VAT Question (Not EU or Brexit related)

[Ceirwan]

Quick VAT question with hopefully a quick answer.

I'm interested in a vessel that's currently outside the UK (and the EU), its VAT paid with all the proof, its not been gone for 3 years yet.
What are the VAT rules if that yacht is sold whilst outside of the UK, would I be eligible for the full amount upon return if I sailed it back, or would the fact that it was originally VAT paid & was returning within 3 years make it exempt.

I'm interested in the letter of the law, rather that what I could hypothetically get away with.
Cheers

 

[Graham376]

If the owner or someone on his/her behalf brings it back, it retains VAT status. If you bring it back, VAT is due on value on arrival.

 

[dunedin]

You would also need to check out the new UK RCD / type approval rules as would be importing into the UK.
Logic doesn’t always apply here, as the fact that was type approved when last in the UK may not cut any ice.

 

[Ceirwan]

Thanks all.

Basically its an absolute pain. (an expensive one as well)

 

[Graham376]

Thanks all.

Basically its an absolute pain. (an expensive one as well)

There could be a possible solution for situations such as yours but it would depend on whether HMRC would see it as tax avoidance or tax evasion, the latter being illegal. You, as delivery crew, could bring the boat back on the present owner's behalf, he/she claims RGR and then the sale takes place after return to UK or EU, wherever it has VAT paid status.

 

[dunedin]

There could be a possible solution for situations such as yours but it would depend on whether HMRC would see it as tax avoidance or tax evasion, the latter being illegal. You, as delivery crew, could bring the boat back on the present owner's behalf, he/she claims RGR and then the sale takes place after return to UK or EU, wherever it has VAT paid status.

Yes, if the boat is close to the UK then the current owner delivering back to the UK pre sale is a good solution.
BUT things break and go wrong on delivery trips. Who pays for this? And people get buyers remorse, or otherwise change circumstances. So for the seller there are plenty of risks in this route that make selling to a buyer where the boat is currently located much less risky.

 

[Graham376]

Yes, if the boat is close to the UK then the current owner delivering back to the UK pre sale is a good solution.
BUT things break and go wrong on delivery trips. Who pays for this? And people get buyers remorse, or otherwise change circumstances. So for the seller there are plenty of risks in this route that make selling to a buyer where the boat is currently located much less risky.

You're quite right there could be problems and responsibilities would have to be sorted beforehand by binding agreement. OP doesn't say how far away the boat is from EU/UK, would be simple if somewhere such as Morocco to Spain or UK but back from Carib or further would be a different matter.

 

[Tranona]

Yes, the law is very clear at least on the VAT front. You have to look at each individual set of circumstances before deciding whether it is worth pursuing. If the boat is in the same ownership as when it left the UK then it can potentially return to the UK by claiming Returned Goods Relief and then sold in the UK as VAT paid. The return could be on its own bottom, by road/ship or by ship, provided the owner clears it through customs. Tou then have to work out whether the coat of doing that is worth it in relation to the boat's value to you, then get an agreement with the owner/seller that they are prepared to do this. There are many UK origin boats in the Caribbean for sale that could use this route (3 years no longer applies) but the cost of bringing it back far outweighs the extra value compared with selling as is.

 

[lustyd]

probably worth highlighting that the original post doesn't seem to indicate whether the present owner actually owned it when it was exported. If it's changed hands since export most of the above is irrelevant.

Also, does RGR apply to non-residents? This could be important too.

Finally, if the boat has undergone much work in the meantime that will also change things. Upgrades are not covered under RGR so if there's a new suite of electronics in theory that will need addressing. In reality I can't imagine anyone checks in such detail but the letter of the law was mentioned so...

 

[Ceirwan]

Lots of good info, thanks.
The owners did own it in the UK, they set off around the world & plans changed, sadly too far for a quick jaunt back.

 

[Graham376]

Also, does RGR apply to non-residents? This could be important too.

AFAIK, RGR applies to the goods, not the residence of the person who owns them. The goods are going back to the place where they are VAT paid in the same ownership. (post edited)

 

[Graham376]

Lots of good info, thanks.
The owners did own it in the UK, they set off around the world & plans changed, sadly too far for a quick jaunt back.

In which case I assume you are buying a very cheap boat with very expensive furnishings and accessories, which will be on a separate (undeclared) contract

 

[Ceirwan]

Well the standard contract is £1 and other considerations. But I don't think that would really wash with HMRC

 

[awol]

If the boat is in the EU you could try finalising the sale in Southern Ireland then sailing to Noriron before crossing to GB. But be quick, Rishi is going to solve the Irish question soon.

 

[ean_p]

As an aside....... do many people declare when they leave the UK or indeed when they return and apart from 'registration' what concrete records are there of ownership?
I have sailed over to Holland and Germany on many many occasions and never once 'signed' out or in on return to the UK.........

 

[st599]

As an aside....... do many people declare when they leave the UK or indeed when they return and apart from 'registration' what concrete records are there of ownership?
I have sailed over to Holland and Germany on many many occasions and never once 'signed' out or in on return to the UK.........

You're meant to use C1331 or the New Online WebForm.

 

[dunedin]

As an aside....... do many people declare when they leave the UK or indeed when they return and apart from 'registration' what concrete records are there of ownership?
I have sailed over to Holland and Germany on many many occasions and never once 'signed' out or in on return to the UK.........

On many occasions prior to 2020, or many occasions since then? Now you are legally required to declare departure from Uk and arrival back via the electronic 1331 process.
Whilst Border Force may not choose to intercept every lawbreaker, if they do discover somebody flouting the law they have very substantial powers to spoil your day - and future months in court.

 

[awol]

On many occasions prior to 2020, or many occasions since then? Now you are legally required to declare departure from Uk and arrival back via the electronic 1331 process.
Whilst Border Force may not choose to intercept every lawbreaker, if they do discover somebody flouting the law they have very substantial powers to spoil your day - and future months in court.

Sorry to be pedantic but part of the Irish situation is freedom from reporting if sailing from Noriron (still UK at the time of writing) to EU. Also no requirement to report if going from UK to Isle of Man. Probably not much use to those crossing La Manche

 

[Tranona]

Lots of good info, thanks.
The owners did own it in the UK, they set off around the world & plans changed, sadly too far for a quick jaunt back.

How far is it? If still this side of the American landmass it may still be worth getting it back. Many shipping services from the eastern seaboard down as far as Venezuela. Really depends on the value of the boat. Shipping is in the region of £10-15k, so if it is £100k+ boat then might be worth looking at. Also some boats have much lower values in other parts of the world than in the UK - and some sellers would rather pay to get the boat back to the UK in the expectation of both a higher price and crucially have oversight of the boat. Nothing worse than having your pride and joy for sale in some run down yard thousands of miles away! I brought my boat back from Greece for this very reason as it meant I had control over selling it. Just look at the number of UK boats for sale in Greece now rotting away and falling in value.

 

[dunedin]

Sorry to be pedantic but part of the Irish situation is freedom from reporting if sailing from Noriron (still UK at the time of writing) to EU. Also no requirement to report if going from UK to Isle of Man. Probably not much use to those crossing La Manche

Sorry to be pedantic, but my reply was specifically to a poster who referred to sailing to “Holland and Germany”, hence I omitted the Irish exceptions
Surely nobody would assume the “oven ready” deal would have sorted out what they meant about Ireland as quickly as 3 years