VAT

The point was more of a pragmatic one. If French customs in big military looking boats and helicopters descend on you, the best outcome is that they leave quickly without demanding money or impounding your boat. If a VAT invoice helps to achieve that, then regardless of the law, it's worth having one.
 
Yeah it is a development of the point.

If I illegally import a boat ino the UK then I owe VAT to UK HMRC. If I cruise the boat to France or Holland without "VAT paid proof" then (allegedly) the French/Dutch get very annoyed and might try to charge me Fr or NL VAT. They shouldn't of course, becuase I don't owe them any. you know all that, I know

It would be great if this project could be done as UK first phase, then phase 2 would be for Fr, NL, Italy, Spain, Portugal and get them to accept that they dont have VAT claim on any boat just cos it is in their waters. But that is massive undertaking

I say "allegedly" becuase I am concerned that this VAT thing is bigged up outside of UK. Lots of people say boats can be impounded but I have not heard of it first hand. I have been inspected twice in France (once by the boat in Nick's pic!) as skipper of a non VAT paid boat and they have been perfectly fine.

I'd like to know if these non UK authorities really do get difficult if you don't have proof of VAT paid, first hand not 10th hand. This point that a VAT-paid docket can get the authorities to leave you alone is an importnat point, if it's actually true, but I don't know if it is and I suspect it is bigged up but I don't know
 
And another point worth noting,

Any 15 year old with the latest version of Photoshop can probably knock up a VAT invoice from just about any dealer or manufacturer you care to mention. All the logos and info are available on the web and since there is no way of verfying anything how are Le Frog going to know any different.

in fact, when you buy a boat, how do you know the bit of A4 paper actually came from the dealer?

The answer, of course, is you dont. yet we all accept that as deal done.
 
Agreed, you don't. If French customs wanted to really check, they would presumably have to request that HMRC conduct an audit which means going back to each seller in the chain to identify if they correctly charged VAT or not. Even if HMRC find something, the tax doesn't get paid to the French, so why would French customs bother referring it in the first place?
 
And, in fact that wouldn't happen. There is a bunch of law preventing HMRC from disclosing to a 3rd party (incl the Frecnh govt) personal information. They do have some powers, and there is an exchange of information treaty UK-Fr (and UK to most other big countries), but it provides merely for the UK hand over info already in their possession. UK will not go and do an audit to look for info they don't have, just cos Le Francais tax inspector requests it.

(That's a massive simplification of the exchange of information rules, but broadly right)
 
That's abolutely so. I'd leave that point out though, cos doing something fraudulent/false instrument isn't most people's cup of tea :-)

Though, incidentally, you get into some fine points of law there. Suppose I have a TV licence, all properly paid up. Then (for whatever reason I can't imagine) i make one on photoshop. The inspector visits and I show him the fake. Is that illegal? It's not fraud under UK law becuase there is no pecuniary gain (fraud is deceipt with an intent to make pecuniary gain). Ignoring any special law on fake TV licences is it otherwise unlawful? I doubt it, under UK law. So showing a photoshopped VAT invoice to HMRC, when no VAT is owed and your motive is merely to gettem off your boat, probably isn't. But of course uk HMRC woud never ask for it in the first place. [I might be wrong on this whole para - I have typed before thinking about it very hard...!]
 
But we'll be mutually preaching the converted. What we want is hmrc and rya to come to essex and we can both shout at them :-) Look forward to meeting up anyhow!
 
Hi jfm, many thanks for this thread it has been the most interesting and informative thread that I have ever read on here. I do hope that the mags/RYA pick it up and run with it but I won't hold my breath.
 
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There might be a question "was VAT correctly paid on the transaction?" but the answer is (a) yes it was cos HMRC sold it and they have no obligation to charge VAT

[/ QUOTE ]Do you mean that as long as any VAT-exempt institution (I can't see why just HMR&C: I could imagine - but don't crucify me if I'm wrong!- that it might be the same for RNLI?) purchases a boat in the UK and resells it to a private individual, we will have a boat sold in the UK, owned by a private individual, and no VAT due/paid EVER by anyone, simply because the first buyer was VAT exempt?
I fully agree with Observer that it's a pretty basic VAT rule in 'ordinary' transactions that it is ALWAYS the supplier who is responsible for accounting for VAT. But as long as a VAT exempt subject is involved, the transaction is hardly 'ordinary', is it?
That's why I said that the invoice in this case is logically similar to an import invoice.
And now, after explaining how wrong I am, you're telling us that the only time a person has to pay boat VAT to HMRC is if they ... import a boat. /forums/images/graemlins/shocked.gif
Now, I'm not yet sure that my guesswork was correct (I did mention that I'm not a UK VAT expert and yourself or others might have corrected me as appropriate, didn't I?), but in terms of confusion I would appreciate if you'd recognise that there are other reasons for it, aside from my posts.
Sorry if I'm not clearing up the mess, anyway. From my part, being interested to the subject, I just didn't see why I shouldn't have thrown in my opinion - isn't that what forums are all about?
Besides, I'm pretty sure, even if I agree with most of the principles you're mentioning, that in some Med Countries their application is radically different, and someone might be interested about that as well.
For instance, are you sure that the two controls you've had by French douanes while captaining a commercial, EU flagged - but not French, non VAT paid boat would have had the same outcome if you were a French citizen?
Mind, I know that the outcome should have been the same.
But would you swear it would, in practice?
 
