VAT Question

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tonyone01

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Some may remember my previous thread about a Sealord 446 ? I have agreed a price with the seller, but they do not have the boat builders cert or proof of VAT paid. They do have the MCA Bill of Sale and the declaration for brokerage sale from the first owner stating VAT paid. The question is, should I go ahead with the sale ? What are the risks ? Can I get proof of VAT paid even though Excalibur boat yard are no longer trading ?

Thanks

Tony
 
beebok said:
I understand you can request confirmation of payment to the HMRC

Alan
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No. They have no idea about payments on individual boats. The only record is with the seller and the original buyer. The seller is only required to keep records for 6 years, but if they have gone out of business it may well be lost anyway.

If the original buyer was a private person in the UK and all subsequent sales were to private people the chances of unpaid VAT are just about nil. In practice the absence of a receipt does not cause most people any problems. Thousands of boat owners are in this position.
 
Hi Tonyone01

When I faced a VAT issue with an original first-sale invoice that was suspicious, the broker put me in touch with a person in a firm who was ex-customs and still had links into the customs section of HMRC. If you are dealing through a broker then request that service to validate your position because it is "free" to the broker - its part of his subscription to being with the BMF, which I am assuming most brokers would be. Enquiries can be made on a no-names basis. In my case HMRC advised that the original invoice was invalid and they would look to me for the VAT should I purchase, but I had already pulled out of the deal for another reason. If you aren't going through a broker then pm me with your details. I promised the individual at that firm I would not broadcast his name but let him choose privately to get involved (or not)...
 
What age is the boat ? If pre 1992 where was it in January 1992 ? Now if the chain of ownership is all UK owners, then it would be reasonable to assume it was in the EU on that date, but ideally some firm of boatyard receipt would provide proof of this. Then it comes down to an unlikely probability you will ever get put to to prove its VAT paid status, especially if the boat is greater than say 10 years old.

In my view very remiss of an owner to lose such an important document, but emphasis on its importance has increased with time, so less of a surprise and more chance to lose it the older the boat.

I went through all this when I bought my last boat. I asked if full title history including original VAT receipt was to be provided for the boat at the initial viewing, where the Broker told me it was. My offer took this into account. Then when it came to the final negotiations following survey I was advised the VAT receipt wasn't available, but it did have a chain of UK owners from new.

I then assessed the risk as a small part of the VAT on the then value I was offering, and chipped a lump off the price to ameliorate this risk (50:50 basis as I recall). The Vendor wasn't too happy about it, but then I should have been given accurate details when I first asked.

I am not an accountant, but as I understand it on any transaction the liability for payment of VAT to HMRC rests with the seller, assuming also he is registered for VAT, which for a boat seller would be almost a certainty. So it really comes down to the risk of an HMRC inspector thinking he had reasonable grounds to suspect the boat might be an undeclared import. He would unlikely ever have such suspicions for a boat bought in the UK with a reasonable title history of British resident Citizens owning the boat ideally from new, but certainly the past 7 years, as this is as far back as UK firms are obliged to retain business records such as VAT payment details for. Be aware that if at any time a UK Company has owned the boat this could complicate the VAT situation as they may have claimed a VAT refund at purchase, and not then repaid it at a subsequent sale. In this case the sale invoice from the firm owning the boat might be essential (time also for proper advice). The RYA do offer sound advice, but it does seem based upon worse case situations.

In my case after purchase I contacted Fairline who kindly provided a copy of the original VAT invoice for the boat.

I showed this to a VAT Lawyer / Judge of my acquaintance who's informal opinion was that if he were presented this document from1986, albeit a copy for an archived record, he would have no reason to question its authenticity.

So your maximum financial risk is 20% of the sum you pay now, but it would be reasonable to argue that the % rate at the time the boat was new would be the most HMRC could demand, and even then I would still negotiate in lieu of an out of Court settlement. But for now it is Buyer who holds the cards, so play it to your advantage, bearing in mind the negative on your own future sale.
 
