, only)

But, its not certain you will be able to produce either the original or a certified copy, depending on the history of the boat/dealership.
Do a search on the forum re VAT, especially posts by JFM, as consensus is that he does know the law, unlike most of us .
As regards your boat, if it stays in UK, it is highly unlikely any official will ever ask to see such a doc, but it doesnt stop buyers/sellers wanting the paperwork. If all goes sour, you might do better selling privately, where a private buyer may not be so concerned over the original invoice.
BTW, if I understand correctly, a second/third etc private buyer cannot be liable for VAT on a previous transaction in the UK, so the idea of reducing by selling price by VAT is a bit tenuous.
Edit: dont waste any time on HMRC.. they seem to have even less idea than anyone else.You wont make ANY progress there, at all.

 

[Nautibusiness]

BTW, if I understand correctly, a second/third etc private buyer cannot be liable for VAT on a previous transaction in the UK, so the idea of reducing by selling price by VAT is a bit tenuous.

Not liable for a previous transaction, but potentially liable on the day.
Therefore, if the boat was worth £200K, but is now only worth £100K then you may (in theory) be able to negotiate £17,500 off the price.
This is not a dead cert, but a possibility and not all sellers will accept it. I'd suggest that for those that "need" to sell, they work hard to find the docs.
Like I said initially, the dealer will gladly help you if he can. It's in his interest to make sure there is accurate paperwork and clear title, not least to allow him to complete the sale of the new boat and then make life straight forward in selling the old one.

 

[wasnotwas]

thanks for all replies iam dealing with a private buyer im based in northern ireland and he is based in southern ireland any more thoughts based on the locations?

 

[Nautibusiness]

thanks for all replies iam dealing with a private buyer im based in northern ireland and he is based in southern ireland any more thoughts based on the locations?

1) Make sure you get all the correct paperwork from him!
2) What is your current boat?
3) Do you know it's full history down to who supplied it from new? If you do, tell us and I'll try and help (PM or phone).

Tom

 

[Tranona]

The idea being that there is a very slim chance (in the UK a slim chance, far greater in Spain, France etc) that Customs may ask for proof of VAT payment. If you cannot prove VAT has been paid on the vessel they can ask for it to be paid there and then. The amount to pay will be based on the valuation on the day that Customs ask you.



Tom

Whatever gives you that idea? That is simply not the case. It not an offence not to have a receipt. There is no way that HMRC (or any other customs authority) can arbitrarily demand VAT from a private citizen just because he does not have a receipt. And there is no evidence that customs in France, Spain or any other European country is in the least bit interested in VAT evidence - indeed in law they have no jurisdiction of VAT matters on a boat owned by a UK resident.

The only way HMRC can require a VAT payment from a private citizen is if that person imported a boat from outside the EU, in which case the individual is responsible for paying duty and VAT.

 

[Tranona]

thanks for all replies iam dealing with a private buyer im based in northern ireland and he is based in southern ireland any more thoughts based on the locations?

In theory it is irrelevant that you and the buyer are in different EU states, the rules are the same. You can get details of the VAT rules from the RYA site.

You are not alone in not having the receipt. There is no legal requirement to have it, but because HMRC advise that in the event of a dispute (with them) the only evidence of payment they will accept is the original invoice, people assume that you have to have one.

When you sell a boat either to a trader or a private individual there is no VAT. If the trader subsequently sells it he has to account for VAT on his profit - but that is not your concern.

If your boat is fairly recent and you can trace it back to the original dealer or builder there is a chance you might be able to get a copy of the original invoice. However, the chances are the original seller is no longer in business, and anyway there is no legal requirement for him to keep records for longer than 6 years.

The only possible complication is if the boat was originally imported into the EU privately when the individual is responsible for paying VAT. If it was not paid that is an offence and could in theory lead to you having to pay the duty and VAT. However, this is highly unlikely as HMRC would only pursue if they belief an offence has been committed - and they have better things to do!

If your Bill of Sale when you bought the boat gives you title free of any encumbrance this should be enough to convince your buyer that there is no problem with lack of VAT evidence, but at the end of the day you have to agree a price with him to do the deal.

 

[Nautibusiness]

Whatever gives you that idea? That is simply not the case. It not an offence not to have a receipt. There is no way that HMRC (or any other customs authority) can arbitrarily demand VAT from a private citizen just because he does not have a receipt. And there is no evidence that customs in France, Spain or any other European country is in the least bit interested in VAT evidence - indeed in law they have no jurisdiction of VAT matters on a boat owned by a UK resident.

The only way HMRC can require a VAT payment from a private citizen is if that person imported a boat from outside the EU, in which case the individual is responsible for paying duty and VAT.

Starting to get out of my depth and certainly only wishing to offer sound advice so I have pinched this directly from the ABYA (Association of Brokers and Yacht Agents) website.

