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petie

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Continuing the saga of proving that VAT has been paid on a boat in the absence of the original invoice, two E mails and a number of phone calls from representatives of Her Majesties Customs and Excise all insist that the original invoice is the only acceptable document. The Legal Officer of the RYA pointed me to an RYA leaflet and confirmed that following discussions with HMCE etc, copies of the original invoice would be considered acceptable proof of VAT payment, at least within the United Kingdom. When I explained this to the appropriate adviser at HMCE, he asked me what RYA stood and who were they so he was a great help. Anyway, at least four of HMCE disagree with the RYA and on the balance of probabilities, I believe the RYA are correct. Now going through complaints procedure with VAT people.
 
Good luck, must be very frustating!
I have an invoice from Essex Boat Yards stating the vessel is free of encumbrances and is VAT paid, would this be accepted by HMRC I wonder?
 
Well since you have a HMRC contact so have opened dialogue, ask him a different question. Ask him:

"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.

Now, against that background
(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?"

The answer to all these questions is no. You don't need an HMRC bloke to tell you cos it is clear under the law. But if you can get them to answer "no" (which they must) then you're in great shape. This whole "proof of VAT paid" thing is a storm in the wrong teacup.

Good luck anyway!
 
Hi sneds

I had all of that but the experts at HMCE say "only the original will do" I think they are wrong and possibly the guy who was going to buy it but he wont take the chance now.
 
from HMRC website:
For how long must VAT records be kept?
''Generally you must keep all your business records that are relevant for VAT for at least six years. If this causes you serious problems in terms of storage or costs, then HMRC may allow you to keep some records for a shorter period.''
My boat is at least 20 years old, and the builder ceased trading around 10 years ago.
The last owner was paid cash in a private sale, the only paperwork I have (edit: relevant to VAT, I have a Bill of Sale) is his last marina bill, which I paid as part of the deal. (2008) So I have nothing on paper to satisfy the customs, and even if the builder was operating, he does not legally need to have kept the records this long anyway. If the builder doesn't need to keep the invoice, why should I?
 
Basically, the VAT is due on first sale and goes with the event not the boat anyway but the people at HMCE seem to be a particular breed and fallback on "we have no power to discuss the rights or wrongs of the regulations". I dont think that in a thousand years the copy invoice would be questioned but if a buyer wants to stand by the rules there is not a lot that can be done. Hope the RYA wil get some sense out of them. They did after all seem to have come to some agreement even though none at HMCE know anything about it.
 
Unless you're leaving the EU I am led to believe it is not a major problem.
Jsut what I've in the pub and not substantiated.us
 
It is if you are trying to sell her but all I have ever been asked for when abroad is boat registration details such as PART 1 OR SSR
 
[ QUOTE ]
Basically, the VAT is due on first sale and goes with the event not the boat anyway

[/ QUOTE ]

Exactly. If someone failed to pay VAT earlier in the boat's life, that's not your problem nor can customs seize the boat. Period.

But you're right, buyers THINK it is a problem. This whole VAT thing has been massively and hamfistedly bigged up by the RYA (whose legal team are bottom quartile with distinction) even entering into discussions with HMRC about "will copy invoices be ok?". Now, through their mishandling, Joe Public boat buyer THINKS that VAT is his problem, so you have that hurdle to cross when innocently trying to sell your boat.

What we need from RYA is a big piece on their website saying VAT is not a problem for a future buyer even if all the invoices have disappeared, just as is being said on this and other threads. Pull your finger out RYA and read the law!

Sorry, in my post above I thought you were buying. I see now that you're selling. Same principles apply though.
 
JFM, what you're saying doesn't quite make sense. If I (knowingly or unknowingly) bought a boat that had not had VAT paid on it I would not be able to absolve myself of the responsbility by claiming that is was down to the original purchaser to have paid it.

Pete
 
Thing is, its not just Joe Public.

If you try to get a marine mortgage on a boat, the bloody finance houses will not pay out without proof that VAT has been paid. So even the pros dont understand the law and are only compounding the issue.
 
