VAT question and feeling a bit uneasy

[lexa777]

Hi everyone, I'm thinking to buy my first boat and I think I have found one that I like. I have read up quite a lot on VAT on the forums (the boat is from '86 so needs one unfortunately). I understand that many older boats don't have the original VAT receipts due to being lost over the years so I'm happy to consider one without the original proof, as long as I'm aware of this and the price is adjusted accordingly. My main concern is basically a resale value as many buyers will ask for this paperwork and may try knocking the price down if I don't have the originals... I may also sail in Europe (Spain, Greece, Croatia, Turkey, etc) a lot so having the right paperwork will not hurt (although I read its rarely an issue on older boats).

So here is the problem... The broker has said that the boat has VAT paid, but when he showed me the VAT receipts, those were fresh photocopies. I did question him about this but he went on about the boat age and that I'm unluckily to find any other boats of similar age with the originals and that those copies are absolutely fine (he even offered to laminate them for me so they look more official!). He said that he also has a contact at the HMRC that may be able to confirm if those are acceptable. He also said that the copies he showed me might be the originals as it's hard to tell due to the age.

I mean... If I'm honest, I feel a bit uneasy by what he is saying. First I don't understand when or who made those copies. The paper feels new, like they were printed yesterday. I have looked at other older documents and I can tell by the paper if it's 20-30 years old.

I have asked if they would consider making a discount on the price for not having the original VAT receipts (as I mentioned earlier, I believe this could affect the price when I wish to sale the boat) and he basically said that those copies are the proof of VAT paid and I have no grounds asking for price reduction and went on again that most boats of the same age don't have the originals.

Any thoughts on this? I'm I just being difficult/paranoid or maybe there are grounds for concerns?

P.S. The previous owner is a Trust, so it will not be a private individual to private individual sale. No sure if this matters but thought to mention.

P.P.S. Sorry for a long essay

 

[MoodySabre]

Send a copy to HMRC special unit and get their take on it.
I don't think that you will get a reduction in price. I'd live with it for a boat 34 years old.

 

[Irish Rover]

Consider yourself lucky the broker doesn't charge you for the photoshopping

 

[lexa777]

I get a lamination for free too! ?

 

[Beneteau381]

I get a lamination for free too! ?

In some med countries they dont like photocopies, smarty pants can use several different pieces of paper, tippex and a photocopier to make up copies of docs. a bit like cut and shut cars. Similarly, they dont like laminated copies, it can hide a multitude of sins.

 

[duncan99210]

From next year onwards the VAT status of U.K. yachts visiting EU countries will be irrelevant as we will no longer be part of the system.... HMRC will not be interested in a 34 year old yacht based in U.K. or arriving from the EU. It’s a non issue.

 

[Irish Rover]

From next year onwards the VAT status of U.K. yachts visiting EU countries will be irrelevant as we will no longer be part of the system.... HMRC will not be interested in a 34 year old yacht based in U.K. or arriving from the EU. It’s a non issue.

I wouldn't like to bet anything valuable that things will change next year. The Transition Period could last for years despite what the dearly departed gentleman in the ditch has said.

 

[Phildorset]

I have had the very same query this week (did post something on here too), I had a contact number for a marine VAT chap who assisted me two years ago on a seperate matter, spoke to him this week, he said (as mentioned by another above) that they at revenue / customs would have no interest in the vat proof of a boat that is nearly 30yrs old and only worth £15k ish... obviously such a conversation holds no legal value, but it has put our mind at rest enough to continue in such an instance.

 

[lexa777]

Thanks for the replies everyone. As said, I'm not too worried about the UK as I have not heard anyone else having any serious issues with older boats. What I'm mostly worries is the Med, I have lived for many years in Greece (not on the boat) and I know that police and officials there can make your life difficult if they want to, so not having all the right docs is a bit of a gamble.

Also as many buyers ask for original proof (just like myself now), if I decide to sell the boat in few years time I may be asked the same questions by the new buyer.

My biggest issue is I don't think I trust the broker. He really tries to downplay the importance of this document and basically says that this is 100% proof of VAT paid. He is also not sure if they do have the originals, or if the the freshly made photocopy is the original? If he was upfront from the start and said they only have photocopies this would be much less of an issue. There were also other major discrepancies in the Ad, with the actual engine year being 4 years older then specified and the hours almost 6000 versus the stated 2000 (the engine is 14 years old).

 

[jwilson]

Ultimately there is virtually no absolute proof of VAT status of an older boat even if you have what was definitely the original receipted invoice showing VAT paid, though how you'd prove that it actually was the original is difficult. VAT paid status might have been lost by a transfer of ownership outside the EU, or in various other ways involving transfers of ownership through a business.

In practice for older boats photocopies are a lot better than no evidence of probable VAT status, not that anyone is likely to ever want to see it except the next twitchy buyer. And as others have said if we finally actually leave the EU your EU VAT paid status will probably go with it. HMRC simply do not want to know, unless you bring a US or Channel Islands based superyacht permanently into the UK.

 

[Baggywrinkle]

If the owner is a trust, how long will they be around after the sale?