I hope they don't mind me "borrowing" it as it is in a public section of their site and there for advice purposes.

Page reads:
VAT
This page contains general information only. Any queries should be made to HMRC's National Advice Line – 0845 010 9000

Boats being used in the EU should have VAT-paid status unless they are just visiting (see right). The original VAT invoice, from when the boat was either first bought in the EU or when it was imported from outside the EU, is usually sufficient evidence. A boat that is VAT-paid but is sold outside the EU loses its VAT-paid status and therefore VAT must be paid if the boat is brought back into the EU.

The above requirement applies to all boats built or brought into the EU since 1 January 1985, or on the joining dates of States that have become EU Members since then. Boats already in EU Member States and territories on 1 January 1985 pre-date the requirement.

The evidence of VAT-paid status will generally be an invoice, showing the VAT element and a VAT number, or similar document, such as a completion statement. Boats sold between companies should show the VAT element on the invoice. Some EU states (notably Holland) ask for the original invoice, but otherwise a certified copy kept on board should be adequate. Keep the original and a couple of certified copies safely elsewhere. It is vital to pass this information on when the boat is sold, as it may be requested by Customs officers in either the UK or elsewhere in the EU.

In the case of home-builds and fit-outs, copies of all the major invoices should be kept and passed to subsequent owners to show VAT-paid status. Customs Notice 8, para 6.3 sets out further details.

Please note that HMRC do not have copies of individual VAT invoices from boat builders, dealers or other boat sales transactions.

Any queries should be referred to HMRCs National Advice Line – 0845 010 9000. If they seem unsure, ask for the matter to be referred to the HMRC Unit of Expertise on Yachts. Request any advice in writing, keep it with the boat's documentation, and pass it on to any subsequent owners.

 

[gjgm]

As I ve already said, dont bother calling the advice helpline,-unless they have updated their opinions.
The issue comes down to whether you will ever be asked to prove the VAT status of your boat to HMRC (lets just stick to UK, for a moment). Now, fair enough, HMRC must then have a list of documents that they will accept as proof, and that is about all the info they can hand out.
What no one asks them is whether, and if so in what circumstances, they would ever ask for such proof. And what happens if you, as a second/third owner cannot offer such documents.
Well, nothing happens, and they never ask, except perhaps where the current owner is somehow implicated in VAT fraud, but that is a different ball game, surely.
So, the only reasons you might need the original VAT invoice are
1. to appease a future buyer
2. to placate some misinformed official abroad (EU), and help speed you on your way.
So it is a useful document, but it hardly merits 17.5pct discount on the price.

 

[jfm]

from the ABYA (Association of Brokers and Yacht Agents) website.

Alas it is typical of the lightweight rubbish that passes as definitive VAT analysis, from many sources. Just cos they're the ABYA it doesn't mean they know about VAT.

For starters, their opening sentence "Boats being used in the EU should have VAT-paid status unless they are just visiting" is not correct. The word "should" is imprecise (do they mean "must", on threat of some heinous penalty, or just "it would be awfully nice if..."?) but it any case it is perfectly lawful under many scenarios (not just "visiting") for boats to sail in EU waters without VAT being paid on the purchase price or value of the boat.

And as for the idea you'll get a definitive/impartial/correct/reliable-upon answer from the 0845 number, perleeese! Where do ABYA get the idea that folks who have got law degrees and studied/practised the law in depth, or whatever, work in 0845 call centres, ffs?

For OP, as a general guide to boats and VAT, there was a fairly decent article in MBY about 4 months ago. It was far better than anything on the ABYA website

 

[Tranona]

This is standard stuff derived from HMRC advice. However, if you do a search on these fora you will find this subject has been done to death. Also the RYA, in its efforts to persuade HMRC to be more realistic in its advice has conducted surveys among members and has failed to find any cases of random "inspection" never mind demands for payments. HMRC advice is just that and they make it clear on their official documents that it is not the law, just their interpretation, which has yet to be tested.

This does not mean to say that some owners may have to prove to HMRC that they have paid VAT. Home builders and individuals who have privately imported a boat from outside the EU are the two most common examples. A prudent buyer would also want to see this evidence if here was anything in the boat's history to suggest it had spent some time outside the EU. Otherwise if the boat is straightforward, as gigm says it is a nice document to have but not essential. In my case, I keep my receipt because I bought my boat in Greece and I can show HMRC (if they ever asked) that any VAT issues were the responsibility of the Greek revenue.

