VAT

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It may be cobblers but it is what the legal officer of the RYA E Mailed me this morning. "HMRC are re drafting Notice 8 and am told it will refer to copy invoices being acceptable as proof of VAT payment." Is that cobblers?

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No, its cobblers that it proves anything.
 
What's needed is a Mark Rowlands type of case. This was where the insurance industry effectively sponsored a case to clarify the operation of the principle of subrogation. Basically the issue was whether the landlord (who had insured the building) and its insurers by subrogation, could recover damages from tenants by whose negligence the insured building had been destroyed. There was a lot of confusion about whether this was possible prior to this case and the myth had grown up that tenants needed to get a specific waiver every time from the landlord's insurer. (They don't).

As with boats and VAT the myth had become stronger than the reality. Hence, when an appropriate case came along the industry was happy to run it to reinforce what the law was.

Is anyone aware of HMRC ever having sued any private boat buyer for anyone else's unpaid VAT?

The trouble with boats and VAT is that HMRC aren't showing any inclination to test the point. If I buy your boat and HMRC were to sue me for VAT which they think you ought to have paid then, no doubt, the RYA would rally behind me rather than giving misleading advice and we'd get the law restated in court, because (like HMRC) the courts don't make the law, they interpret what it is.
 
BJB, a test case is a good idea where the law is in doubt. Indeed often HMRC would agree to running the case

But it wont work here. There is NO DOUBT here. If I import a boat into UK and naughtily dont pay the VAT, then 6 months later I sell the boat you you, there is NO LAW stating that you must pay my personal VAT liability or that your boat may be seized by HMRC. So there is nothing to test in court. There is no way HMRC would ever come to you to ask you to pay my VAT or take your boat. So there will never be a dispute to settle in court

The way to fix this is for MBY/RYA to write a gudance note, get it agreed by good tac advisers and get HMRC to agree it, then oublish it
 
Well, if that could be done it would be a massive benefit to leisure boaters in the UK. I had a problem with it myself a year or so ago. I wanted to shift a boat very quickly to make way for the next one and was chipped on the price by a trader because of the lack of a VAT invoice. I knew it wasn't an issue but no-one else was offering to take the boat away in the right timescale so he had me by the short and curlies. Whether he knew the VAT point was spurious or not is, as they say, unknown and, at the end of the day, I was happy with the price.
 
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If I import a boat into UK and naughtily dont pay the VAT, then 6 months later I sell the boat you you, there is NO LAW stating that you must pay my personal VAT liability or that your boat may be seized by HMRC .... There is no way HMRC would ever come to you to ask you to pay my VAT or take your boat

[/ QUOTE ]That's simply amazing.
A citizen of Guatemala could see such naughty import as a great job opportunity.
He flies to the UK, buys a non-VAT paid boat, resells it to a UK citizen, and flies back to his home Country.
Job done, we have a boat which is now magically VAT paid, and HMRC left with the only option of catching somebody in Guatemala who should have paid the VAT.

Now, since I have no reason to think that you're telling porkies (if anything, the opposite), there is one thing I'd politely suggest to all those who wish to involve RYA and MBY, draw guidelines, ask HMRC for a test case, and so forth: don't.
It can't get any better than that.
 
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and HMRC were to sue me for VAT which they think you ought to have paid then, no doubt, the RYA would rally behind me

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Have you ever had anything to do with the RYA?

Snowballs and Hell Freezing Over comes to mind.
 
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If I import a boat into UK and naughtily dont pay the VAT, then 6 months later I sell the boat you you, there is NO LAW stating that you must pay my personal VAT liability or that your boat may be seized by HMRC .... There is no way HMRC would ever come to you to ask you to pay my VAT or take your boat

[/ QUOTE ]That's simply amazing.
A citizen of Guatemala could see such naughty import as a great job opportunity.
He flies to the UK, buys a non-VAT paid boat, resells it to a UK citizen, and flies back to his home Country.
Job done, we have a boat which is now magically VAT paid, and HMRC left with the only option of catching somebody in Guatemala who should have paid the VAT.

