VAT reality

[John4sythe]

I am wanting to but my first yacht and am aware that evidence of VAT is necessary. I am a member of the RYA and i have sent them copies of the VAT evidence of yachts that i viewed only to be told that it is insufficient because it does not have a value of VAT paid on it. Now a broker is telling me that in the real world most older yachts dont have the evidence and you can sail back and forth between europe and UK without a problem. I know anyone giving legal advice will give it by the book, but is it different in reality, can i sail around without ideal VAT evidence and later sell my boat again without major problems? Or is this broker not to be trusted?

 

[jordanbasset]

How old is the yacht in question?

 

[John4sythe]

It is 1989

 

[jwilson]

How old is the yacht in question?

And what sort of value?

The answers will be very different if it is 1976 and £10,000 or 2006 and £100,000.

On an older cheaper boat you will restrict your choice considerably if you insist on apparently * perfect VAT status evidence, and in practice the chance of the lack of it causing a problem is vanishingly small, unless you go around being obnoxious to Customs officials.

* I say apparently, as it is possible (though rare) that the VAT evidence is wrong, there are several ways this can occur, including a careful fake of an original VAT bill. Very very difficult to prove without genuine forensic resources that a receipted bill on letterhead from a long defunct boatbuilder is genuine.

 

[John4sythe]

Thanks. The value is £30000. It is a moody 336. They provided a letter from princess yachts saying they have checked their records and can confirm that VAT was paid on the original invoice. I contacted princess for a copy of the invoice but they cannot provide it due to the data protection act.

 

[gjgm]

HMRC is not the least interested unless they suspect evasion-the boat has come in from CIs or outside EU, for example.
If you are buying a 9 month old Oyster, I would suggest you should expect evidence of VAT (and that is not a piece of paper) because that VAT will be alot of money. For down to earth transactions, your risk is that the next buyer gets concerned over this. No one else has any interest.
Going back a few years, no one was that concerned over all these bits of paper, and people didnt really keep it that carefully.
Given VAT can be reclaimed, the original piece of paper only would show that VAT was once paid, not that it is still paid, and anyone can mischievously type up a "VAT doc", so you can see the piece of paper really doesnt mean anything, though folk seem to think it is very exciting to have one.
So, in my view, on a newer boat, it is probably a good idea for selling on if you have a doc of some sort. An an older boat, I would personally not be concerned- it has become a bit of an urban myth that it is necessary, unfortunately.

 

[EdWingfield]

Hi John, if your travels take you to Holland you may be boarded by Customs (I have)

They ask for proof of VAT. I suspect they have the legal right to board a foreign boat to check for non VAT. But I suspect they want to get aboard and get a nose for possible illegal goings-on. (I don't know that)

Very polite, you'll be wished a happy holiday, no guns.

 

[Fendant]

Especially the Italian Guardia di Finanza is very tough on VAT matters.
They are clearly from "Missouri" it is either "show me" or the chain to a solid ring in the quay.

I don't think that the data privacy excuse from Princess will hold.
Maybe a more official request from your insurance, or the registrar might be an avenue to be pursued.

 

[Neil_Y]

If it's an EU built boat then unless it was bought by a business or exported out of the EU when first sold it will be vat paid, if you have any evidence it has been in use within the EU for a number of years that is probably the best you'll get. It's so unlikely to be still vat unpaid unless you are buying it from a business and they bought it originally as a charter boat in 76 that no tax authority would be interested. Is it UK registered and do you have details of a couple of past owners having kept it in EU waters as a UK vessel? that's all I'd be looking for. Having said that my last boat came with the original receipt from the maker but that was 1991 boat. Proof that it's been in UK or EU is what I'd look for if I was concerned.

 

[macd]

John4sythe: both the RYA and the broker are correct, one so far as the strict letter of the law is concerned, the other about practical realities. As said, the age and value of the boat will have a practical bearing (possibly a very big one if it's pre-1985. If so, do post back and we'll tell you why). You would be right, however, to reassure yourself that the boat's history is legitimate, in respect of VAT and everything else.

Years ago the UK VAT man was prepared to issue certificates confirming a vessel's VAT status. This has not been the case for aeons.

If you are overseas, the responsibility for VAT enforcement lies not with the local authorities but with the flag state, which will presumably be the UK. But good luck with explaining that in Italian.