 

[jfm]

As I ve already said, dont bother calling the advice helpline,-unless they have updated their opinions.
The issue comes down to whether you will ever be asked to prove the VAT status of your boat to HMRC (lets just stick to UK, for a moment). Now, fair enough, HMRC must then have a list of documents that they will accept as proof, and that is about all the info they can hand out.
What no one asks them is whether, and if so in what circumstances, they would ever ask for such proof. And what happens if you, as a second/third owner cannot offer such documents.
Well, nothing happens, and they never ask, except perhaps (i) where the current owner is somehow implicated in VAT fraud, but that is a different ball game, surely; or (ii) if they come across evidence that a previous owner smuggled the boat into the UK
So, the only reasons you might need the original VAT invoice are
1. to appease a future buyer
2. to placate some misinformed official abroad (EU), and help speed you on your way.
So it is a useful document, but it hardly merits 17.5pct discount on the price.

Spot on gigm, and I took the liberty of a little edit above in bold

 

[Deleted User YDKXO]

As I ve already said, dont bother calling the advice helpline,-unless they have updated their opinions.
The issue comes down to whether you will ever be asked to prove the VAT status of your boat to HMRC (lets just stick to UK, for a moment). Now, fair enough, HMRC must then have a list of documents that they will accept as proof, and that is about all the info they can hand out.
What no one asks them is whether, and if so in what circumstances, they would ever ask for such proof. And what happens if you, as a second/third owner cannot offer such documents.
Well, nothing happens, and they never ask, except perhaps where the current owner is somehow implicated in VAT fraud, but that is a different ball game, surely.
So, the only reasons you might need the original VAT invoice are
1. to appease a future buyer
2. to placate some misinformed official abroad (EU), and help speed you on your way.
So it is a useful document, but it hardly merits 17.5pct discount on the price.

You've missed one important reason to have an invoice showing VAT has been paid and that is because marine mortgage companies ask for it and I guess the reason they ask for it is because it has a bearing on the value of the boat and thus how much they will lend on it. I know we've discussed this ad infinitum in the past and I know our learned friends on this forum have a legal viewpoint which is undoubtedly correct but, personally, I still wouldn't buy a boat being sold as VAT paid without an original or certified copy of an invoice showing somebody has paid VAT on the boat at some stage, even if they've subsequently claimed it back. With so many boats on the market and most with proof of VAT paid documents, nobody needs to buy a boat without this anyway. As for misinformed foreign officials, yes it's fine and dandy to theorise about how misinformed they are but try arguing that position with the Spanish Guardia Civile as some boat owners in the Balearics had to last summer. And just to throw something else in to the pot, it's no secret that HMRC are looking at every which way to increase tax take at the moment and, IMHO, it's not beyond the bounds of possibility that some bright spark in HMRC thinks it may be a good idea to try to bully some boat owners into coughing up some VAT in the future. After all it's open season on rich people and anybody who's got a boat is by definition rich, of course. All doomongering I know but why take the risk for the sake of not bothering to get a simple piece of paper?

 

[Tranona]

All doomongering I know but why take the risk for the sake of not bothering to get a simple piece of paper?

As usual Mike you are imagining things that don't exist! If somebody was able to "claim back" VAT they would be VAT registered. Therefore when they sold the boat they would have to charge VAT and account for it. Failure to do that is an offence committed by them, not the buyer.

There is no evidence that HMRC is pursuing private individuals for "unpaid VAT" simply because as you know from all that has gone before that is not possible in law except in very narrow circumstances, mostly related to private imports - and there the offence is clear, even if the subsequent action of HMRC is not so clear.

As to a "simple piece of paper" - it is anything but. Firstly it has no status in law, secondly there is no legal requirement to have it and finally there is no obligation for the body that issues it, ie the VAT registered trader, to keep records for more than 6 years. Hardly a simple piece of paper if you don't have it and need to get it.

Your point about finance companies requiring it is well made - but there is no legal reason why they should need to see it - just their prejudice, just as they have other prejudices in making their lending decisions.

 

[saltwater_gypsy]

And there is no evidence that customs in France, Spain or any other European country is in the least bit interested in VAT evidence .

Incorrect I'm afraid.
French Customs have regular swoops in Norther France to check if VAT free purchasers from the Channel Islands have overstayed their 185 (?) days welcome and are liable for residents taxation.

 

[jfm]

Incorrect I'm afraid.
French Customs have regular swoops in Norther France to check if VAT free purchasers from the Channel Islands have overstayed their 185 (?) days welcome and are liable for residents taxation.

That's interesting becuase it has been asked on here many times whether anyone has reliable or first hand knowledge of French (or other) douanes actually asking for VAT invoices, and generally the answer is "no". Are you saying you have that first hand or highly reliable knowledge from a reliable source (as distinct from a 35th hand internet urban myth)?