I run a small VAT exempt company. Yes, I know it's unusual, but no matter what our turnover, we cannot register for VAT.
We pay VAT on our purchases but cannot reclaim input VAT. We also cannot charge VAT.
If we purchased a boat, we would have to pay VAT on it and could not reclaim it, so it would be VAT paid. Our VAT exempt status is irrelevant.
 
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Do you mean that as long as any VAT-exempt institution (I can't see why just HMR&C: I could imagine - but don't crucify me if I'm wrong!- that it might be the same for RNLI?) purchases a boat in the UK and resells it to a private individual, we will have a boat sold in the UK, owned by a private individual, and no VAT due/paid EVER by anyone, simply because the first buyer was VAT exempt?

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No, absolutely not. That's a misunderstnading of "VAT exempt" (which isn't the correct jargon, but no matter). A VAT exempt person still has to pay VAT when they buy boat from a VATable seller. So even if HMRC or RNLI bought a new Fairline off Fairline Boats, they would be charged VAT on the invoice. When HMRC sold that boat, they wouldn't charge any VAT on that sale. So, no, you would never in those circumstnaces get a boat with no VAT paid by anyone.

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I fully agree with Observer that it's a pretty basic VAT rule in 'ordinary' transactions that it is ALWAYS the supplier who is responsible for accounting for VAT. But as long as a VAT exempt subject is involved, the transaction is hardly 'ordinary', is it?

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Yes it is ordinary. A "VAT exempt person" in this context means a non VAT-registrable person. The vast majority of all transactions ever carried out in all EU economies are such transactions - ie retail

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From my part, being interested to the subject, I just didn't see why I shouldn't have thrown in my opinion - isn't that what forums are all about?

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Yes, but this is about whether VAT is or isn't payable on a transaction. That's a clear matter of law. My complaint (sorry, didn't mean to be unkind /forums/images/graemlins/grin.gif) was not about opinions, it was about guesses, which need to be thrown in with restriant, to avoid confusion

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Besides, I'm pretty sure, even if I agree with most of the principles you're mentioning, that in some Med Countries their application is radically different, and someone might be interested about that as well

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Sure, I'd be very interested to hear a proper analysis of the VAT law on this point in the other main EU boating countries

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are you sure that the two controls you've had by French douanes while captaining a commercial, EU flagged - but not French, non VAT paid boat would have had the same outcome if you were a French citizen?

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No. My general comment here was that lots of peple have mentioned 10th hand that "so and so got his boat impounded" but I can't find first hand evidence of that. I was invitiing folks to say what direct experience did they have, and I threw in my 3 actual experiences into the pot. I clearly was not trying to extrapolate my personal experiences. I merely offered them as 3 data points in the study. I have no idea if a Frecnch citizen would have had different treatment. What intrigues me though is that I have never ever had a first hand account of a Frenchman having a VAT problem. I suspect the whole thing is a little bit exaggerated
 
And there are plenty of massive multibillion VAT exempt companies in exactly the same circumstances. Insurance companies, for starters.

I disagree with your "so it would be VAT paid" statement though. I don't have the energy to explain it all again. In those circumstnaces the expression "the boat is VAT paid" is an oxymoron :-)
 
Hadn't realised insurance companies were VAT exempt. I learn something every day.

You don't need to explain it all again. I understood your explanation perfectly. I just used the wrong terminology. I should have said "so the VAT would have been paid". Sorry.
 
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No, absolutely not. That's a misunderstnading of "VAT exempt" (which isn't the correct jargon, but no matter, I'll stick with it). A VAT exempt person still has to pay VAT when they buy boat from a VATable seller. So even if HMRC bought a new Fairline off Fairline Boats, they would be charged VAT on the invoice. When HMRC sold that boat, they wouldn't charge any VAT on that sale. So, no, you would never in those circumstnaces get a boat with no VAT paid by anyone.

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Although a sale by an ordinarily exempt entity (or one which has no input tax recovery) can of itself be a taxable supply so give rise to an obligation to register and account for VAT if value exceeds the registration threshold.

The RNLI is a case in point. The supply of a lifeboat (and certain other goods) to the RNLI can be zero rated, but they have to account for VAT on the sale price when they sell it.
 
Yup but we're at crossed purposes. There is (as you know!) no such thing as an exempt entity. Only transactions are exempt, not entities. I took "exempt entity" to mean a non registrable entity (eg selling not in the course of a trade), not an entity that made exempt supplies. So, things have got all a bit mixed up just on this point, but no matter!
 
Yep. And "exempt" has a wider meaning in many EU countries than in the UK. They use it to describe a non-taxable transaction where (in the UK) we would use "zero-rated" or "outside scope".

However, notwithstanding that, mapis did raise the question of VAT treatment by/of the RNLI, and the explanation that a lifeboat supplied zero rated to the RNLI is not forever zero rated answers his point. Could be the same for HMRC (although I can't imagine why HMRC would buy a boat). However, the rules for VAT treatment of repossessed goods are tighter than they used to be so maybe they should account (to themselves) for output tax on the sale of a boat that was seized because of for example) illegal importation. I dunno.
 
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