Regarding Petems comment , the RYA quote VAT is payable when a chargeable event occurs, this could be when a vessel is supplied by a taxable person who is registered for VAT. I am not so Vat is not payable? (Again)
 
That's just not right Pete. you say "I would not be able to absolve myself of the responsbility by claiming that is was down to the original purchaser to have paid it" as if that were self evident. It isn't. The ONLY way you are liable to pay money to the state in taxes is if there is a clear law imposing the liability on you. All the UK statute is online, so find me a law that says you are resonsible for my VAT obligations just becuase you now own a boat that i used to own. (Hint: don't bother, the law doesn't exist. Neither is there a law that says you have to pay the income tax bill of the fish-and-chip shop just cos you bought a bag of chips. I am responsible for my taxes, you are resopnsible for yours. Period.).

I repeat, this is all bigged up by RYA and it would be great if sorted out properly. There's a 2009 project for RYA. And as Jez says, it has infected finace houses too!

Hey, I'm happy to be proved wrong and will eat much humble pie if anyone can find me that law. I've looked, and I don't reckon it's there, but i could have missed it. I repeat, there is never an obligation to pay tax without a clear law imposing it.
 
Correct. And only the party to the event pays it. Not someone who innocently bought a boat 5 years after the event in which he played no part.

FFS, why should Mr B EVER be responsible for Mr A's taxes? The annoying thing is, some people have managed to put out misinformation that says Mr B is responsible, and it has been repeated so often that people including RYA and finance houses think it's true. I dunno who put that story out but it wasn't me guv.
 
jfm, please dont be so naive about HMRC. You can speak to several different people in the organisation about a particular topic, they will contradict each other and their publications, they will never give you a definitive answer and if you ask them if you should follow their answer, all they will say is 'it's up to you to make a decision as to whether to accept their advice or not'!
Also, there is a piece of legislation that HMRC have decided on that they are slowly introducing into many industries, first was mobile phones and now recruitment - it means that if A does not pay the VAT, then HMRC can go after the next person, lets say B for that tax.

If you have a copy of the original tax invoice, this will be sufficient to prove that VAT has been paid - HMRC will need to prove that the VAT upon the said invoice has not been paid by the broker in order to claim any VAT on the boat. If the boat was supplied in the UK, you should have no worries anyway.
 
You. The event of importing a boat from outside the EU is a VATable event. You imported it, so the VAT is your personal liability.

If you dont pay the VAT and I buy the boat off you in good faith 1 week later, the VAT is still your liability. I am not responsible for your personal tax obligations, whether VAT, income tax or any other taxes.
 
Thanks for the "naive" comment. Actually I am listed in The Euromoney Guide to the World's Best Tax Advisers as among the top 10 tax experts in the UK on M&A deals for the last several years, and they don't rank people within the top 10. To be honest, I don't do much VAT law but I am hugely familiar with the structure of tax law and how to deal with HMRC, though it's usually Dave Hartnett not a tax inspector from Cleethorpes.

Let's get somethinbg striahgt. HMRC can't decide anything. Parliament decides, and their decisions are published in things called laws. This is the UK, remember, not Bolivia. If HMRC want to collect a strange tax, the first thing you ask them to do is show you the law that imposes the tax. Still, in all these threads, no-one has found that rule on boat VAT, despite all the law being online and text-searchable. Lots of folks on here are proprietors of businesses and have accountants and tax advisers. Ask them to find the law and post it here. My offer to eat lots of humble pie if it is found still stands (as i say, I dont specialise in VAT, though I know a lot more about it than anyone in the RYA).

The legislation you refer to (that parliament decided on, not HMRC, incidentally) is designed to catch carousel fraud. It has zero applicability to boats. You are correct that B can be resonsible for A's taxes in carousel cases. Yeah, I could have explained that as an exception to my "B is not liable for A's taxes" in my posts above but this is a forum and I'm trying to be concise and it is irrelevant and off the point. (Indeed, there are many cases where B is respnsible for A's tax, by virtue of very specific laws, but none of them are connected with boats).

Anyway, the carousel law is an exception to the "B is not liable" point. Indeed, it kinda proves my point: to combat massive carousel fraud parliament decided it needed to collect A's tax from B (in order to change the behaviour of B, incidentally) and in order to collect that tax they had to impose a specific law. They haven't imposed that law on boats, which proves my point eh?
 
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