I see you've posted the same query on two other forums. This can lead to confusion and is against forum rules. Neither seems to have had a reply to I suggest you delete them or add a post to each redirecting readers here.

Welcome to the forum and good luck with your purchase.

 

[vyv_cox]

My UK flagged and registered boat has not been in UK, other than very briefly, since 1996. During that time we were in Netherlands for seven years and have cruised since to Germany, Denmark, Belgium, France, Spain, Italy and Greece. Despite having presented our papers countless times to various officials, and been boarded by customs a couple of times, nobody has ever asked us for proof of VAT payment. We have been asked for various other obscure documents, even my VHF licence once, but never that one.

A few years ago the RYA asked for cruisers to provide evidence of having been asked for this documentation but AFAIK nobody could provide any.

 

[jwilson]

The original VAT invoice would probably have been from Moody Yachts, not Marine Projects (who later became Princess), and who built the boat for Moodys. Marine Projects/Princess and the old Northshore yard were two companies who to their credit tried to help owners by issuing letters confirming VAT was paid on specific hull numbers. Many companies will not do this, or like Northshore are no longer trading. There is no obligation on yachtbuilders to keep records of VAT for more than 6 years, so even if a company was still in business they may still not have the original invoice copy.

Probably 50% of 1973-1985 yachts in the UK have no convincing VAT documentation. No-one then thought keeping it mattered much, and many people still seem to believe that pre-1985 boats do not even need it, which is technically incorrect, though in practice not an issue.

Even those owners who got HMRC in the late 80s through to the 90s to issue a SAD88 form, which confirms that they regard the boat as VAT paid, often then lost or threw away the flimsy carbon-type SAD88 form itself, which was the real document, and kept the accompanying letter. As a broker I see this again and again! HMRC generally stopped issuing these forms and letters before 2000, though a very very few appear to pop up dated in the early 2000s. They certainly won't do it now.

For a 1979 boat, if you are really worried, your "get out of jail free" card is proof that the boat was built before 1985 (any original paperwork from before then) AND (not or) proof that it was in the EEC on the last day of 1992 (boatyard/marina bill or a club letterheaded letter from a club Commodore or Hon Sec. saying the boat was on their premises or mooring on that date). This makes it of "deemed VAT paid" status.

As others correctly keep saying, on older and/or non-high-value boats, no VAT proof is very, very rarely a problem, even going foreign, as long as you are UK-registered. This does not help you however if you choose to piss off a Customs official somewhere foreign, who in turn can choose to make your life hell if his wife has just run off with the local wine-seller, his house roof fell in that morning, and has just had his own income tax bill come in.

 

[duncan99210]

As others have said, VAT paperwork is largely a none issue except with brokers and the worried new owners. In the UK HMRC are simply not interested in old secondhand boats. Their focus is on newer boats entering UK from outside the EU. In most of the remainder of the EU, unless you seriously annoy the customs people, there is no interest in VAT paperwork. Like Vyv, our boat has been overseas for for nearly seven years now. In that time we've been asked for VAT paperwork exactly nil times.

So the boat you're proposing to boat to buy dates from 1989 and you've got a letter from the successor company to the builders stating that VAT was paid when it was built. Get that translated into the language of the countries you intend to visit, get the original letter and translations stamped by a Commisoner for Oaths certifying the translation and that will keep 99.9% of customs men happy should they take it into their heads to demand paperwork. Stamps are important once you get south of France: the more the merrier, big and impressive even better.

 

[Tranona]

If you are overseas, the responsibility for VAT enforcement lies not with the local authorities but with the flag state, which will presumably be the UK. But good luck with explaining that in Italian.
.

That is not strictly correct. VAT is nothing to do with registration, but is a tax on transactions. The responsibility for VAT lies with the state where the transaction (chargeable event) took place.

So my old boat was UK registered, but the VAT was paid in Greece where I bought it. HMRC would not be in the least bit interested in any VAT issues on the boat - which is a good thing because the scheme through which I bought it would not be legal in the UK, but was (obviously) in Greece.

Suggest the OP reads the VAT section on the RYA site which is as good an explanation of the main issues as any. Then take the advice to carry a copy of the Bill of Sale if he takes his boat abroad. This will clearly show that the transaction took place in the UK. Even better if he has the trail of BofS that shows the boat has always changed hands in the UK.

