VAT Status

[Heckler]

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!

http://www.rya.org.uk/knowledge-advice/boating-abroad/Pages/t2l.aspx
Here you go, whilst there are a few caveats, it does say:

"Although a T2L does not of itself prove that VAT has been paid, because a T2L is validated by HMRC it might nevertheless assist in satisfying foreign customs officials that a boat has Union status and is entitled to free movement. Boaters intending to visit EU members states other than those referred to above may therefore also wish to apply for a T2L."

Basically you fill in a form and send it with copies of your bill of sale and registration. I had mine back in less than a week.

 

[Mark-1]

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!

Yup.

Now I've started on this train of thought it also occurs to me that theoretically there could be a boat builder small enough not to be VAT registered. Say, building one £80k boat a year. ICBW but I'm pretty sure someone buying one of his boats would never have a VAT receipt and the builder would not pay a penny of VAT on the value he added by building the boat. (Obviously he wouldn't be able to reclaim any on the stuff he bought in either.) ....and self builds, let's not forget self builds.

 

[Heckler]

Yup.

Now I've started on this train of thought it also occurs to me that theoretically there could be a boat builder small enough not to be VAT registered. Say, building one £80k boat a year. ICBW but I'm pretty sure someone buying one of his boats would never have a VAT receipt and the builder would not pay a penny of VAT on the value he added by building the boat. (Obviously he wouldn't be able to reclaim any on the stuff he bought in either.)

Exactly! Anyway nowadays with a computer and Quickbooks or such? and RYA in their quote are basically saying nudge nudge!

 

[Mark-1]

Exactly!

I now have the amusing vision of someone handing over their receipt and being asked for the receipt for the paper it's written on - and the staples.

 

[Mark-1]

and RYA in their quote are basically saying nudge nudge!

When this issue first came up I remember thinking if I were ever in a situation where I needed to prove any of this stuff I'd just photocopy/create appropriate documents for the type of boat and hand it over saying I'd found the docs on the boat and had no idea of the provenance of the documents but maybe something here would be what the requester wanted. My gut feel is that alone would get the box ticked.

Sounds like the RYA/HMRC have offered a way to do exactly that, but with a slightly more official looking document.

If I were buyer I would clearly still be distraught that the boat I was looking at didn't have essential original paperwork, and only a substantial discount would persuade me overlook such a serious deficiency.

 

[Tranona]

Yup.

Now I've started on this train of thought it also occurs to me that theoretically there could be a boat builder small enough not to be VAT registered. Say, building one £80k boat a year. ICBW but I'm pretty sure someone buying one of his boats would never have a VAT receipt and the builder would not pay a penny of VAT on the value he added by building the boat. (Obviously he wouldn't be able to reclaim any on the stuff he bought in either.) ....and self builds, let's not forget self builds.

Then he would provide a sheaf of VAT invoices for his material input in just the same way as self builder is expected to.

 

[dom]

Then he would provide a sheaf of VAT invoices for his material input in just the same way as self builder is expected to.

But if he's not registered for VAT as below £85k threshold?

 

[Tranona]

But if he's not registered for VAT as below £85k threshold?

Then he will still pay VAT on all his materials, but of course not be able to reclaim it. shows that VAT has been paid on the boat where applicable.

In reality this is not a big issue, firstly because there are very few "builders" in this situation and secondly the requirement for proof is only an issue if the boat leaves the UK for the EU. As we have seen this turns out to be for most a non issue.

 

[dom]

Then he will still pay VAT on all his materials, but of course not be able to reclaim it. shows that VAT has been paid on the boat where applicable.

In reality this is not a big issue, firstly because there are very few "builders" in this situation and secondly the requirement for proof is only an issue if the boat leaves the UK for the EU. As we have seen this turns out to be for most a non issue.

Indeed, the £85K exemption typically only matters commercially for sole traders selling services with little claimable input.

Agree with your central VAT argument.

 

[Mark-1]

Then he would provide a sheaf of VAT invoices for his material input in just the same way as self builder is expected to.

I'm not doubting you, but linky, please.

 

[Tranona]

I'm not doubting you, but linky, please.

Question D2 in the RYA/HMRC VAT FAQ sheet on the RYA site

Document well worth reading as it deals with just about every issue raised in this thread - and more besides.

 

[lw395]

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"?

