VAT Status

[Laysula]

Interesting. If HMRC have no records and the original builder has dissolved, how can anyone prove that VAT hasn't been paid. If someone were to print their own receipt up, who would be able to say otherwise. Having sailed for the last 25 years in and out of the EU. no one has ever asked to see a vat receipt or passport or insurance cert or ships registration. Even if it were to happen, I'm not sure that the "inspector" would have the kit to define a fake from a company that disappeared years ago.

 

[Concerto]

Reading the page for Greece (https://www.accordancevat.com/vat-guide/eu-country-vat-profiles/greece-el/), their VAT limitation seems slightly confused as it could be 5 years or 3 years. In the UK this is 4 years. So it seems if the boat is UK registered then customs are not interested in boats older than 4 years - unless they have left EU waters and changed ownership whilst outside EU waters.

The OP has owned the boat since 2003 and he can declare it was a personal purchase made 15 years ago. Provided he did not take the boat outside EU waters, sell it and then repurchase it, no VAT liability could ever arise. The OP can certify this quite easily. The OP has documentation going back to 1997, some 21 years, and this has not been a problem to any previous owner. Only the first 7 years are not covered by documentation, which exceeds the VAT limitation for the UK by 3 years. Any purchaser who wants more than this as proof of payment of VAT is only seeking to use the lack of "proof of VAT payment" as a tool to drive the selling price down (or the surveyor is suggesting this). It is a myth that Customs want VAT proof, when they do not know what VAT was paid for on any particular boat - even though each boat has a unique number moulded in the hull.

The OP should ask the potential purchaser (or his surveyor) why this "proof of VAT paid" is so important for a relatively old second (or, third, fourth hand) boat is so important. Make them justify themselves. All the advice given so far in this thread, says there is not a problem. So follow the advice of Tranona and especially of jwilson (a well established yacht broker) in post #30.

 

[macd]

There’s a touch of Basil Faulty there somewhere methinks.

Doubt it, unless you're dyslexic.

 

[Tranona]

Reading the page for Greece (https://www.accordancevat.com/vat-guide/eu-country-vat-profiles/greece-el/), their VAT limitation seems slightly confused as it could be 5 years or 3 years. In the UK this is 4 years. So it seems if the boat is UK registered then customs are not interested in boats older than 4 years - unless they have left EU waters and changed ownership whilst outside EU waters.

The OP has owned the boat since 2003 and he can declare it was a personal purchase made 15 years ago. Provided he did not take the boat outside EU waters, sell it and then repurchase it, no VAT liability could ever arise. The OP can certify this quite easily. The OP has documentation going back to 1997, some 21 years, and this has not been a problem to any previous owner. Only the first 7 years are not covered by documentation, which exceeds the VAT limitation for the UK by 3 years. Any purchaser who wants more than this as proof of payment of VAT is only seeking to use the lack of "proof of VAT payment" as a tool to drive the selling price down (or the surveyor is suggesting this). It is a myth that Customs want VAT proof, when they do not know what VAT was paid for on any particular boat - even though each boat has a unique number moulded in the hull.

The OP should ask the potential purchaser (or his surveyor) why this "proof of VAT paid" is so important for a relatively old second (or, third, fourth hand) boat is so important. Make them justify themselves. All the advice given so far in this thread, says there is not a problem. So follow the advice of Tranona and especially of jwilson (a well established yacht broker) in post #30.

The 4 years is nothing to do with evidence specific to the boat. That only applies to VAT registered entities in terms of record keeping. The evidence that is required is that related to the last "chargeable event" - that is a transaction from a VAT registered entity to a private owner (or the import of a boat into the EU). This is only required to comply with VAT rules for the free movement of boats across the EU and is very specific to boats.

BTW it is only in recent years (not sure of the exact date, but post 1998) that it became a requirement to identify the boat by its HIN on the VAT invoice. Prior to that the description may have been a yard number or even just a name.

 

[lw395]

Reading the page for Greece (https://www.accordancevat.com/vat-guide/eu-country-vat-profiles/greece-el/), their VAT limitation seems slightly confused as it could be 5 years or 3 years. In the UK this is 4 years. So it seems if the boat is UK registered then customs are not interested in boats older than 4 years - unless they have left EU waters and changed ownership whilst outside EU waters.

The OP has owned the boat since 2003 and he can declare it was a personal purchase made 15 years ago. Provided he did not take the boat outside EU waters, sell it and then repurchase it, no VAT liability could ever arise. The OP can certify this quite easily. The OP has documentation going back to 1997, some 21 years, and this has not been a problem to any previous owner. Only the first 7 years are not covered by documentation, which exceeds the VAT limitation for the UK by 3 years. Any purchaser who wants more than this as proof of payment of VAT is only seeking to use the lack of "proof of VAT payment" as a tool to drive the selling price down (or the surveyor is suggesting this). It is a myth that Customs want VAT proof, when they do not know what VAT was paid for on any particular boat - even though each boat has a unique number moulded in the hull.

