VAT Paid Status - What can you prove ?

CPD

CPD

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Final stages of purchasing a 1987 vessel where the original invoice is missing. I have been sent a copy of a letter from HMR&C referring to another vessel headed "Documents required to prove the VAT status on a used vessel", and I replicate it in full here :

Dear x,
With reference to our meeting dated xxxxx, I can confirm that the "Agreement for the Sale and purchase of a second hand yacht" and the "Bill of Sale" are satisfactory evidence to meet the conditions as set out in notice 8 para 6.3 "Sailing your pleasure craft to and from the United Kingdom", which states that "if you are unable to provide any of the documentationmentioned in the Notice, whilst cruising within the EU, you should carry a Bill of Sale (between two provate individuals in the UK). hilst this is not conclusive proof that VAT has been paid, it does indicate that tax status is the responsibility of UK customs.

The second page of the agreement, paragraph 1, Purchase Price, states that "the evndor is not a registered person for the purpose of the regulations relating to Value Added Tax and Value Added Tax is therefore not payable on the purchase price and the Bill of Sale also demonstrates that the sale is between two private individuals.

If I can be of further assistance, please do not hesitate to contact me.

Your Sincerely
yyyyyyyy



The fact that this letter comes from the horse's mouth so to speak is somewhat encouraging, but it essentially says that it is a UK VAT issue (Bill of sale between 2 UK people) and that the individuals are not liable to VAT and therefore HMR&C is happy.

I would have thought that more concrete proof would be required, or am I worrying too much ?.

Has anyone else been faced with a similar situation (lots I would have thought), am I worrying too much, and should I be doing anything else before proceeding ?

Thanks as usual.
 
Do a site search on JFM VAT and learn all you ever wanted to know about the subject. In my view it boils down to:

1. Many brokers and finance houses say you need the original VAT invoice.
2. HMRC say you should have original VAT invoice or at least bill of sale btwn to UK individuals.
3. No one seems able to point to the law that says you must prove a boat is "VAT paid" whatever that means-see JFM's and others comments-if you agree with this you need nothing.
4. In practice unlikely to have a problem in UK waters (ask HMRC to tell you which statute requires you to have any evidence boat is VAT paid!) but overseas who know what the local customs office will do but little to know evidence of a anyone having a problem with a 20 year old boat.

My own view is HMRC and the RYA and the "industry" have blown this issue out of all proportion-it is a risk in buying a boat but a very minor risk.
 
Agree, don't worry about it. HMRC have no way of knowing for certain that VAT has ever been "accounted for" on an old boat, even if you have a VAT invoice. This is because the responsibility of accounting for it lies with the VAT registered vendor (Builder, Dealer) who do not have to record the VAT against a specific identifiable boat, nor have to keep any records of any sort after 6 years.

Their weasel words, which are at odds with their advice that you should have this document, are only saying that as they have no way of checking, it is really of no consequence to you. This is because, as they say a Bill of Sale between two private individuals means no VAT is involved.

Experience suggests that in the normal course of events, foreign officials are also not interested in VAT receipts for a British yacht.

So, relax and enjoy!
 
The problem remains that some/many buyers want proof that VAT has been paid.

My broker, here in Malta, asked me a while ago for Proof of CE Compliance, and VAT paid, amongst other things.

I "think" I can prove that VAT has been paid, but I dont have anything relating to CE.

I am guessing that the broker asked for the info because it makes it easier to satisfy a buyer of the provenance.... or lack of the info has caused him problems in the past.

So it seems that it is OK to swan around without proof that VAT has been paid, when you come to sell, it could be an issue.
 
As Richard_44 says the issue only comes when you come to sell again.
The Bill of Sale implies that it is a matter for HM Customs.
The fact that this saga has been running so long is a sad reflection on the ability of HM Customs and the RYA to get their respective ducks in line. /forums/images/graemlins/confused.gif
Do as I do and DEMAND a letter from HM Customs in Bristol to deem that VAT has been paid. The key issue is that if it hasn't, they should be coming after you.
 
and did you get your letter from your DEMAND ? And if so, based on what documents you may have sent them?
 
i am in exactly the same boat (as it were )having gone round in circles for 3 weeks and still no proof , i have decided to proceed with the sale. it just was not going anywhere , i am also going to keep all the corespondance to demonstrate to anyone who cares to look that i have tried to get to the bottom of the VAT issue with the boat i will soooon own .

I suspect that due to the age (1989) of the boat i will have more pressing matters to deal with, in regard to maintenance once ownership kicks in
as others have said the next time it will be an issue is when next sold so enjoy in between

michael
 
Got to smile at " Has anyone else been faced with a similar situation (lots I would have thought), am I worrying too much, and should I be doing anything else before proceeding ?" If we had any sort of search system, you'd have 50 pages of answers to this question.

What UK customs say carries weight in the UK but not in anywhere else. Try quoting their response to French customs and see where you get.