It's clearer if you look at it from the perspective of the VAT registered trader being the tax collector.
The consumer pays the VAT, when he buys the goods.
As a VAT registered trader, I issue VAT receipts, the customer has paid the VAT. If I fail to pass that VAT on the the Church, then that is between me and them, not the retail customer.

But from a boat perspective, the big difference from other goods is that VAT is (often) payable when you import something, whether it's changed ownership or not.
And yachts are naturally capable of leaving the Customs union and returning.

If you compare with the situation regarding cars for example, cars have to be registered. I think you will struggle to use a car in the EU without registering it, and to register it in the UK at least I think you need to show it has been legally imported and VAT paid. An individual might be able to import their personal car free of VAT (e.g. an ex ex-pat?) but if you import cars from California by way of trade, you'll be paying VAT on them.
The tax man does like a bit of paperwork.

 

[Joker]

"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?"

Sorry to disappoint you, but this on board, and they were very polite but very very insistent.

 

[Bitterend]

I've said it before and I'll say it again,,,,,,my yacht was impounded by UK HMRC until I proved it was VAT exempt. This ocurrred in Fox's yard, Ipswich.......
So................... it did happen to me and several other owners. Here we have another instance of a contributor having no knowledge of facts, but Not preventing him from couching his opinion as a categoric statement....Grrrrrrr

 

[Mark-1]

In case anyone else is curious:

http://www.ybw.com/forums/showthread.php?455277-VAT-reality&p=5683863#post5683863

The situation experienced by other owners and myself is summarised thus:
My boat was on the hard in Ipswich and when I returned to the marina there was a brown envelope awaiting me from HMRC. Several such envelopes had been issued to owners. It was effectively a writ forbidding the boat to be moved until proof of VAT paid had been seen by HMRC. I had bought the boat as VAT paid but didn't get a certificate - OK, I should have insisted! I phoned HMRC and they said they would visit me at the marina. As my boat was built / registered in 1978, my Part 1 Certificate was accepted as proof of date of 1st registration. But the visiting HMRC officials wanted absolute, quantifiable proof the boat was in the EU on 31 Dec 1992. Fortunately, I had faxed copies of marina bills from Estepona marina which I had retained when I cleared out the boat on purchase.
I eventually received a letter from HMRC confirming they were satisfied the boat was VAT exempt
!

 

[jwilson]

Not disputing Bitterend and Mark1's experience, but this is/was very very unusual. There must have been something about one or more boats in the yard that triggered this, and probably others got "papered" too "just in case".

Did anyone ever have to wrongly pay VAT a second time? The RYA have for a long time been asking for evidence of this, and the last time I discussed this with their legal dept. they said it just didn't happen - the cases where VAT got paid were genuine evasion attempts - ie boat exported VAT free and then re-imported without declaration and payment.

 

[CLB]

I've said it before and I'll say it again,,,,,,my yacht was impounded by UK HMRC until I proved it was VAT exempt. This ocurrred in Fox's yard, Ipswich.......
So................... it did happen to me and several other owners. Here we have another instance of a contributor having no knowledge of facts, but Not preventing him from couching his opinion as a categoric statement....Grrrrrrr

There is more to your story than the thread above lets on. The big question is: why was your boat in particular(and the others), singled out for this treatment. The Vat man doesn't routinely visit marinas slapping brown envelopes on random boats. In fact in all the years I have been involved in boats, yours is the only case like this I have ever heard of. Tell us more.

 

[Mark-1]

Not disputing Bitterend and Mark1's experience.

Not my experience, I just found Bitterend's old post so everyone could read it in a little bit more detail without having to search.

My own gut feel is there's more to the story. Perhaps Biterend's boat was imported. Perhaps imported by him. Perhaps there were several recently imported boats in the same marina.

 

[CLB]

He does seem strangely quiet on this. Even in the other thread he offered no further explanation.

He also says above that he had to prove it was "VAT exempt" rather than "VAT paid". Maybe there is something in that.

 

[Tranona]

He does seem strangely quiet on this. Even in the other thread he offered no further explanation.

He also says above that he had to prove it was "VAT exempt" rather than "VAT paid". Maybe there is something in that.

That probably means it was built pre 1986, although the correct term is "deemed VAT paid" because of the age and it was in the EU on the qualifying day in 1992.

As in the last thread he has failed to provide any further information to support his story - not that anybody is doubting it, but just maybe questioning why such an unusual thing happened.