Now, since I have no reason to think that you're telling porkies (if anything, the opposite), there is one thing I'd politely suggest to all those who wish to involve RYA and MBY, draw guidelines, ask HMRC for a test case, and so forth: don't.
It can't get any better than that.

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Mapis there are several flaws in your thinking there: (!)

1. OK, suppose Mr Guatemala does an illegal act of importing boat to UK and not paying VAT. 1 month later he sells it to Mr B, a UK citizen. Mr B is innocent, he buys in good faith. Give me one good reason why Mr B should be personally responsible for the finacial loss from Mr Guatemala's crime? All UK citizens should suffer that loss, not just Mr B. We pay for police and customs officers to stop this illegal activity and mostly they do a good job. But some criminals get away with it. It is grotesquely unfair for Mr B personally to reimburse the other 58million UK citizens for that loss to the UK exchequer. Give me one good reason why he should?

2. Last week, Sailorman on this form bought a Raymarine plotter off me, following an ad on the For Sale forum. Otherwise, I have no connection with Sailorman. Do you think he should be responsible for my personal taxes, just becuase he bought something off me? Of course he shouldn't, and of course there is no law in this country that says he is. It is an absurd idea.

3. You say "HMRC left with the only option of catching somebody in Guatemala who should have paid the VAT". Well yes. That's exactly how it should be. Who the hell else should HMRC pursue? You? Me? We're just as "fair" a target as Mr B. Mr Guata committed the crime, the only option is to catch him. If he commited a murder, it would be the same. You wouldn't send the family of the man he murdered to jail would you?

4. Yeah it's a great job opportunity for Mr guata. So is robbing banks and growing heroin. It happens. Funnily enough on TV tonight there was report of the sentencing to 10years in jail of one of the biggest carousel VAT fraudsters in the UK. He has been given 2 years to repay £26m in VAT else he gets another 10yrs in jail. Some criminals get away with it, some get caught. But your observation that Mr Guatemala could have a "job" committing crime doesn't impact on this debate one iota.

5. You say "we have a boat which is now magically VAT paid". No, you misunderstnad. The whole point I'm trying to make here is that the "VAT paid" status of a boat is not relevant in the way people describe to a buyer of the boat within the EU. VAT is a liability of people not boats. If I buy Mr Guata's boat, it doesn't matter TO ME whether he imported it without paying that VAT. The VAT is a matter between him and HMRC, just like his income tax. A bot sold by a private individual is ALWAYS VAT paid in the hands of the buyer.

6. But really the habit of labelling of boats as "VAT paid" in this context is an oxymoron. The "VAT paid" label ought to be used in different circumstnaces. For example if I have a boat outside EU I might advertise it for sale as "not VAT paid" to warn any buyer that they will have to pay VAT if they buy it and import it. Or if I previously imported it and paid VAT on it I might advertise it "VAT paid" to tell buyers that I can deliver the boat to them back into the EU with no further VAT to be paid. Or if I am a business who owns a boat on which I got a refund of the VAT I might advertise it for sale at €x + VAT, to make clear that I have to account for VAT on a sale (I could also advertise it as €Y inclusive of VAT). That is as far as the "VAT paid" terminology should be take. Everything else is mistaken and mixed up. (I'm ignoring the Med commercial boat system here)

It's not amazing at all. It's perfectly rational. What's amazing is that so many people have mixed this up for so long. It isn't even that complex - all pretty logical
 
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Mapis there are several flaws in your thinking there: (!)

[/ QUOTE ]Possibly.
As you can imagine, I'm just using common sense, on top of a knowledge of laws and regulations which isn't extended to the UK.
But I can't see which are my flaws exactly. Following your list:

1. I never said he should, but as a matter of fact, at least in some EU Countries, he is. Or at least, he'd be subject to the inversion of onus probandi. Either ways, I have two words for Mr.B: good luck.

