VAT Status

[Caladh]

Am I now stuck with my yacht built in 1990 but have no proof of VAT status ?

A sale of my yacht has been proceeding with survey carried out but has fallen through with no proof of original VAT being paid. When I purchased the yacht in 2003 the broker advised it was not necessary due to the age of the boat. Being more niaive in those days we went ahead and have had 15 years of excellent sailing. However although having sales receipts going back to 1997 and also contacting HMRC for clarification - their response typically woolly to the effect that "in their opinion VAT was originally paid." I know threads of this nature have been around but I feel that I am between a rock and a hard place now with no more that I can do to resolve this situation.

 

[Graham376]

You have a computer and a printer so why should preparing a VAT invoice be a problem as long as VAT was paid? I don't have a VAT invoice but Moody brokerage confirmed in writing that the boat is VAT paid. They wouldn't give me a copy of the original owners invoice due to data protection.

 

[Tranona]

Was this boat first sold in the UK and VAT paid here? If so, there is nothing you can do as the only evidence of VAT payment is the original invoice from the builder or dealer. The boat is not old enough to be deemed VAT paid (has to be pre 1986).

You are in no different position from thousands of other boat owners because this obsession with VAT "evidence" is a recent thing, and in fact there is no law that says you actually have to keep the receipt. HMRC respond in the way they do because they have no idea if it was paid as no records are kept of the original invoice except at the original seller, who only has to keep it for 6 years, and is probably long gone anyway.

All you can do is keep all the evidence you have that it has always changed hands between private citizens as these transactions do not involve VAT. Ideally you want the original Bill of Sale which shows the boat was bought by a private person which would normally mean that VAT was charged. However it is only "normally" because, for example the boat could have been bought and then privately taken outside the EU under the VAT exemption scheme.

Buyers' attitudes vary as to whether having solid VAT evidence on a near 30 year old boat is important. The reality is that neither you nor they will ever be asked by any official to produce this evidence, nor is there any possibility there will ever be any demand for VAT. However the VAT "Project Fear" put about by HMRC, brokers, banks etc means some buyers believe there is a risk. Such people may well find it very difficult to actually buy a boat of this age if they insist on VAT evidence.

 

[PhillM]

Or take a 20% hit on the sale price. I guess that way the new owner will have comfort should the worst happen.

 

[lw395]

It might depend whether it's the type of boat which you might expect to be out of UK/EU waters for long enough that people ask questions on its return.

 

[pagoda]

We sold our 1988 boat last year. The broker was surprisingly (to us anyway!!) keen on VAT evidence. I knew some of the history of the boat and contacted the dealer originally involved in the first sale. Their accountant still has records going back to the mid 80s. Phew. They provided a letter stating the amount paid in VAT on the original sale.
Overkill if you ask me!

(however we managed to get a copy of the VAT invoice on our purchase of a replacement from Kiel in Germany -leaving us quite glad we had not paid the first bill!)

 

[Sybarite]

You could offer to personally guarantee any liability to VAT knowing that the guarantee is hardly likely to be called.

 

[Shuggy]

I can't find the original thread but I once copied and pasted this from, I think, jfm:

"I am a private individual and I bought this boat in the UK from Mr X, another private individual". I have zero proof that any VAT has been accounted for on any previous sale(s) of the boat. When I bought the boat off Mr X, he didn't furnish me with a VAT invoice nor would I expect him to as he was selling it as a private individual, not in the course of a business.


(i) do I owe you any VAT now?
(ii) if I sell the boat in the future to another private individual, as a private seller not carrying on a business, will I owe you any VAT then (under today's laws)?
(iii) will the person who buys from me it owe you any VAT then (under today's laws)?
(iv) in the event that, on an occasion when the boat was sold by one person to another prior to my purchase of it, VAT was incorrectly accounted for and a person's VAT liability wan't properly accounted for to HMRC and remains outstanding, could that liability be imposed on me or could it give rise to a right of distraint (or similar process) over the boat such that HMRC could take the boat and sell it to recover the unpaid prior VAT liability? If there is any such way that the liability could be imposed on me or any such right of distraint would you kindly point me to the statutory references please?"

 

[Tranona]

I can't find the original thread but I once copied and pasted this from, I think, jfm:

"I am a private individual and I bought this boat in the UK from Mr X, another private individual". I have zero proof that any VAT has been accounted for on any previous sale(s) of the boat. When I bought the boat off Mr X, he didn't furnish me with a VAT invoice nor would I expect him to as he was selling it as a private individual, not in the course of a business.


(i) do I owe you any VAT now?
(ii) if I sell the boat in the future to another private individual, as a private seller not carrying on a business, will I owe you any VAT then (under today's laws)?
(iii) will the person who buys from me it owe you any VAT then (under today's laws)?
(iv) in the event that, on an occasion when the boat was sold by one person to another prior to my purchase of it, VAT was incorrectly accounted for and a person's VAT liability wan't properly accounted for to HMRC and remains outstanding, could that liability be imposed on me or could it give rise to a right of distraint (or similar process) over the boat such that HMRC could take the boat and sell it to recover the unpaid prior VAT liability? If there is any such way that the liability could be imposed on me or any such right of distraint would you kindly point me to the statutory references please?"