The standard acceptable document is the original copy or the receipted vat invoice from the boat builder and then a document chain from that invoice to you. But that doesnt mean that you cant prove vat status by a collection of other docs, and there are issues about when the boat was built and where it was at certain dates.

As far as I can gather, VAT status is only likely to come up when you irritate the foreign customs in other respects such as lack of registration docs, insurance - or there's something specific like the UK govt has upset the Greeks (as happened with Bosnia et al apparently). Certainly I've never been asked for vat documents and I've yet to read of anyone who has.

Will it affect resale?
 
Did you get a response to your DEMAND?

The reason I ask is because there are only two situations I know where they could actually do this. The first is with yachts built prior to 1985 and were in use in the EU in 1992 (see A3 of the RYA FAQs on VAT). In the early days of this saga HMRC did issue confirmation of status for such yachts if one had the evidence. However they stopped doing this years ago because they realised that there was no real certainty about this "deemed VAT paid status".

The second situation is where a yacht is privately imported and HMRC collect the VAT directly. Presumably they would keep a record of the payment and be able to provide a copy of the receipt. However, in law there is no requirement to keep any VAT records longer than 6 years.

Therein lies the nub of the VAT "problem" The responsibility for "accounting for" VAT lies with the VAT registered vendor. In the normal course of events HMRC never sees the receipt, never mind keeps any record.

So you can DEMAND all you like - for something that does not exist!
 
Only for your information:
Last summer I was asked twice for V.A.T. documents in France and also immediately after our arrival in the Netherlands. I was very glad that I could show them a copy of the original Bill of sale. By the way our boat is from 1991.
 
Interesting. Does the Bill of Sale include a VAT receipt. I think here the practice is that they are separate documents.

I wonder whether your nationality has anything to do with the request, because the experience for UK yachts is that it is not common to be asked for evidence of VAT if you have the correct Registration documents as this shows that VAT is not their concern but the UK authorities.
 
My Bill of sale shows V.A.T.. In addition I do have a letter from the shipyard (builder) which confirms that V.A.T. has been fully paid at the V.A.T. office. My boat has a German registration. But I don't feel that this could be a specific reason for the authorities because I haven't been the only one who was checked. And I don't see this as an unfriendly act - it's their job....
 
Your experience is very different to mine.

I have been to France, Belgium and Holland every year, on a few trips per year, for the last 9 years. Have been asked for documentation on maybe 3 or 4 occasions, and never asked for proof of VAT paid status.

Most of these trips have been on new, or nearly new motor boats of quite considerable value.
 
Well, it is not actually their job. VAT seems to be the responsibility of the state where the Boat and owner reside - although that in itself is unclear. The official advice from our HMRC is that other states will not pursue VAT issues related to British boats.

This does not mean to say that they won't investigate if they think that an offence may have been committed in relation to VAT. However, not having a receipt is not an offence!
 
yea, the question should be, do I need to be able to prove VAT has been paid?
Trouble is, that isnt what people ask.. they ask, HOW can I prove.
 
We deal with this on a weekly basis and there really is no simple answer. I have even been told directly by HMR&C that the rules for VAT which are applied in the UK are only transitional and carry no bearing elsewhere in Europe. One thing to not about an earlier comment about CE proof. This is actually a legal requiremt for any boats built sold or imported into the UK after a specific date. So beware the cheap American Bargain
 
My boat was originally sold new in Dublin, by BJ Marine to Mr. 'X'.

The Bill of Sale says:

.......In consideration of the sum of one pound and other considerations Paid to me/us by:

Mr 'X'......

No sign of even the price, never mind the VAT /forums/images/graemlins/smile.gif

When it was sold again in 2002, it was again sold for one euro plus other considerations

Seems to be an Irish thing as, when it was next sold in Wales, the full price is on the Bill.

Fortunately, I have an Irish Revenue letter stamped to confirm that "All Duties Have Been Discharged....... " .

The thing that niggles me is that the above document is in the name of Lady 'B', and subsequently "Puffin", but I am now called Rogue /forums/images/graemlins/frown.gif
 
Trarona,
Here you are defenitely wrong! It doesn't matter where the boat ist registered nor whether you are British, French or whatever...
The registration is no prove that V.A.T has been paid. By the way - if you buy a boat in the Med there is no possibility to pay V.A.T. in the UK. V.A.T can only be paid in that country where the boat is pysically located.
If you are not able to prove in an EU country that V.A.T. has been paid for boats younger than 1985 your boat will be kept as long as the outstanding V.A.T. has been paid.
I've bought already several boats in different European countries. The first thing I'm interested in is a correct paper documentation. And belief me, especially broker tryed to cheat me with faked papers....
 
One thing that particularly galls me is that, when my father wanted to register Puffin, (as she then was), Part 1, he had to provide a trail back to first ownership, including VAT paid status, (hence the Irish Customs documents in my file).

If we are required to prove that VAT and all other duties have been discharged before we can be Part 1 registered, why wont the MCA confirm VAT paid for all Part 1 registered vessels.
 
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