2. Let's assume you bought your plotter in the US and brought it here without paying VAT and duties. That plotter (again, not sure about UK, but definitely in some EU Countries) can be confiscated. Any time, anywhere - period. The advantage of Sailorman in this case, being the plotter an unregistered good, is that it's up to the authorities to prove that he wasn't in good faith. And most likely they would not even bother, considering also the value.
...though, on second thought, since he bought it from some obscure seller contacted on the web, he might risk a prosecution for receiving as well!?! /forums/images/graemlins/grin.gif

3. I agree, that's exactly how it should be. But again, as a matter of fact in some EU Countries it isn't. The murder example doesn't make sense anyhow, 'cause penal responsibilities are strictly individual by definition, as you surely know.

4. It doesn't impact one iota, I agree. 'Twasn't meant to, either. But why flawed?

5. Sorry, but here it's your comment that is flawed imho. You correctly say at the end that A bot sold by a private individual is ALWAYS VAT paid in the hands of the buyer. So, the boat of my example (forget the magically if you want) has indeed gained the VAT paid status after a previous naughty import, hasn't it? What did I misunderstand?

6. No objections your honour - actually, I didn't comment on any of those points, to start with.

And with regard to your conclusions, do you mean that in the UK any logical and rational principle is always perfectly reflected in the laws and tax regulations?
Geez, now I'm envious.
 
I hope this doesn't muddy the waters, but I have a real life example:

In the late 80s I bought a motorbike. I was in a rush to buy (due to go away touring for 2 weeks), the bike was right (it even had a 'go faster' back mudgard, indicators, etc.), the price was right, the guy seemed OK (squaddie stationed in Germany), and the deal was done in his mum's house. The only snag was that he had sent the registration document to the DVLA for a change of address, and hadn't had it back. He offered me the phone to ring them and confirm this.

It was a con. The bike had been bought for export, and neither 'car tax' (or whatever it is called for new vehicles) or VAT had been paid. It would have been allowed to remain in the UK for upto 6 months as a 'temporarily imported vehicle', and as such should have had a special number plate rivetted to the back mudguard, and its status would have been on the registration document. After this time, the full car tax and VAT would be due if it remained in the UK - something like 40% of the new value.

I got a call from C&E TIVLO officer informing me of this after filling in a form to get a copy of the registration document. I was advised not to sell the bike on. There was never any attempt to recover any of this tax from me, or any hint at seizing the bike. (For 10 years I just filled in the 'V5' request every year to get road tax disc. Eventually I stuck at the correspondence long enough to get the DLVA to re-register the bike and provide a registration document)

Although they had the full details of the seller, I don't believe they pursued it with him, either, as this would have brought closure to the process, but it just seemed to be in limbo, almost as if they didn't know what to do (Correspondence dried up, people involved changed jobs, nobody seemed interested).

The registration document thing isn't relevant to boats, but (apart from the amounts involved) I don't see why the VAT situation is any different to that which would apply to a boat.

I sincerely hope this hasn't confused matters!

Excellent contribution by jfm, btw. Most impressed.

Andy
 
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Excellent contribution by jfm, btw. Most impressed.



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Agreed, thanks jfm /forums/images/graemlins/smile.gif
 
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The registration document thing isn't relevant to boats

[/ QUOTE ]Really in the UK it isn't?
Regardless of size and type of boat? No registration papers at all?
I'm even more surprised than when I understood you don't need a license.....
 
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The registration document thing isn't relevant to boats

[/ QUOTE ]Really in the UK it isn't?
Regardless of size and type of boat? No registration papers at all?
I'm even more surprised than when I understood you don't need a license.....

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I think registration may be compulsory for large boats (maybe > 24m?? Someone will correct me). For leisure boats smaller than this, however, there is no need to register. You can buy / build a boat and just put it in the sea.

The UK has two possibilities for registering leisure boats (sail or power). 'Part 1' is formal and has some legal significance (often required when marine mortgages are used to purchase the boat); Part 3 is completely informal, and came into existance so that UK owners could have 'registration papers' to present to non UK administrations. Both are voluntary.

Some details on each below.

