VAT Question - No original Bill of sale available

[robbieg]

Did they quote the peice of tax law that gives them these powers?

They can't just make up the law but seem reluctant to point to the act of parliament or statutory instrument that gives them this power. If your correspondance is ongoing you might want to ask them the question.

There is a good thread with input from JFM on the mobo forum who is,apparently a tax specialist and seems to thing the law doesn't exist.....

 

[Tranona]

And what is your scenario?

 

[slipknot]

Exactly!

Although they seem quite happy to do so. /forums/images/graemlins/confused.gif

 

[Ariadne]

If it is sold by two private individuals then no VAT is due as will have been deemed to have been paid at the point of original sale. However if you are buying from a company then VAT will be due on the sale, the seller is responsible for the VAT due not the purchaser.

My boat was built in South Africa in 1981, no original bills of sale, no VAT status, the company that built the boat has ceased to exist; so in effect no VAT trail is existing. My boat was imported into the UK before the VAT cut off time, and I have the original stamped HMCE document to prove this. So I think I'm lucky here.

We have been in the Med' and Morocco over the last 2 years and have never been asked for proof of VAT paid. But then we do have an old scruffy looking boat

Don't worry about it and enjoy your boat, while we still have our freedom to do so.

 

[LadyJessie]

[ QUOTE ]
I believe this is a non-issue. The RYA have tried to find evidence from members that they have been interrogated over the matter but this seems to have fallen flat.

[/ QUOTE ]Agree. This is a non-issue if you have a 'normal old boat'. Nobody will bother you. I have never heard of anyone with a <40ft boat being questioned anywhere, if they did not arrive on something that was obviously very new. It will be different if you arrive on a larger yacht. I have been crew on a classic 65ft Swan built in 1981 that has been checked for VAT by customs in Spain and France on several occasions. The potential VAT bill could have been around 200,000 euros so you would understand why the customs people just did their job.

My summary: if you enter the EU on a Swan 651 or similar; make sure you have all your papers in order. Otherwise; relax. It is not an issue for our 'normal' boats.

 

[rhumlady]

Recent articles in mags referring to boats being boarded by HMRC men in black have pointed to the owners being asked if they had VAT documentation and advising that it would be advisable to have it.

 

[PeterGibbs]

Moodysabre has given you all you need - in official terms.

In reassurance terms, the chances of getting into some sort of discussion on the continent over VAT paid for a boat of this vintage is almost zero. As a UK registered boat, the blokes over there take the (unofficial) view that it's up to the UK authorities to sort out VAT on such an obviously not new boat.

In terms of satisfying whoever may next purchase your boat, that's something else. Get all the evidence together you can for that purpose.

PWG

 

[Tranona]

You simply tell them that you don't have it and they will advise you to have it and that is the end of the conversation unless they have grounds for thinking you are involved in a VAT fraud or suspect that you are importing a boat from outside the EU which is liable for VAT. There is no evidence that anybody has been pursued further than having the question asked because, as has been said many times it is not an offence not to have a VAT receipt. Has anybody ever been asked to show an original VAT receipt for their car? VAT on cars operates in exactly the same way as VAT on boats - or any other transaction that is subject to or potentially subject to VAT. VAT fraud can involve any goods and probably boats would not be first choice because of their high individual value and visibility.

 

[LadyJessie]

[ QUOTE ]
as has been said many times it is not an offence not to have a VAT receipt.

[/ QUOTE ]Wrong! You need to be able to prove that VAT has been paid (or 'deemed' paid) on your boat when moving within EU countries. Failure is a punishable offence. That the enforcement of this requirement is not usually pursued does not have any indication of its applicability. Failure to prove VAT paid status could lead to a large penalty for you, on top of the actual VAT payment. Again, this does normally only relate to big yachts so please relax if you have a 'normal' yacht. Just want to ensure that there is no further mis-information on this issue.

 

[bbg]

[ QUOTE ]
Wrong! You need to be able to prove that VAT has been paid on your boat when moving within EU countries. Failure is a punishable offence.

[/ QUOTE ]
Punishable under which statute? Can you give us a reference to a specific section?
The most articulate discussion of this by a tax expert was on the mobo forum several weeks ago, and I took from that discussion that objects do not attract VAT, and cannot have a "VAT paid" status. The only things that attract VAT are events - a sale or an importation. And in that case, the party to the event is responsible for remitting the VAT. A later owner cannot be liable for the VAT, because he was not a party to the event.

 

[gavin_lacey]

Even an invoice does not prove that the revenue have recieved the tax. Companies going bust, fraudulent etc. The claim that is sometimes made that the responsibility lies with the current owner of the goods does not seem to hold for other types of goods so why should it for boats? I have been asked the VAT status on various harbour forms in both spain and portugal but have never been asked to prove it.

 

[LadyJessie]

[ QUOTE ]
Punishable under which statute? Can you give us a reference to a specific section? The most articulate discussion of this by a tax expert was on the mobo forum several weeks ago, and I took from that discussion that objects do not attract VAT, and cannot have a "VAT paid" status. The only things that attract VAT are events - a sale or an importation. And in that case, the party to the event is responsible for remitting the VAT. A later owner cannot be liable for the VAT, because he was not a party to the event.

[/ QUOTE ]Those are several questions; lets start with the 'punishable under what statue?; that is easy, the statue of 'tax-avoidance'. VAT payable rules are pretty clear and avoidance is an offence.

