VAT paid status expires 1st Jan 2021 for UK registered boats kept abroad long term . 30,000 boats probably affected

[Auryn]

This was sent out to all CA members and if true is shocking news for anyone , engaged in long term cruising abroad or who has an ex charter boat in Greece for example that doesnt return to UK Dear member, I am writing to you about an issue that will affect most CA members. Her Majesty’s Revenue and Customs (HMRC) has decided that UK-owned boats returning to the UK post-Brexit, i.e. after the transition period ends on 31st December 2020, will be deemed to be imported and VAT will be payable unless a relief from VAT payment is available. The main relief available is the Returned Goods Exemption. This requires that goods (including yachts) are re-imported within three years of export. To make matters worse, HMRC decided in September that the rule would be applied rigidly from the end of the transition period on 31 December 2020. This would mean that yachts that have been out of the UK for more than 3 years on 31 December 2020 and yachts bought in the EU which have never been in the UK would lose UK VAT paid status. Given that it was announced in September this year, this was farcical. HMRC has now relented to a small extent and a period of one year’s grace has now been granted for yachts that have been located in the UK at some point but yachts which have never been located in the UK will still lose UK VAT-paid status on 31 December 2020 which is ridiculous. We think there are up to 30,000 UK boats scattered throughout the EU at the moment, many in Greece and Croatia. The least we are asking of HMRC is that the three year period should start from 31st December 2020 and that the Relief should be available for yachts which have never been located in the UK, but even that is unsatisfactory. Hitherto, in practice boats could leave the UK and sail for as long as they wished, for example round the world, to the Caribbean or just in Europe. HMRC were not interested when they returned and in the vast majority of cases there was no suggestion of additional VAT being payable as long as it was the same person returning the yacht and the yacht had not been significantly improved. We would like to maintain the status quo. The change in attitude by HMRC is unacceptable. The CA is fighting it but I would like you all to write to your MP expressing your extreme disapproval of HMRC’s new policy. I have attached a letter written by RATS that you may wish to use. I am also taking this opportunity to remind members that voting for the CA in the “Outstanding Achievement” category in the 2020 British Yachting Awards closes on 15th of this month. Our nomination reads: “Years of campaigning led to a crucial victory that means fishing pots have to be clearly marked in Scottish waters. The association is now continuing its campaign to bring this to the rest of the British Isles.” To vote go to https://www.britishyachtingawards.com/vote-now/ Julian Dussek CA President

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[JumbleDuck]

How many of the boats in Greece or Croatia will their owners ever want to bring to the UK? Why should "returned goods relief" be available to goods which are not, in fact, being returned?

 

[Baggywrinkle]

How many of the boats in Greece or Croatia will their owners ever want to bring to the UK? Why should "returned goods relief" be available to goods which are not, in fact, being returned?

Because legally they are in the same customs area as UK based boats until 31.12.2020?

There is also a precedent set when a country joins the EU which states that the "import" which is the trigger for the taxable event, occurs on the day when the new country acceeds to the EU - and all boats in that country are deemed to be imported on that day.

You would think that going in the opposite direction, the "export" would be deemed to be the day when the UK splits its customs area from the EU customs area. This is probably how the EU will handle EU boats in the UK.

Brexit has however enabled the UK to "take back control" and the HMRC are no longer bound by any precedents set by the EU - they can decide whatever they want - looks like they've decided to screw British boat owners.

I guess most UK boat owners with boats in the Med would be unlikely to bring the boat home, and can sell it, VAT Paid in Europe, but if it's your pride and joy and you did intend to bring it home, this is a very cruel decision IMO.

 

[JumbleDuck]

There is also a precedent set when a country joins the EU which states that the "import" which is the trigger for the taxable event, occurs on the day when the new country acceeds to the EU - and all boats in that country are deemed to be imported on that day.

You would think that going in the opposite direction, the "export" would be deemed to be the day when the UK splits its customs area from the EU customs area.

Which would be at midnight on 31.12.2020, would it not, as seems to be the case?

I guess most UK boat owners with boats in the Med would be unlikely to bring the boat home, and can sell it, VAT Paid in Europe, but if it's your pride and joy and you did intend to bring it home, this is a very cruel decision IMO.

It is certainly unfortunate in those circumstances.

 

[prv]

Which would be at midnight on 31.12.2020, would it not, as seems to be the case?

If I've understood correctly - which I may not have, it's not something that concerns me greatly - no it wouldn't.

If the end of the transition period counted as export, these people would have the next three years to bring their boats back and count them as "Returned". Instead, HMRC are counting the export as having happened (and hence the three-year clock having started) whenever the boat physically left the UK. If that was before 2017, they're already too late to come back as "Returned", and if it was between 2017 and now, the period to get it back is correspondingly shortened.

