lw395
Well-Known Member
I think if you are caught yotting around in a non-VAT paid vessel, you can effectively be forced to pay the VAT.
VAT Status
- Thread starter Caladh
- Start date
I think if you are caught yotting around in a non-VAT paid vessel, you can effectively be forced to pay the VAT.
Caladh
Well-Known Member
Yup - thanks for those words of wisdom.................
Tranona
Well-Known Member
How? and by whom?
An individual private person cannot commit a VAT offence EXCEPT (as I pointed out earlier) if s/he assumes the role of an importer. Only VAT registered entities can commit VAT offences.
So there is no law that says you cannot be "yotting around" in a non VAT paid vessel, nor any mechanism for charging YOU VAT on the boat.
At the risk of repeating myself, VAT is a tax on transactions, not assets, nor their use. So, first you have to identify the transaction where VAT was not accounted for correctly, then identify the person or entity responsible for accounting for VAT.
Graham376
Well-Known Member
But what about a boat purchased in another State where debts and taxes can be attached to movable goods, payable by the current owner?
Caladh
Well-Known Member
Thanks Tranona - so.....perhaps having identified the transaction that was not accounted for in 1990 (although I think it was all above board) the person or entity has gone in to liquidation way back.
My question is how to resolve it ? HMRC have not requested/demanded VAT payment from me but nor will they say it has been paid - arrghh.
Tranona
Well-Known Member
As I suggested, there is no resolution as in the UK the only evidence acceptable is the original invoice.
As I explained earlier it is impossible for HMRC to demand VAT from you - there is no law that allows them to do so unless you imported the boat illegally into the UK - which you did not.
The "official" advice from HMRC and the RYA is that you should keep all the evidence that the last transaction took place in the UK (the Bill of Sale is enough) then any VAT issues are the responsibility of HMRC. As you have discovered they will then say that they have no reason to make any claims for VAT against the boat. That is as close as you will get.
This assumes the boat has stayed in the EU since the last transaction.
The reality is that it is highly unlikely that VAT was not paid when the boat was first sold to a private owner in the UK, and the responsibility for accounting for it would have been for the seller, not the buyer.
The concern with buyers now is that if they move the boat around Europe without the evidence customs may give them hassle. However the chances of this are minimal to non existent. why should they bother with old (low value!) boats which are not here responsibility anyway? Added to this there is the uncertainty of what will happen to UK boats after Brexit.
Although this is all logical and well proven it is not always possible to reason with buyers and allay their (unfounded) fears.
macd
Well-Known Member
In addition to what Tranona writes, proof of VAT status is an illusion. Except in rare cases of private imports, there is no such thing (and even then the 'proof' can be overridden by subsequent events). The best anyone can reasonably expect is evidence. In the OP's case, an HMRC letter declaring that "in their opinion VAT was originally paid" on a 28 year-old boat should satisfy anyone but the most neurotic.
Caladh: I fully realise this is a very real ££ issue to you and that ultimately the only reality that matters is that of a potential buyer. Good luck.
P.S. There is, I believe, a statute of limitations on VAT accounting errors in the UK (and other EU countries), although I assume it can only apply to VAT-registered entities. Currently it's four years, but 20 years in the case of fraud. In most EU countries, the time limit for fraud is very much less than that.
https://www.accordancevat.com/vat-guide/eu-country-vat-profiles/united-kingdom-uk/
Caladh: I fully realise this is a very real ££ issue to you and that ultimately the only reality that matters is that of a potential buyer. Good luck.
P.S. There is, I believe, a statute of limitations on VAT accounting errors in the UK (and other EU countries), although I assume it can only apply to VAT-registered entities. Currently it's four years, but 20 years in the case of fraud. In most EU countries, the time limit for fraud is very much less than that.
https://www.accordancevat.com/vat-guide/eu-country-vat-profiles/united-kingdom-uk/
Irish Rover
Well-Known Member
So assuming this boat is sold in Greece to a citizen/resident of another EU country. The buyer the registers it in his home country but wants to keep it in Greece for the present I assume he will need to apply for a DEKPA. Is there not a risk he will be asked to prove that it’s vat paid and what happens if he can’t?
macd
Well-Known Member
Documents required for DEKPA are registration certificate, passports, crew list, insurance (including liability limits in Greek), ICC or equivalent. I've been cruising there on and off for the last 10 years during which no official has shown the slightest interest in VAT status.
jwilson
Well-Known Member
To add to what Tranona (correctly ) says:
HMRC can certainly charge you IF THEY CAN PROVE THAT VAT WAS NOT PAID. But they can't prove that, even if they went back through all their records from 1973 onwards. When Bogstandard Boatbuilders Ltd. submitted their VAT payments in 1973, 1983 or 1993, or yesterday for that matter, they did not specify which boats or hulls it related to. They and every other boatbuilder just send a lump sum quarterly made up of VAT on all their sales. Only in the rare event of there being a VAT fraud enquiry would anyone from the Revenue have gone there and added up the various individual amounts relating to each boat. Even then the chance of this documentation from the 1970s/80s/90s still being held is very remote indeed especially as there were major changes in 2005 when the IRD merged with HM Customs to form HMRC. So HMRC in 99.999% of cases cannot prove no VAT was paid and thus cannot now charge VAT (again).
