VAT Status

I think that I have a possible solution. I believe that HMRC is issuing T2L's for those that require them. If you speak to the RYA they will advise how to get one and unless I have misunderstood things it will work perfectly well as proof of VAT status.
 
Tranona said:
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.
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That is because the Europeans operate on the Napoleonic code and habeas corpus is thrown out so you have to prove innocence, in this case prove you are not operating without VAT. Unfortunately in the UK with our EU membership many new laws have been the reverse of habeas corpus, one of the oldest is living off the immoral earning of a prostitute but more recently it is applied to driving offences and you have to prove who was driving if it was not you. (OT, a husband named his wife as driver and the wife pleaded not guilty and she said the husband was driving, owing to the lack of any other evidence to identify the actual driver the courts found them both guilty of speeding and both were fined).
 
Seven Spades said:
I think that I have a possible solution. I believe that HMRC is issuing T2L's for those that require them. If you speak to the RYA they will advise how to get one and unless I have misunderstood things it will work perfectly well as proof of VAT status.
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I am afraid that is not the case. A T2L just states that the goods are community goods and free to move. HMRC explicitly state that it is not proof of VAT payment. Where it helps is in the case of some states (principally Portugal - but apparently only one office! and Croatia) ask for this rather than the VAT invoice. I have one for my boat issued by the trucking company that brought the boat back from Spain.

There is a fuller explanation on the RYA site together with instructions on how to apply to HMRC.

As I pointed out earlier HMRC can never confirm VAT has been paid on an individual boat as there is no record. Even when you import your boat from the US and pay your VAT direct they will not keep a record and the only record will be your receipt. So keep it safe!

The best you will get if you submit your Bills of Sale and other documents that show the boat has been in the EU and the last transaction was in the UK between private individuals is a wooly statement saying that there is no VAT to pay. Not the same as saying VAT has been paid. That is the basis on which they can issue a T2L.
 
I asked the HMRC officers why they had targeted Fox's and they said that non-payment of VAT on yachts had been under-regulated. This had resulted in a 'push' on inspecting yachts along the South coast and East coasts. OK, this ocurred in 2004 and my point is........ it did happen and may happen again!!
 
Bitterend said:
I asked the HMRC officers why they had targeted Fox's and they said that non-payment of VAT on yachts had been under-regulated. This had resulted in a 'push' on inspecting yachts along the South coast and East coasts. OK, this ocurred in 2004 and my point is........ it did happen and may happen again!!
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But why your boat. Did it happen to have Guernsey or jersey on the transom?
 
OH! and for the conspiracy theorists.... my boat was a Dutch built ketch built in 1978, previously British owned and moored in Palma, Mallorca. The broker was De Valk who advised that as both parties were British we use the MCA Bill of Sale. I sailed the boat from Palma to Malta and then to Fox's for some major work and so I could continue working part-time. (I'd previously been commuting from both Mallorca and Malta) The boat was Part 1 Registered through both previous and my ownership. The boat is now sold, moored in Lefkas with German flag and registration and the VAT exempt letter is onboard..........so I'm afraid nothing untoward at all, at all!!
 
Bitterend said:
I asked the HMRC officers why they had targeted Fox's and they said that non-payment of VAT on yachts had been under-regulated. This had resulted in a 'push' on inspecting yachts along the South coast and East coasts. OK, this ocurred in 2004 and my point is........ it did happen and may happen again!!
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I think that was an initiative of a Mr Gordon Brown. At the time I was at anchor in the Scillies when a large warship disgorged a RIB full of armed men in sinister black. They approached me as I was enjoying my first coffee and demanded VAT evidence. "She's pre-86", I replied, "deemed VAT-paid". Although I was fully prepared to produce the evidence, they gave me a cheery "righto" and returned to their mother ship.
Revenue recovered by Exchequer: £0.00.
Cost of recovery: £a blinking lot.
Will HMG do it again?: logically, no, but they're certainly daft enough.
 
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macd said:
I think that was an initiative of a Mr Gordon Brown. At the time I was at anchor in the Scillies when a large warship disgorged a RIB full of armed men in sinister black. They approached me as I was enjoying my first coffee and demanded VAT evidence. "She's pre-86, I replied, deemed VAT-paid". Although I was fully prepared to produce the evidence, they gave me a cheery "righto" and returned to their mother ship.
Revenue recovered by Exchequer: £0.00.
Cost of recovery: £a blinking lot.
Will HMG do it again?: logically, no, but they're certainly daft enough.
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Indeed, around 2004 I remember UK Customs clambering across rafts of boats at Cowes Week checking VAT papers and nothing else. BTW I hear they would be happy to restart these checks if given another 6-10 boats!