That is just a series of questions to which the answer is "NO".

Does not help the OP when faced with a buyer who believes, or is advised that original evidence is still required.

 

[Caladh]

Catching up with my thread and thanks for all your input. As stated I feel totally helpless in this case. I guess Brexit is making possible buyers "beware" - I am selling in Greece. Having approached HMRC their answer is apparently "hard luck" and we can help you no more. I guess forgery is next on the list ..................

 

[langstonelayabout]

Catching up with my thread and thanks for all your input. As stated I feel totally helpless in this case. I guess Brexit is making possible buyers "beware" - I am selling in Greece. Having approached HMRC their answer is apparently "hard luck" and we can help you no more. I guess forgery is next on the list ..................

Chaps - are we missing out on another possibility: the sworn affidavit?

Surely once sworn and witnessed, the affidavit confirming VAT paid status would be accepted by those whom it interests?

Is this a possible way forward?

 

[lw395]

Selling in Greece, I am not surprised the buyer is cautious. There are a lot of VAT-not-paid boats out there.
I'm not sure Brexit has changed much, I recall people having complications a few years ago.
How old is the boat?
Is it possible to trace the original owner?
Builder?

Is it possible to get a letter from the Greek authorities saying they accept HMRC's opinion?
Did you buy it in Greece?
Unfortunately, buyers have plenty of choice.

 

[Caladh]

Selling in Greece, I am not surprised the buyer is cautious. There are a lot of VAT-not-paid boats out there.
I'm not sure Brexit has changed much, I recall people having complications a few years ago.
How old is the boat?
Is it possible to trace the original owner?
Builder?

Is it possible to get a letter from the Greek authorities saying they accept HMRC's opinion?
Did you buy it in Greece?
Unfortunately, buyers have plenty of choice.

Boat from early 90's, original builder gone bust, takeover company also went bust.
Original owner last known address traced but no answer from a letter - perhaps deceased ?
No idea about a letter from Greek authorities but TBH VERY unlikely.
The trouble with HMRC's response is it's very woolly and won't commit to say all is ok.
Yes I know about the choice out there.

 

[Caladh]

Chaps - are we missing out on another possibility: the sworn affidavit?

Surely once sworn and witnessed, the affidavit confirming VAT paid status would be accepted by those whom it interests?

Is this a possible way forward?

It may be - but whose authority ?

 

[lw395]

Chaps - are we missing out on another possibility: the sworn affidavit?

Surely once sworn and witnessed, the affidavit confirming VAT paid status would be accepted by those whom it interests?

Is this a possible way forward?

How can you swear something which you don't actually know?
The OP has merely assumed the boat is VAT paid.
He may have no reason to doubt it, but he can't really claim to know it as a fact.

I wonder if it is possible to insure this doubt, in the same way that people insure against unknowns when buying and selling houses?

 

[lw395]

Boat from early 90's, original builder gone bust, takeover company also went bust.
Original owner last known address traced but no answer from a letter - perhaps deceased ?
No idea about a letter from Greek authorities but TBH VERY unlikely.
The trouble with HMRC's response is it's very woolly and won't commit to say all is ok.
Yes I know about the choice out there.

Any other owners traceable?
If the boat has never been berthed outside the EU, only changed hands in the EU, then it's increasingly likely it is a VAT paid boat.
But in the 90s, there were a lot of VAT avoidance shenanigans going on. Boats registered in the CI's, boats owned by Turkish companies or nominees. Boats owned by vat registered businesses, which mostly existed to claim back the VAT.

 

[Shuggy]

Thanks for the constructive reply.

That is just a series of questions to which the answer is "NO".

Does not help the OP when faced with a buyer who believes, or is advised that original evidence is still required.

 

[Tranona]

Thanks for the constructive reply.

Hope you don't think I was being unhelpful, but that is jfm's way of explaining that in law there is no need to keep a receipt for VAT. However that presents difficulties complying with EU rules that require evidence of VAT payment for a boat to move freely around the EU.

This illustrates very well one of the major problems with EU derived "rules" as individual states translate Directives into their own laws which have to meet the Directive, but are not necessarily all the same. In the UK we chose to rely on the commercial invoice as the "evidence", but given that VAT status can change over time - for example if the boat leaves the EU even that evidence may not be definitive. Most other states have a system of registration where the VAT evidence is recorded on a permanent register so making it easier to check.

Unfortunately over time our relaxed system has resulted in difficulties for some, but there is no effective solution to deal with existing boats. It is somewhat ironic that this example has arisen in Greece which historically has had probably the most chaotic VAT system of all states and as noted there are many non VAT paid boats circulating, some perfectly legal but many not - and it is difficult to tell the difference.

 

[Aja]

Or take a 20% hit on the sale price. I guess that way the new owner will have comfort should the worst happen.

Surely all that means is the new owner could still be deemed liable for VAT!
Donald

 

[Tranona]

Surely all that means is the new owner could still be deemed liable for VAT!
Donald

No. that is impossible.

VAT is a tax on transactions, not on assets (boats) and a transaction between two private citizens is not a "chargeable event".

The only time a private individual is liable for VAT is if he imports a boat from outside the EU. That is not the case here.