It is extremely unlikely that you will be pulled up by any official in the UK for failing to have a proof of VAT document. However, as seastoke says, selling the boat on might be difficult as some buyers may walk away if you don't have such documentation. There is another factor as well. AFAIK, most finance companies providing marine mortgages will demand to see proof of VAT documentation because it goes to determining the value of the boat and this might further restrict potential buyer interest in the boat. IMHO if you still want the boat, you should tell the selling broker that you will have to reduce your offer by 20% to account for the risk of having to pay the VAT yourself unless he produces a valid proof of VAT document
 
The boat is a 1999 which the current owner purchased in 2005. The only bill of sale is the one showing the transaction from the first owner to them. There was a sheet with tick boxes showing that the original owner transferred all the docs to the current owner who unfortunately lost / misplaced
 
Cold you contact the agent / dealer who sold the boat new? I know it's unlikely they'll have it, but worth a shot?

FWIW, when I purchased my latest boat, which to me was 'big' money, I insisted on the original VAT receipt. Thankfully it wasn't an issue as the previous owner had a mortgage on it, hence the lender had the original VAT receipt which was forwarded to me.

As said above, realistically, it won't ever be an issue when you're cruising around the UK enjoying your time on the water, BUT, when it comes to re-selling, you might have a buyer who insists on the VAT receipt
 
tonyone01 said:
The boat is a 1999 which the current owner purchased in 2005. The only bill of sale is the one showing the transaction from the first owner to them. There was a sheet with tick boxes showing that the original owner transferred all the docs to the current owner who unfortunately lost / misplaced
Click to expand...

You might contact the first owner to determine that he bought the boat as a private individual, which might help. There is no chance you will ever get a bill from HMRC as they can only collect VAT from a private individual that is importing a boat. It is unreasonable to expect a discount to cover something that will never happen. The main risk is that the boat may have a lower value to a non UK buyer as many other states require the evidence to register the boat.

BTW if you are buying through a broker they should be doing the legwork and advising you of the options if any.
 
alt said:
Cold you contact the agent / dealer who sold the boat new? I know it's unlikely they'll have it, but worth a shot?

FWIW, when I purchased my latest boat, which to me was 'big' money, I insisted on the original VAT receipt. Thankfully it wasn't an issue as the previous owner had a mortgage on it, hence the lender had the original VAT receipt which was forwarded to me.

As said above, realistically, it won't ever be an issue when you're cruising around the UK enjoying your time on the water, BUT, when it comes to re-selling, you might have a buyer who insists on the VAT receipt
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Unfortunately the agent / builder no longer trades (Excalibur Boats UK) and the broker who made the next sale (who has been very helpful) only had copies of the MCA Bill of Sale, which they have sent.
You have however triggered a thought. The original purchase was financed through Barclays Marine Finance. I will see if I can make contact to see if they took copies of the original VAT cert
 
tonyone01 said:
Unfortunately the agent / builder no longer trades (Excalibur Boats UK) and the broker who made the next sale (who has been very helpful) only had copies of the MCA Bill of Sale, which they have sent.
You have however triggered a thought. The original purchase was financed through Barclays Marine Finance. I will see if I can make contact to see if they took copies of the original VAT cert
Click to expand...

You *may* be in luck, who knows! Best of luck with it :)
 
The vat man in the UK will not ask you for a vat invoice after 6 years, because they wrote the rule, you can bin, burn, keep or wipe you backside with a vat invoice after 6 years. the problem could be different on the med.
i just bought a princess v39 1996 and did not get a vat invoice and i am not worried,
 
Isnt a point if you travel to an eu country if they ask you proof of purchase which does not show vat it could turn dodgy ,yes very rare but
 
hullabaloo,

I'm inclined to think that the reason you may not be worried is not because you do not need evidence of VAT having been paid but that HMRC do not have the resouces to comprensively check every boat so you are very unlikely to be found out in the UK. However as has been stated previously worry may be valid if going to the continent or selling the vessel.

Last summer I purchased a boat without VAT paid. I have now paid the VAT to HMRC and am in possession of a valuable VAT paid invoice from HMRC. So I certainly have no worries on that point.
 
How did I know the VAT wasn't paid?

1. The vendor told me
2. No VAT receipt was in the datapack
3. The vessel was imported from outside the EU
 
theoldsalt said:
How did I know the VAT wasn't paid?

1. The vendor told me
2. No VAT receipt was in the datapack
3. The vessel was imported from outside the EU
Click to expand...

Exactly. There was a chargeable event so HMRC could legitimately charge VAT. Nothing like the OPs situation where VAT has almost certainly been paid but the receipt is lost.
 
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