The OP should ask the potential purchaser (or his surveyor) why this "proof of VAT paid" is so important for a relatively old second (or, third, fourth hand) boat is so important. Make them justify themselves. All the advice given so far in this thread, says there is not a problem. So follow the advice of Tranona and especially of jwilson (a well established yacht broker) in post #30.

Unfortunately customs can get very interested in boats older than 4 years, particularly when they re-enter the EU.
Unless someone's prepared to underwrite their advice, it will be obvious to the buyer that he will be in the OP's position should he wish to sell in a few years.

 

[Joker]

I remember when being challenged by Dutch customs asking: 'If I drive my car in your country, will you stop me and ask for a VAT certificate?'
'No,' they said.
'So why are you asking me for one for my boat?'
'That is different.'
'Oh? How?'
'Errrr … '

 

[Mark-1]

I remember when being challenged by Dutch customs asking: 'If I drive my car in your country, will you stop me and ask for a VAT certificate?'
'No,' they said.
'So why are you asking me for one for my boat?'
'That is different.'
'Oh? How?'
'Errrr … '

With my pedant hat on the car example is different because you can't get UK registration unless VAT is paid. I take your point though. Why didn't he want to see proof of VAT for your watch and your underpants? It's all nonsense.

I presume there's a lag of some months between paying for a new boat and the builder settling its VAT commitments. So I'd guess that, ironically, VAT has not been paid on most boats in their first few weeks on the water!

Another point is that if I were ever going to buy a boat I'd deffo be looking for one without proof of VAT and trying to negotiate a big discount on the back of it. I suspect many buyers are well aware that the whole issue is nonsense, but are hardly going to admit that during negotiation.

 

[langstonelayabout]

I remember when being challenged by Dutch customs asking: 'If I drive my car in your country, will you stop me and ask for a VAT certificate?'
'No,' they said.
'So why are you asking me for one for my boat?'
'That is different.'
'Oh? How?'
'Errrr … '

Was this before the full cavity search, you 'falling down the Police station steps', losing all of the cash on you and falling into the sea, by any chance?

Did the officers in question walk off for a smoke and a pancake?

 

[langstonelayabout]

With my pedant hat on in the car example it is different because you can get UK registration unless VAT is paid.

I take your point though. Why didn't he want to see proof of VAT for your watch and your underpants? It's all nonsense.

I presume there's a lag of some months between paying for a new boat and the builder pay it's VAT commitments. So I'd guess that, ironically, VAT has not been paid on most boats in their first few weeks on the water!

Another point is that if I were ever going to buy a boat I'd deffo be looking for one without proof of VAT and trying to negotiate a big discount on the back of it. I suspect many buyers are well aware that the whole issue is nonsense, but are hardly going to admit that during negotiation.

This is scary for some of use that may have bought a nice watch duty free sometime...

 

[Mark-1]

This is scary for some of use that may have bought a nice watch duty free sometime...

...and for those of us who don't keep the receipts for our underpants.

 

[Tranona]

I remember when being challenged by Dutch customs asking: 'If I drive my car in your country, will you stop me and ask for a VAT certificate?'
'No,' they said.
'So why are you asking me for one for my boat?'
'That is different.'
'Oh? How?'
'Errrr … '

Quite simple. EU rules are very specific about leisure boats and different from other products such as cars. There is a requirement for free movement to be able to show that VAT has been paid. The rule was established because of the highly mobile nature of boats and the possibility of avoiding VAT. Payment should strictly be in the state where the boat is used, but it is acceptable to pay in the state of purchase and then move to another state.

 

[Tranona]

With my pedant hat on the car example is different because you can't get UK registration unless VAT is paid. I take your point though. Why didn't he want to see proof of VAT for your watch and your underpants? It's all nonsense.

I presume there's a lag of some months between paying for a new boat and the builder settling its VAT commitments. So I'd guess that, ironically, VAT has not been paid on most boats in their first few weeks on the water!

Another point is that if I were ever going to buy a boat I'd deffo be looking for one without proof of VAT and trying to negotiate a big discount on the back of it. I suspect many buyers are well aware that the whole issue is nonsense, but are hardly going to admit that during negotiation.

You seem to be making up your own explanation and it is wrong. The rules on boats are very specific and different from other products.

Payment of VAT occurs at the time the invoice is issued. The seller does not pay it direct in its entirety but accounts periodically for his VAT transactions, offsetting inputs against receipts and accounting for the difference. So there is no direct connection between your payment and HMRC.

 

[Mark-1]

The rules on boats are very specific and different from other products.

Yup, I hadn't appreciated that. I can't be bothered to check but it sounds plausible.

Payment of VAT occurs at the time the invoice is issued. The seller does not pay it direct in its entirety but accounts periodically for his VAT transactions, offsetting inputs against receipts and accounting for the difference. So there is no direct connection between your payment and HMRC.

Your first sentence totally contradicts your second!

VAT is not paid at the time of invoice at all, it's paid by the builder/seller to HR, presumably in arrears. * Presumably several months in arrears. So VAT on a new boat will not have been paid on the day the owner takes ownership. (Except occasionally by fluke.)