One option is to take the VAT receipts on face value and write into the contract of sale that if the VAT reciepts turn out to be insufficient and VAT is subsequently charged, then the Trust are liable to pay it. Get the seller to sign and you're covered as long as the trust exists and has the funds to pay.

I agree with the other posters that on a boat of that age and value, no-one will care .... the VAT men are only really concerned with more expensive boats where avoiding VAT is a big revenue issue.

If Brexit goes through as expected then the boat will be VAT unpaid in the EU, but it doesn't matter because you will not be an EU citizen (as long as you don't have citizenship of an EU country) and you will be able to sail your VAT unpaid boat in the EU without a problem under a temporary import.

 

[HunterWanderer]

Its quite usual that old boats do not have original Vat paperwork but a UK bill of sale is sufficient.. See
https://www.rya.org.uk/sitecollecti...O DO IF YOU DO NOT HAVE DOCUMENTARY PROOF.pdf
To expect a reduction in price if you are buying from a UK seller because it hasn't got a vat document dating back to when it was first sold is rather unrealistic. If you find a boat from a UK seller where the price is comparable then thats the market value. Up to you if you want to buy it.

 

[lexa777]

Cheers for providing a link to that document. I think I had seen it a while back but could not find it again. The only problem is that it says about a bill of sale between two private individuals which is not what is happening in my case, hence I'm not sure if that's a good proof.

Its quite usual that old boats do not have original Vat paperwork but a UK bill of sale is sufficient.. See
https://www.rya.org.uk/sitecollectiondocuments/legal/Web Documents/Legal Leaflets/Members Advice/VAT/VAT WHAT TO DO IF YOU DO NOT HAVE DOCUMENTARY PROOF.pdf
To expect a reduction in price if you are buying from a UK seller because it hasn't got a vat document dating back to when it was first sold is rather unrealistic. If you find a boat from a UK seller where the price is comparable then thats the market value. Up to you if you want to buy it.

 

[jwilson]

Even if you buy through a broker the actual bill of sale is almost always between two private individuals. Probably 95%+ of brokerage sales are thus.

There are exceptions -

1. Where the brokerage actually owns the boat. This is very rare, and only usually where they are also a new boat sales agent and have taken it in part-exchange to make a sale of something much more expensive. Unlike used car traders brokers generally don't own boats.

2. Where they have been commissioned to sell a boat owned by another business.

 

[lexa777]

Hi jwilson, I think your 2nd point is what is happening, the owner is a business (a Trust).

Even if you buy through a broker the actual bill of sale is almost always between two private individuals. Probably 95%+ of brokerage sales are thus.

There are exceptions -

1. Where the brokerage actually owns the boat. This is very rare, and only usually where they are also a new boat sales agent and have taken it in part-exchange to make a sale of something much more expensive. Unlike used car traders brokers generally don't own boats.

2. Where they have been commissioned to sell a boat owned by another business.

 

[duncan99210]

You say the boat is owned by a trust. Is this a large organisation, likely to have bought the boat from new? If so, then there is a vague possibility that the trust was VAT registered and might have been able to reclaim the VAT. However, if that were the case then there would be a paper trail in existence showing this. From what you describe, it seems the trust is a second or subsequent owner, so the VAT status when she was bought by them is the equivalent of a personal sale, as is the subsequent sale to you.
Given the circumstances you outline, this is a complete none issue. Old boat, relatively small value = no interest in UK from HMRC. Outside UK little chance of interest between now and 31 Jan 21, none at all thereafter.

 

[lexa777]

Cheers everyone, turns out to be less of an issue then I originally thought ?

 

[zoidberg]

My biggest issue is I don't think I trust the broker.

So don't trust the broker..... who is acting in the interests of the vendor and himself, and certainly not you. Should he tell you something that is significant to you - such as stating the age and hours of the engine - then require/get that in writing over his signature. That will then form part of the contract and he can be held to account for any misrepresentation.

If he does not or cannot, then he is being deceptive.

Are you having a survey done for you by an independent surveyor who is a member of a prominent trade body? If not, I and others would counsel you to tread very warily - for your lack of experience of boats' problems and faults would be spotted in minutes by a broker. You need an opinion, IMHO, from someone skilled and experienced in making judgements on boats' condition and value.

Be very wary. A vendor's broker is not the right person in whom to place blind trust - as multiple tales on here over the years will attest.

 

[langstonelayabout]

My biggest issue is I don't think I trust the broker. He really tries to downplay the importance of this document and basically says that this is 100% proof of VAT paid.

If this is your gut feeling then trust it. Walk away from the boat as you will always have that as a niggling feeling for the duration of your ownership.

Certainly, there are many 'gifted artists' that are capable of producing good looking VAT paid certificates from long defunct boatbuilders but if you want certainty, this isn't the boat for you and well done for being that honest with yourself and others.

 

[GTom]

....but it doesn't matter because you will not be an EU citizen (as long as you don't have citizenship of an EU country) and you will be able to sail your VAT unpaid boat in the EU without a problem under a temporary import.

Resident. Citizenship doesn't matter for tax/VAT purposes. If you for whatever reason take up EU residency, you become liable to VAT immediately when bringing the boat to EU waters.