Aside from that, UKBF ships are armed but their boarding parties do not routinely carry weapons for yotty visits. And a full suss warship dispatching armed sailors not customs officers? Nuts.

Still, suppose it would make a good pic if the new Queen Elizabeth carrier sails by bedecked with F-35s and hails ..”Allo allo allo, VAT papers please Sir ...Oh and i don't s’pose you know anything about shaft couplings?” ;)
 
Tranona said:
I am afraid that is not the case. A T2L just states that the goods are community goods and free to move. HMRC explicitly state that it is not proof of VAT payment. Where it helps is in the case of some states (principally Portugal - but apparently only one office! and Croatia) ask for this rather than the VAT invoice. I have one for my boat issued by the trucking company that brought the boat back from Spain.

There is a fuller explanation on the RYA site together with instructions on how to apply to HMRC.

As I pointed out earlier HMRC can never confirm VAT has been paid on an individual boat as there is no record. Even when you import your boat from the US and pay your VAT direct they will not keep a record and the only record will be your receipt. So keep it safe!

The best you will get if you submit your Bills of Sale and other documents that show the boat has been in the EU and the last transaction was in the UK between private individuals is a wooly statement saying that there is no VAT to pay. Not the same as saying VAT has been paid. That is the basis on which they can issue a T2L.
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An Update to my original post. Tranona is of course correct and the woolly statement is what I got. The potential purchaser is a first time buyer which in my case is probably not that helpful as she wants every i dotted and t crossed.

However as advised on here I did lower the price and I believe with the docs I do have she is now going to buy the boat (its a give away at the price!). It was very frustrating dealing with both HMRC and RYA. My purchaser spoke to them and was told she must have VAT proof. The RYA web site info reflects HMRC advise of course. I'm just amazed that with sufficient info HMRC can't issue at paid status document. They did say that yes the 1985 date should be "revised" but that'll never happen. I guess that I am one of the few now, so the issue recedes as buyers and sellers know the VAT situation. I'll be so glad when I can actually see the proceeds of the sale in my bank account. Thanks for all your input particularly Tranona who had good knowledge of the situation.
 
Keep fingers crossed that it all goes through.

The reason HMRC will not issue a paid status document is a straightforward legal one. VAT being a transaction tax rather than an asset tax means it is not permanent and the boat can subsequently lose its status. The most obvious being if/when it leaves the EU. Unless when re-entering the EU it qualifies for one of the exemptions it has to pay VAT again. So the original receipt is no longer valid. There are other more complex situations involving purchase and sale of the boat to VAT registered entities where VAT paid status can be lost. None of this "loss" is recorded but only comes to light when the facts are known the HMRC (or their lawyers') view is that they can be open to legal action if they make a statement that is then found to be false - even if there is no way of checking it at the time.

There are many UK owned boats in Turkey, for example that have lost their VAT paid status and the owners do not appreciate the difficulties they may face selling, or any new owners if they try to bring the boat back into the EU.
 
Graham376 said:
But what use will a T2L issued now be after Brexit when we're no longer in the Customs Union and UK goods will no longer be free to move?
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It still has some value for a UK person whose boat is in the Uk on B-Day and subsequently keeps it UK based and might want to sell it in the UK. Beyond that simple case, lies speculation.
 
Graham376 said:
But what use will a T2L issued now be after Brexit when we're no longer in the Customs Union and UK goods will no longer be free to move?
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No use at all for a UK boat if the UK becomes a third country.

However, this is all speculation as the UK may never leave the EU in reality but depending on how far we diverge from being full members there may be an alternate system with its own paperwork to facilitate the movement of boats (and people).
 
lw395 said:
It still has some value for a UK person whose boat is in the Uk on B-Day and subsequently keeps it UK based and might want to sell it in the UK. Beyond that simple case, lies speculation.
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Completely useless for that if you see the problem in a sale as no evidence of VAT payment.
 
Joker said:
18 months.
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Actually, three years if retained in the same ownership**. 18 months is the usual maximum period allowed for Temporary Importation into the EU for a leisure craft owned by a non-EU resident.

Should the same boat be sold during it's stay in Turkey, then Graham's comments in post #99 apply.

** there are some exceptions to this, explained in section 3.15, here: https://www.gov.uk/government/publi...ur-pleasure-craft-to-and-from-the-uk#section5
Sections 3.4 and 3.5 of the same link explain the three year rule.
 
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