The OP is in no different position from thousands of other UK boat owners and the sky has not fallen in yet.

 

[Rivers & creeks]

VAT scare stories are a product of the Internet and brokers. The Internet loves scare stories, and brokers like the VAT one in particular because it appears to justify their fees. No one has ever provided a link to an actual news story about Northern Europe VAT issue for a private yacht owner with anything but a very nearly new or newly imported yacht. That doesn't stop the scare stories and it never will.

 

[KINGFISHER 9]

How old is the boat you want to buy?

DOUBLE POST! .... see PBO.

 

[Bitterend]

This is an old potato and was discussed recently here
http://www.ybw.com/forums/showthread.php?453374-How-do-you-prove-that-VAT-has-been-paid.
You definitely need absolute proof that VAT has been paid or is exempt. My yacht was 'impounded' by HMRC until I provided the proofs. Do not listen to any response which says I've sailed for donkeys years and never been asked to provide proof. It can and does happen!!
There are 2 elements in play here dependent upon the age of the boat:
Boats built before 1985 are deemed VAT paid (or exempt) provided proof can be shown on the date of build / first sale or MCA Part 1 registration with date first registered.
Plus the boat MUST have been physically present in the EU on 31 Dec 1992. Fortunately I managed to find some old marina receipts for berthing and electricity left by the previous owner and overlooked by me when clearing out the boat - phew!!.
For boats built from 1985, an original bill of sale or subsequent bill of sale between private individuals should show the VAT paid on the transaction.

Whatever you do don't listen to some smooth talking seller or broker, insist on absolute proof before deposit or purchase............ or find another boat.
Happy hunting

 

[Tranona]

You definitely need absolute proof that VAT has been paid or is exempt. My yacht was 'impounded' by HMRC until I provided the proofs. Do not listen to any response which says I've sailed for donkeys years and never been asked to provide proof. It can and does happen!!

This is possibly the first time in all the years that this subject has been discussed here that anybody has reported a boat being impounded by HMRC for proof of VAT.

It would be really helpful to all if you could explain the circumstances and how it was resolved.

 

[lpdsn]

In general, the VAT system is a complete mess. Speaking as someone who has been VAT registered twice in two separate EU countries there's even quite a bit of variation between countries. It was poorly thought out initially, and has been patched many times over the decades since.

So, the original VAT invoice would have been from Moody's who sold the yacht to the original purchaser. Moody's would've accounted for that VAT back in 1989. There was no requirement for them to keep records for more than six years. They are now, I believe, owned by Hanse, but I doubt any records exist and I don't even know if the company Hanse will have bought was actually the same company that sold the yacht.

Marine Projects (now Princess - but same legal entity?) would've invoiced Moody's for the yacht, including VAT. They'd have accounted for that VAT themselves back in 1989 or so. I doubt whether they've acquired Moody's VAT records, so the VAT invoice they are probably referring to is the one they sent to Moody's. I'm surprised they've still got it, but you may not gain much by pushing to get a copy of it as it wouldn't prove VAT was charged on the sale of the yacht to the original owner.

In any event, it was Moody's responsibility to give Customs & Excise the money back in 1989 (they would also subtract the VAT they'd paid to Marine Projects and VAT on other costs).

No one else in the chain since then would've had anything to do with VAT unless the yacht was owned by a VAT registered entity at some point. Let's assume in the absence of any evidence to the contrary that that is not the case.

Basically, I can't see anyone at HMRC being remotely interested.

If you happen to find the original receipt amongst the boat's papers then I would imagine it would have been typewritten (although I have a hand-written VAT receipt from 2008) and would be rather yellowed by now. I remember using a laser printer in the company I was working for in 1990, but the place I worked in 1988 used dot matrix printers generally, with daisy wheel printers for anything formal. Certainly the pages in my notebooks from the early 1990s are yellowing a fair bit these days. If you had such a old VAT receipt you would also need to check the VAT number was genuine. 1989 was before my time pulling my hair out with VAT, so another poster might be able to send you a copy of a receipt of the same vintage so you can cross-check. You might even be able to get one with Moody's VAT reg no, so you would really know your bit of yellow paper had the right VAT no too.

 

[Daydream believer]

If the original supplier was not VAT registered because his turnover was below a certain level then he would not have charged VAT & VAT would not have actually been due

Probably does not apply to you but some might use that argument