Pete

 

[Sandy]

Why is it shocking? The UK voted to leave the EU we must now deal with the consequences.

 

[JumbleDuck]

If I've understood correctly - which I may not have, it's not something that concerns me greatly - no it wouldn't.

If the end of the transition period counted as export, these people would have the next three years to bring their boats back and count them as "Returned". Instead, HMRC are counting the export as having happened (and hence the three-year clock having started) whenever the boat physically left the UK. If that was before 2017, they're already too late to come back as "Returned", and if it was between 2017 and now, the period to get it back is correspondingly shortened.

Pete

Ah, right, I see what you mean. That does seem rather unfair.

 

[webcraft]

This is pretty small beer for most cruisers compared to the loss of free movement.

- W

 

[[163233]]

If that was before 2017, they're already too late to come back as "Returned"

If they got it back before the end of the withdrawal agreement that won't be a problem.

We will likely have to rely on inept implementation..

 

[johndove]

Just book and pay for a berth for the yacht in UK over the new year. Keep the receipt with dates and name of yacht. Then let the inland revenue prove a few years later it wasn't on berth at that time.

 

[Buck Turgidson]

what about a Yacht that was VAT exempt due to age?

 

[Graham376]

This is pretty small beer for most cruisers compared to the loss of free movement.
- W

£8k VAT on a £40k value boat or £15k on a £75k boat, which have already paid UK VAT isn't "small beer" as far as most folks are concerned.

In reality, very few of the total number of UK boaters or tourists want to be or, can't be in Europe for more than 3 consecutive months so, loss of freedom of movement is only an issue for a minority.

 

[Graham376]

Just book and pay for a berth for the yacht in UK over the new year. Keep the receipt with dates and name of yacht. Then let the inland revenue prove a few years later it wasn't on berth at that time.

Even cheaper, OCR someone else's invoice

 

[prv]

In reality, very few of the total number of UK boaters or tourists want to be or, can't be in Europe for more than 3 consecutive months so, loss of freedom of movement is only an issue for a minority.

Depending on the airport, having to queue up with the Chinese and the Africans instead of breezing through the auto-gates could be a significant embuggerance if you travel regularly. Both times I went to Duesseldorf the non-EU queues looked extreme and I’d probably have missed the last train if I’d had to stand in them.

Pete

 

[awol]

Why is it shocking? The UK voted to leave the EU we must now deal with the consequences.

Surely England and Wales. The sanest part of the UK was somewhat agin the idiocy, as was Noriron

 

[RichardS]

Why is it shocking? The UK voted to leave the EU we must now deal with the consequences.

Indeed. It's a small price to pay for all the benefits.

Richard

 

[Graham376]

Depending on the airport, having to queue up with the Chinese and the Africans instead of breezing through the auto-gates could be a significant embuggerance if you travel regularly. Both times I went to Duesseldorf the non-EU queues looked extreme and I’d probably have missed the last train if I’d had to stand in them.
Pete

Main hubs could be a problem but, passport control queues could be far shorter for non-EU passports at tourist destination airports.

 

[jbweston]

Why is it shocking? The UK voted to leave the EU we must now deal with the consequences.

The unfairness is that having paid VAT to the UK authorites once on buying their yacht they want it paid a second time when the owner brings it back into UK waters.

I'm sure many of us get a bit fed up with those who tell us on leaving the EU we must now deal with the consequences. It was because we want the consequences that some of us voted to leave - if there were no consequences what would would be the point of choosing to leave?

That doesn't mean we want consequences which are (a) entirely within the UK government's control, and (b) require us to pay tax twice over and (c) will simply encourage us, when the time comes to sell our boats, to do it within the EU, giving the work and business to EU yards and brokers.

It would be different if we had got a VAT refund when the boat left the UK, or if it had been supplied VAT free for export. But to charge us VAT twice is barmy.

 

[Goldie]

It’s a big - and cruel - hit for those wanting to go on an extended cruise. Anyone wishing to spend a few years cruising away from U.K. - Med? Caribbean? RTW? - now faces a stark choice between having to return to U.K. within 3 years of leaving, or get stung for VAT again on return.

 

[TernVI]

The unfairness is that having paid VAT to the UK authorites once on buying their yacht they want it paid a second time when the owner brings it back into UK waters.

....

That has potentially always been the case when you take any goods out of the country for more than 3 years.

It doesn't seem that unreasonable in most cases, that if you've not brought your boat back in the last 3 years because it's permanently based in say Greece, then you've basically permanently exported it. It remains "VAT paid" in the EU and you can sell it anywhere in the EU in the future, so you or anyone else can carry on using it in the same way as you've been doing for the last 3+ years.