The buyer has no idea whatsoever if VAT has been paid. For all he knows the builder/seller has useless finance staff and consistently underpays his VAT. (Or overpays, for that matter.)

Hence: "I presume there's a lag of some months between paying for a new boat and the builder settling its VAT commitments. So I'd guess that, ironically, VAT has not been paid on most boats in their first few weeks on the water!" *

* Which is surely exactly that you mean by: "accounts periodically for his VAT transactions"?

 

[Tranona]

Yup, I hadn't appreciated that. I can't be bothered to check but it sounds plausible.



Your first sentence totally contradicts your second!

VAT is not paid at the time of invoice at all, it's paid by the builder/seller to HR, presumably in arrears. * Presumably several months in arrears. So VAT on a new boat will not have been paid on the day the owner takes ownership. (Except occasionally by fluke.)

The buyer has no idea whatsoever if VAT has been paid. For all he knows the builder/seller has useless finance staff and consistently underpays his VAT. (Or overpays, for that matter.)

Hence: "I presume there's a lag of some months between paying for a new boat and the builder settling its VAT commitments. So I'd guess that, ironically, VAT has not been paid on most boats in their first few weeks on the water!" *

* Which is surely exactly that you mean by: "accounts periodically for his VAT transactions"?

You misunderstood. The invoice date is the transaction date, NOT when the seller settles his VAT account. That may never happen, for example if the business goes bust. Or there may not be a payment in the period because the inputs exceed the receipts.

For the purposes of determining whether VAT has been paid on a boat, and how much, it is the invoice date and amount that matters. How and when the seller accounts for it (or not) is irrelevant. Hence the observation that there is no direct connection between the payment from the buyer and HMRC. The exception to this is where the buyer imports the boat and pays VAT direct to HMRC and gets a receipt, although even then HMRC do not keep a record of the transaction so the receipt remains the only evidence.

 

[[163233]]

With my pedant hat on the car example is different because you can't get UK registration unless VAT is paid.

Do kit builders don't have to prove VAT was paid on every part?

 

[Mark-1]

Do kit builders don't have to prove VAT was paid on every part?

I have no idea. I'm pretty sure that DVLA/HMRC don't forensically audit every company who supplied parts for a kit car so the whole idea of 'proof of VAT' seems nonsense anyway.

I still find it deliciously ironic that the Boat with the very best 'proof' of VAT being paid will be one fresh out of the factory that day, which will come with a receipt that can be verified simply by calling the builder (which will still be trading). Yet in the case of that boat it's a near certainty no VAT has been handed over (yet). Tickles me.

 

[doug748]

......

Another point is that if I were ever going to buy a boat I'd deffo be looking for one without proof of VAT and trying to negotiate a big discount on the back of it. I suspect many buyers are well aware that the whole issue is nonsense, but are hardly going to admit that during negotiation.

There is a good deal of sense in this outlook. The OP's buyer will either accept a reduction in lieu of the missing paperwork or will go. He may well go away and then re-think the matter when he has looked at some more boats. Either way I think the OP would be well advised to continue to market the boat as he has, and take any hitches with future prospective buyers as they come.

It's still a bit baffling that so much paperwork is "lost". On buying a boat in 1994 I recall being very interested in proof of VAT payment even though the boat was old enough to be treated as exempt. But there we are.

 

[Tranona]

Do kit builders don't have to prove VAT was paid on every part?

The guidance from HMRC is to keep as much as you can, particularly for the major items such as hull, engine, rig etc.

No big deal these days as so few people build their own boats of any size either from scratch or from mouldings. Complying with the RCD and VAT are two of the factors that put people off, although the main reason is economic.

 

[Heckler]

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.

Get a T2L as written about on here a lot and written up by me for PBO a couple of months ago. PM me and I will try and find the article. Or phone 07967 313792
Stu

 

[Heckler]

Yup, I hadn't appreciated that. I can't be bothered to check but it sounds plausible.



Your first sentence totally contradicts your second!

VAT is not paid at the time of invoice at all, it's paid by the builder/seller to HR, presumably in arrears. * Presumably several months in arrears. So VAT on a new boat will not have been paid on the day the owner takes ownership. (Except occasionally by fluke.)

The buyer has no idea whatsoever if VAT has been paid. For all he knows the builder/seller has useless finance staff and consistently underpays his VAT. (Or overpays, for that matter.)

Hence: "I presume there's a lag of some months between paying for a new boat and the builder settling its VAT commitments. So I'd guess that, ironically, VAT has not been paid on most boats in their first few weeks on the water!" *

* Which is surely exactly that you mean by: "accounts periodically for his VAT transactions"?

Ive been registered for VAT in quite a few businesses. The only figures the Revenue see are your turnover, income and expenditure vat and the difference between them is what basically your VAT bill is based on. The detail is never gone in to. Think when I had a restaurant, Fred Smith X amount for a takeaway? Get real!