It's an interesting angle becuase a CI resident taking boat to france has 18months (not 185 days) before he has to pay VAT. Of course none of them would stay that long when the trip home is so close. So spot checks by douanes would generally be fruitless, and anyway it wouldn't be VAT invoices they want to see cos there wouldn't be any. It would be proof the boat has been back to CI sometime in the last 18mths

Alternatively if the douanse are looking for French folk who have bought in CI and sneakily smuggled the boat to France then that might be fruitful, depending on how widespread such a crime is - not very, you'd expect. And there is no 185 day grace period - the VAT is immediatley payable in these cases

Anyway, I'd be really interested to hear if you have quality first hand knowledge (non hearsay) of douanes regularly asking for VAT invoices in France

 

[Tranona]

In an earlier thread on this subject there was a contribution from a Dutch person saying their customs routinely asked to see proof of VAT. However, it seemed that they were only interested in Dutch citizens, which suggests there is a problem with importation of boats without paying VAT, or VAT avoidance schemes.

On the more general subject of customs activity, it is not surprising that the French are more active on their western seaboard as this is more open to illegal activity, including avoiding VAT. It is the same wherever there is close proximity of states with different tax regimes - Gibraltar and Spain, Italy and the Adriatic states are other examples where differing tax regimes in neighbouring countries may make smuggling attractive.

However it is stretching it to suggest the French Douanes are targeting UK owned yachts for VAT offences where they have no jurisdiction anyway.

 

[Deleted User YDKXO]

As usual Mike you are imagining things that don't exist! If somebody was able to "claim back" VAT they would be VAT registered. Therefore when they sold the boat they would have to charge VAT and account for it. Failure to do that is an offence committed by them, not the buyer.

There is no evidence that HMRC is pursuing private individuals for "unpaid VAT" simply because as you know from all that has gone before that is not possible in law except in very narrow circumstances, mostly related to private imports - and there the offence is clear, even if the subsequent action of HMRC is not so clear.

As to a "simple piece of paper" - it is anything but. Firstly it has no status in law, secondly there is no legal requirement to have it and finally there is no obligation for the body that issues it, ie the VAT registered trader, to keep records for more than 6 years. Hardly a simple piece of paper if you don't have it and need to get it.

Your point about finance companies requiring it is well made - but there is no legal reason why they should need to see it - just their prejudice, just as they have other prejudices in making their lending decisions.

Firstly, Tranona, apologies for being pedantic but you are wrong on 3 counts regarding your statements on VAT. If a new boat is being exported out of the EU, VAT may be reclaimed by an individual without being VAT registered. Secondly, if a boat on which VAT has been reclaimed is owned by a VAT registered company, it may be sold to another VAT registered company in another EU country without VAT being charged on the invoice. Similarly, if a boat on which VAT has been reclaimed is owned by a VAT registered company and it is sold to an individual outside the EU, again VAT does not have to be charged.
My point about finance companies is nothing to do with legalities or prejudice. Whether or not VAT is paid is pertinent to the value of a boat and quite obviously a finance company has to make a judgement on the value of a boat before lending money on it. Simple sound business practice
Yes I said I was doomongering about HMRC and VAT on boats but as I said why take the risk when it's so easy to buy a boat with proof of VAT paid documentation?

 

[Tranona]

Firstly, Tranona, apologies for being pedantic but you are wrong on 3 counts regarding your statements on VAT. If a new boat is being exported out of the EU, VAT may be reclaimed by an individual without being VAT registered. Secondly, if a boat on which VAT has been reclaimed is owned by a VAT registered company, it may be sold to another VAT registered company in another EU country without VAT being charged on the invoice. Similarly, if a boat on which VAT has been reclaimed is owned by a VAT registered company and it is sold to an individual outside the EU, again VAT does not have to be charged.
My point about finance companies is nothing to do with legalities or prejudice. Whether or not VAT is paid is pertinent to the value of a boat and quite obviously a finance company has to make a judgement on the value of a boat before lending money on it. Simple sound business practice
Yes I said I was doomongering about HMRC and VAT on boats but as I said why take the risk when it's so easy to buy a boat with proof of VAT paid documentation?

In the examples in your first paragraph, any boat that left the EU and VAT was either not paid or reclaimed, and came back is liable to VAT and the person who imports it is responsible. Nothing new there. If a VAT registered company (say a charter operator) was able to treat VAT as an input tax, as most do, then sold the boat to a private owner he (the seller) would have to account for VAT and there would be a VAT invoice for that transaction. If he did not accout for it correctly, he has committed the offence and not the buyer.

As to finance houses, there is no rational reason why they should need to see proof of VAT, unless there are grounds for believing there has been an offence, for example an imported boat. I can undertand their reluctance as the HMRC "advice" does not appear to have been tested, so it is easier for them to hide behind that. I suspect they lose very little business, because as you say it is "easy" to buy a boat with the full documentation, if the boat is relatively new and probably high value. Like you I would be suspicious of a lack of documentation, simply because that might suggest all is not right elsewhere. But there are still thousands of boats where the owners do not have that "proof" and will never be able to get it, but there is nothing to suggest that VAT was not paid.