VAT - possible solution ?

[Boo2]

Importing a boat from outside the EU is a chargeable event and the person doing the importing is liable, but the unpaid tax is a charge against the boat until it is paid. That is why it is so important to check with the history of the boat that it has always been in the EU. If it has not you need to carry out further checks.

With respect, Tranona, the test for deemed VAT status is in use before 1985 + being in EU waters on 31 December 1992 (Note: not 29th Dec 1992, nor 1st Jan 1993 but the specific day Thursday 31st Dec 1992), or otherwise originally VAT paid + it has never been imported by a different person from the exporter if it has ever left EU waters.

And I am interested to know what collection of papers, other than the entire ships log, signed on every page, could ever hope to prove that second proposition ?

Hence the desire to have a record on the boat that the current owner paid VAT on the transaction which transferred ownership to him/her. This does not, of course, alleviate any charge that a (hypothetical) historical fraudulent transaction might have incurred, but it is elementary beaurocrat psychology that officialdom will be satisfied by such a piece of paper.

Whether that amounts to £17 grands worth is debatable, but that boat is out of my league anyway, and £17k will pay for more hours of a soliciter's time than the VAT on any boat I am likely to buy.

In any case there is no requirement to produce papers older than 6 years in support unless there is a reasonable suspicion of fraud. However one might feel different sitting on the quay in a foreign land forbidden to set foot in a boat which is costing you the equivalent of £30 to £100 or more a day to moor + your hotel bills + a solicitor's fee of umpteen pounds an hour for the advice "I know you are right, but it will be easier and cheaper just to pay them..."

Boo2

 

[Boo2]

Prepared to risk the wrath by going off topic

I wasn't going to reply to this but istm John Champion has nailed the reason why brokers will probably not want to get involved, so my original reason for staying on topic has gone now.

Surely another imaginary problem troll from the same inventive mind as the earlier one about putting a hinge in a keel stepped mast

You mean this hinge ? If you care to cast your eye over the original post in that thread you will see that I started off by asking how to unstep a keel stepped mast without assistance. The fact that I got such an inventive and unexpected solution tells me that quesions are good, and helpful replies even better.

so that the imaginary yacht could go under an imaginary bridge to its imaginary mooring.

The bridge was/is the (non) swinging bridge at Southease (just N of Newhaven), the mooring was/is in Lewes (unfortunately I discovered it is not easily reachable by a displacement yacht so no use to me), and the boat was sold the day before I phoned to put an offer in.

Hardly worth wasting time on?

Well, honey, you know what to do...

Boo2

 

[Tranona]

With respect, Tranona, the test for deemed VAT status is in use before 1985 + being in EU waters on 31 December 1992 (Note: not 29th Dec 1992, nor 1st Jan 1993 but the specific day Thursday 31st Dec 1992), or otherwise originally VAT paid + it has never been imported by a different person from the exporter if it has ever left EU waters.

And I am interested to know what collection of papers, other than the entire ships log, signed on every page, could ever hope to prove that second proposition ?

Hence the desire to have a record on the boat that the current owner paid VAT on the transaction which transferred ownership to him/her. This does not, of course, alleviate any charge that a (hypothetical) historical fraudulent transaction might have incurred, but it is elementary beaurocrat psychology that officialdom will be satisfied by such a piece of paper.

Whether that amounts to £17 grands worth is debatable, but that boat is out of my league anyway, and £17k will pay for more hours of a soliciter's time than the VAT on any boat I am likely to buy.

In any case there is no requirement to produce papers older than 6 years in support unless there is a reasonable suspicion of fraud. However one might feel different sitting on the quay in a foreign land forbidden to set foot in a boat which is costing you the equivalent of £30 to £100 or more a day to moor + your hotel bills + a solicitor's fee of umpteen pounds an hour for the advice "I know you are right, but it will be easier and cheaper just to pay them..."

Boo2

You have answered your own question. If you are a good faith buyer of a yacht from a private EU resident then no VAT is involved. He signs a Bill of Sale saying that it is free. No problem.

The point I was making about HMRC stopping issuing any kind of "certificate" was that there is no need for such a thing. So why are you worrying about it now?

As to being forbidden to use your boat at a foreign quayside, this is absolute nonsense. It just does not happen to ordinary people. It might happen if you are Flavio Briatore and have your boat registered in the Cayman Islands, claim that it is a charter boat, but swan around Europe as if it is your own without paying VAT. Then the Italian authorities might impound it and slap you with a bill for 1.5m Euros. But they could not give a toss about you or I unless there us something clearly wrong, such as pitching up with a boat you bought in the States last week for which you have no paperwork.

Direct your energies towards the important issue which is buying a sound boat.

 

[Pagetslady]

If I sail into Granville from St Helier on Jersey are you saying the French customs are not allowed to see proof that my boat has had Vat paid or was first sold before Dec 1992 I recall going to a great deal of trouble getting a load of stuff from the Customs Yacht team back in 1992 when i purchased my boat because i was going to France to prove it was Vat paid. I also thought that if you take a boat to France without paying Vat on it at purchase then it would Attract Vat in that country at their Vat rate.
Mike

 

[nimbusgb]

If I sail into Granville from St Helier on Jersey are you saying the French customs are not allowed to see proof that my boat has had Vat paid or was first sold before Dec 1992 I recall going to a great deal of trouble getting a load of stuff from the Customs Yacht team back in 1992 when i purchased my boat because i was going to France to prove it was Vat paid. I also thought that if you take a boat to France without paying Vat on it at purchase then it would Attract Vat in that country at their Vat rate.
Mike

If you have proof of current British registration then the VAT status of the boat is about as much business of the French customs man as the VAT status of your car if you drove it over there or your clothes should you happen to be wearing any over there.