Your second part is more difficult to respond to. To say that VAT is only triggered by 'events' might not be the best usable description. 'Objects' like boats do attract VAT. In relating boats' exposure to VAT payment; it usually is initiated by a sale/purchase situation and/or an import into the EU, or an intra-EU movement. It will always be subject to possible VAT payment exposure in those 'events'. YOU are responsible for the VAT exposure at that time, irrespective of who was the original owner at some earlier 'event'. Normally, nobody would bother with a 'normal' yacht in these intra-EU situations; but you need to be careful when bringing a yacht into the EU. Your old own yacht is 'normally' not as issue, but you need to have your papers in order when bringing in 'new' and 'big' yachts.

 

[rogerthebodger]

Since when has tax avoidance become an offense. Tax evasion is the offense.

If tax avoidance related to VAT is an offense who has committed the offense, it IMHO the VAT registered person who is responsible for collecting the VAT on the transaction. This is a "VAT registered seller" not the purchaser.

In normal business a VAT registered seller will get a VAT audit to ensure is is complying with his VAT collection obligations. Have yow of any one had the VAT man come into your home and reguest you to prove you have paid VAT on the TV or video you have in your house or the car in your garage ?

If as you suggest the purchaser may have committed an offense in UK and most EU countries it has to be proven that YOU have committed the offense of tax evasion and not up to you to prove that you have not.

I am building a boat at the moment and will not have a bill of sale but do have a big box of invoices/receipts for all the items purchased to prove VAT has been paid. Do I need to carry all the invoices with me and is the HMCR going to do through all of then to determine that I have paid VAT on every single item fitted to my boat, including items purchased in the UK on which I paid UK VAT but not RSA VAT and items imported from the UK on which I have not paid UK but RSA VAT

As for confiscation of your boat that would need a court order not just the wim of at HMCR official.

 

[gjgm]

Those are several questions; lets start with the 'punishable under what statue?; that is easy, the statue of 'tax-avoidance'. VAT payable rules are pretty clear and avoidance is an offence.

******
Maybe I have this wrong, or maybe you dont know what you are talking about.
Surely tax avoidance is perfectly legal. Tax evasion isnt.

 

[Tranona]

You have raised an interesting issue about self-built boats. The HMRC advice currently is that yes, you do have to keep all the original receipts with the implication that if you don't you will have to pay VAT on the boat when it goes into service. However, if you bought all the materials in the UK from conventional trading sources, by definition you will have paid VAT!

Building your boat in South Africa from a mix of UK and local sourced materials raises another issue if you wish to import it permanently into the EU. In theory you would have to pay VAT on its value, but I guess you could argue for a reduction in value equivalent to the materials on which you have already paid UK/EU VAT! You would also be in an interesting position with regard to the CE mark (broadly compliance with the RCD). Home built boats are exempt in the EU provided they are not "put into service" ie sold to another party until 5 years after completion.

Something to think about!

 

[bbg]

[ QUOTE ]
Those are several questions; lets start with the 'punishable under what statue?; that is easy, the statue of 'tax-avoidance'. VAT payable rules are pretty clear and avoidance is an offence.

[/ QUOTE ]

I'm not saying you're wrong, but you certainly haven't done anything to convince me you are right. "Tax Avoidance" is not a statute. When I asked for you to support your assertion with reference to a statute, I was hoping you would be able to come up with something like - "Section 247.3, paragraph (d) of the Value Added Tax Act (1982) reads as follows: --------"

Your vague reference, and your belief that "tax avoidance" is a statute only serves to undermine you position, not support it.

I suggest you read ALL of jfm's posts on this thread.

If you can support your position any better in light of jfm's extremely persuasive discussion (i.e. with specific reference to statuts) I am sure we would all be delighted to be enlightened.

But for my part (and I am no expert), I find jfm's discussion convincing.

 

[Tranona]

Waste of time, bbg, in trying to get Lady Jessie to ever support his wild statements with facts. He has no idea what he is talking about as evidenced by his posts on this thread.

So best to ignore him - advice given to me by other regular forumites!

 

[rogerthebodger]

I cane across this document Vat collection and control procedures in member countries, a report to European parliament.

have not read at all but this did catch my eye was the premise is that tax evasion is fraud which I agree and fraud is a criminal offense which must be proven in a court of law. IMHO HMCR or other tax authorities are just flying a kite for trying to "demand" proof of VAT payment in an attempt to extract extra VAT on a pretext of non proof of VAT payment in the past with threats of confiscation which is "extortion" which is also a criminal offense.

Now there was a discussion a little while ago where a British yacht visiting Holland was "fined" for red diesel in his tanks and "frog marched" to a cash machine to pay the 'fine" or face confiscation of his yacht. It turned out that the Dutch authorities were completely wrong and in fact and apology was given and published on this fora. This IMHO shows the disregard of tax authorities to their own rule in an attempt to extract extra revenue from unsuspected sailers in particular.

 

[rogerthebodger]

I just used that as an example and I don't intend to permanently import my boat into the UK of EU.

My business is import/export customs duty and VAT so I tend to know most of the normal procedures in moat of the major trading countries of the world.

The UK have a very difficult way of reclaiming VAT paid on personal export of VAT paid goods which means the UK supplier who should refund the VAT on production of proof of export either does not of charges such a large commission that it is not worth trying. In South Africa you get your VAT back cone checked for you flight out of South Africa in cash at the departure airport.

That is why IMHO HMCR do, lets call it,stretch their own rules to HMCR advantage.

This means I could end up paying VAT twice once in the UK and also in RSA on arrival.

 

[kenp]

So, i have a steel self built boat 10 years completed. I didnt keep receipts. A lot of the gear was bought second-hand, ie 1973 Volvo engine, mast and boom about 1980. The boat plans were originally drawn 30 or 40 years ago. It would be impossible to say when the boat was built. How fearful should I be about taking it outside the UK. If confronted about the VAT whilst abroad I was able to produce a piece of paper passing as a bill of sale from joe bloggs 25 years ago should I be confident this would be acceptable.