HMRC may occasionally get themselves involved if a newish near-superyacht is exported to Guernsey witout VAT payment and then reappears in England permanently based in Poole. But the older and lower value the boat the more they simply do not want to know.
VAT status on a UK-owned and UK-registered yacht is in EU law the responsibility of the UK HMRC and no-one else.
Irish Rover
Well-Known Member
Fair enough but I assume that the risk of being asked to prove the VAT payment would weigh on the mind of a prospective purchaser which is the problem the op has.
Joker
Well-Known Member
'if they move the boat around Europe without the evidence customs may give them hassle.'
The Dutch Customs did in Oost Vlieland a couple of years ago.
The Dutch Customs did in Oost Vlieland a couple of years ago.
Caladh
Well-Known Member
Which is why I believe this buyer is pulling out. Pretty much all the "advice" from the RYA and HMRC indicate one should have original VAT payment proof. Even the notes about the status where it cannot be provided indicate past bills of sales may suffice - which I do have. However a new purchaser (and in this case new to boating I believe) is going to be put off with not having stated documents. As I said I'm in a helpless situation but believe I can't be the only one!
Irish Rover
Well-Known Member
Personally if I was in your situation I’d advertise the boat as “VAT paid but original proof not available” and price it a bit below the VAT paid market rate. I bought VAT not paid recently because it suited my circumstances and there are other buyers like me out there or there will be others who are prepared the risk which is according to our forum experts very small.
macd
Well-Known Member
Precisely, and already addressed in various ways. Neurotics may be sincerely intentioned, but at the end of the day they're just tyre-kickers.
Irish Rover
Well-Known Member
There’s a touch of Basil Faulty there somewhere methinks.
lw395
Well-Known Member
I have heard of French authorities making it their business.
When push comes to shove, I personally would not buy a high value boat without proper proof of VAT status, because even if it causes me no trouble in the time I keep the boat, I don't want to restrict the pool of buyers when I want to move on.
Maybe post -brexit it won't be much of an issue, because a UK boat will be foreign in the EU and you only have to deal with HMRC.
I think it''s more likely to be a real problem if the boat is likely to be out of UK waters for a long time, the onus of proof may shift more towards the owner on re-entry.
Donheist
Well-Known Member
My boat is in this situation. I’m afraid I negotiated the vat off the price.
Occurred to me much later though that the exposure is less: eg presumably any kit put on the boat post original purchase is vat paid: instruments, plotter etc. Perhaps you have a book of receipts for a good half the value as evidence that vat was paid on that. . I rang hmrc and they confirmed my reasoning and that they would be very sympathetic on a valuation. Throw in a bit of depreciation and I was tempted to pop to jersey, re-import and pay chicken feed “gesture” payment just to get the cert. as it happens, I’ve instead heeded tranonas advice and ignored it
Βut to get your sale moving, could offer a smaller reduction OR offer to indemnify for say five years if ever an issue to the lower value
Occurred to me much later though that the exposure is less: eg presumably any kit put on the boat post original purchase is vat paid: instruments, plotter etc. Perhaps you have a book of receipts for a good half the value as evidence that vat was paid on that. . I rang hmrc and they confirmed my reasoning and that they would be very sympathetic on a valuation. Throw in a bit of depreciation and I was tempted to pop to jersey, re-import and pay chicken feed “gesture” payment just to get the cert. as it happens, I’ve instead heeded tranonas advice and ignored it
Βut to get your sale moving, could offer a smaller reduction OR offer to indemnify for say five years if ever an issue to the lower value
Tranona
Well-Known Member
I am afraid your strategy of importing from Jersey would not work. That is not a "chargeable event" and HMRC would not demand VAT.
The only way a valuation would be required taking into account additions etc would be if the boat changed hands outside the EU and then re-imported, or it had been out of the EU for more than 3 years. In the first case VAT would be based on the transaction price (if recent) or market value and it would be up to you to propose a value. What you have added to the boat would only be relevant as far as it affected the value. In the latter case, HMRC probably would not bother to demand VAT as the 3 years is discretionary .
The reality is that there is no legitimate way you can pay VAT on an existing boat that you own in the UK.
Donheist
Well-Known Member
Understood. And I defer to you. As I say, i’m content with my situation. I was just trying to help OP unblock his deal. He is selling a boat comprising a hull plus a load of after market kit which has had vat paid and is evidenced. Part vat-paid, if you will. It’s a Bit like selling the appliances separately on a house deal to avoid stamp.
Maybe op can offer to split the diff. As I say, someone at hmrc thought this was reasonable.
But it comes down to what the buyer is prepared to pay. The op has a plausible rationale for dropping his price a bit but not as much as 20%. If that does the trick it may be helpful
Maybe op can offer to split the diff. As I say, someone at hmrc thought this was reasonable.
But it comes down to what the buyer is prepared to pay. The op has a plausible rationale for dropping his price a bit but not as much as 20%. If that does the trick it may be helpful