 

[Tranona]

If I sail into Granville from St Helier on Jersey are you saying the French customs are not allowed to see proof that my boat has had Vat paid or was first sold before Dec 1992 I recall going to a great deal of trouble getting a load of stuff from the Customs Yacht team back in 1992 when i purchased my boat because i was going to France to prove it was Vat paid. I also thought that if you take a boat to France without paying Vat on it at purchase then it would Attract Vat in that country at their Vat rate.
Mike

As Nimbusgb says, if you have a BofS that shows you prurchased the boat outside France they will not be interested.

However, the French authorities are more active in that part of the world because there is much more opportunities for offences (not just VAT) because of the proximity of a non-EU state and an EU state. Temptation to buy a boat in the CI and keep it in France to avoid French taxes might be one!

Similar issues arise at other points in the EU eg Spain/Gibraltar, Italy/Croatia, Greece/Turkey.

You are right that in the early days there was a lot of hot air about VAT certificates, partly because the legislation was new, but the world has changed since then and it is now, for most people a non-issue.

 

[jfm]

Coming late to this, sorry, Boo2

I agree all the other general comments that this amounts to paying unnecessary tax and the broker is now the seller so liable for quality/performance of the boat under SOGA etc, but as per your instructions I'll ignore those aspects

As a matter of VAT law what you propose can be done. The broker is selling the boat in the course of a trade and can elect out of the margin scheme so would then be selling a £100k boat for £83k plus £17k VAT. That will produce the magic piece of paper, namely a VAT invoice, albeit at the alarming cost of £17k, which buyer/seller/both have to bear. It's also £17k more than it would cost you to obtain (lawfully) that piece of paper if you really knew what you were doing, but as per instructions I'm sticking to your narrow question, and answer (a) yes it can be done but (b) I've never heard of a broker doing it

But that's all your plan achieves. A piece of paper, for £17k, and the related "saleability" that goes with that piece of paper. The problem with all this increased "saleability" is that it is not rooted in law. It's merely in the eyes of ignorant beholders.

So if this £100k boat had, 3 years previously when it was worth £150k (say), been illegally imported into UK from say Jersey, it is still smuggled, and your magic piece of paper is now looking not such good value at £17k. If HMRC discover the smuggling they want 17.5% x £150k = £27k. The primary obligor is the smuggler but being a criminal he has probably conveniently disappeared and the £27k debt is (by operation of law) mortgaged on the boat. So having done your scheme whereby £17k is voluntarily handed over to HMRC the new owner would now get a bill for another £27k. The payment of the £17k does not cleanse the boat of the £27k problem.

You see, all this misinformation on yacht VAT that you read on forums misses one vital point. The ONLY VAT that can be assessed on an innocent subsequent owner of a 2nd hand boat is VAT avoided by smuggling that boat into the UK. That particular VAT is by law mortgaged on the boat. But your scheme does nothing to cleanse the boat of that risk.

Hence we're back where we have always been, which is check the boat's history and form a view on whether it is smuggled, and other than that don't worry. And don't go paying £17k thinking it cleans up the boat's VAT history. Only pay £17k if the price you put on the future "saleability" of the boat is £17,001 or greater. Personally I'd never put that price on it but then I would manage VAT altogether differently

 

[Boo2]

Hi jfm, Thanks for your very interesting remarks. The following is not in the order you posted :

The payment of the £17k does not cleanse the boat of the £27k problem.

OK, this is another nail in the coffin, but it does not entirely remove the point in respect of saleability in the eyes of as you say "ignorant beholders", which must include me for starting this thread

It's also £17k more than it would cost you to obtain (lawfully) that piece of paper if you really knew what you were doing

I'm very interested to hear how that can be done ?

The ONLY VAT that can be assessed on an innocent subsequent owner of a 2nd hand boat is VAT avoided by smuggling that boat into the UK. That particular VAT is by law mortgaged on the boat.

Is VAT due at first purchase not also mortgaged on the boat, can you tell me ?

Personally I'd never put that price on it but then I would manage VAT altogether differently

I'm most interested to hear how ?

Boo2

 

[jfm]

OK, this is another nail in the coffin, but it does not entirely remove the point in respect of saleability in the eyes of as you say "ignorant beholders"

Yes I agree that, and said so. Debatable whether it's worth £17k, but yes indeed it does make the boat more attractive to buyers, AOTBE

I'm very interested to hear how that can be done ?

No doubt you are, but you said to stick to the narrow question, so I did Seriously, I wouldn't explain that kind of thing on open forum. Tax law is way too complex and folks would get wrong ideas

Is VAT due at first purchase not also mortgaged on the boat, can you tell me ?

No, not under Uk law. The only VAT that is mortgaged on the boat automatically by law is import VAT that is paid when the boat is imported to UK from outside the EU. VAT on importation and VAT on an ordinary purchase in the UK have different legal status in a number of respects, including this one

I'm most interested to hear how

The rules are very complex