Andy

Part 1 Registration

Registration on Part I of the British Registry entitles you to the following benefits:
Enables you to prove title to your boat
Allows you to register a marine mortgage
Provides internationally acceptable documentation to ease passage to foreign ports
Entitles you to protection from the Royal Navy and the services of British Consuls
Can enhance the resale of your vessel
Provides proof of date of build in respect of the EU Recreational Craft Directive
Ensures that your boat's name is unique on Part I
Registration under Part I requires measurement by an approved Tonnage Measurer.

The cost of tonnage measurement for British registration through the YBDSA is:

Vessel in UK
Under 15 metres overall £150.00
Over 15 metres and under 24 metres overall £195.00

You may register if you are :

A British citizen
A non-UK national exercising your right of freedom of movement of workers or right of establishment
A British Dependant Territories citizen
A British Overseas citizen
A British subject under the British Nationality Act 1981(a)
Boats need to be re-registered every five years, for which the cost is currently only £46. Delay in re-registration of over a year may result in a requirement for re-measurement.

1) What is Part III of the Register?
Part III (commonly called the Small Ships Register-SSR) is for ships which want only simple registration; it does not register title and you cannot register mortgages on this part of the Register. It provides an inexpensive, simple registration which proves the ships nationality (a kind of passport). A Part III certificate may not be accepted in some foreign ports if you are using your ship for commercial purposes; e.g. diving or chartering.

2) What is a small ship?
A small ship is one which is less than 24 metres (79 feet) in overall length. The following ships cannot be registered on Part III
those owned by a company
those over 24 metres in length
fishing or submersible vessels


3) Who may register a small ship?
A small ship may be registered if it is owned by one or more of the following persons who are 'ordinarily resident' in the UK:-
British citizens

Persons who are nationals of a European Union or European Economic Area country other than the United Kingdom and are established * in the UK

British Dependant Territories citizens; British Overseas citizens; persons who under the British Nationality Act 1991 are British subjects; persons who under the Hong Kong (British Nationality) Order are British Nationals Overseas, and

Commonwealth citizens not falling within those paragraphs.

......

5) Can my ship be registered on Part I and PartIII?
Ships cannot be on more than one part of the Register at any one time. If you have Part I registration it is to your advantage to keep your ship registered on that Part rather than transfer it to the SSR. If you wish to transfer from one part of the Register to another, it will be necessary to close the ships current registration before the transfer can be made.

6) How long does SSR registration last?
Registration on Part III of the Register lasts for 5 years.

Cost £25.00 from memory.
 
Interesting reading, many thanks.
Actually, now that I think about it, I must have read something along those lines already, somewhere on these forums in the past.
Maybe it's just something which I refuse to remember, 'cause it sounds so unbelievable to my mind... /forums/images/graemlins/ooo.gif
By chance, are you aware of any other Country where the registration is not compulsory?
I mean, aside from small boats (which surely a 70+ footer isn't!), and considering only the "main" (let's say western) Countries.
Thanks again anyway!
 
That's a good example in that a liability to vat crystallised on the squaddie the moment he sold you the bike. It was his personal liability, and hmrc never pursued you or seized your asset (the bike) cos the tax libility was a personal debt owed by squaddie, not owed by you. Just like a boat scenario

mapis i'll try to reply to your longish post above but no time now, just using an airport lounge internet for 10mins
 
Just to add some more fuel to the fire.

I purchased my boat from HMR&C. Paid cash, had the bill of sale signed by a commissioner and the boat is registered part 1. At the time of the transaction a got a receipt for the purchase price with a detailed invoice to follow. I eventually received a detailed invoice for the full amount with no mention whatsoever of VAT, whether it was included or otherwise. I have contacted them several times and even had my solicitor ask them for proof of VAT status but they simply washed their hands of us, referring us to our local VAT office, who didn't have a clue.

I eventually gave up.
 
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I purchased my boat from HMR&C...I eventually received a detailed invoice for the full amount with no mention whatsoever of VAT, whether it was included or otherwise.

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/forums/images/graemlins/laugh.gif priceless
 
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