jfm
Well-Known Member
Yup, actually I think they use "exempt-with-credit" where we say "zero rated", and exempt for exempt or outside scope 
VAT
- Thread starter petie
- Start date
MapisM
Well-Known Member
[ QUOTE ]
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.
[/ QUOTE ]Aha, interesting.
In other Countries, in this situation, the seller (RNLI, in this context) would be exempted from accounting for VAT also on its sale invoice, thus reversing the obligation upon the buyer, if and when appropriate (e.g. not with a foreign buyer, but definitely with a domestic one).
That was the rationale behind my post #2075784 and the following debate.
On a side note, I reckon from the above that you disagree with jfm when he says that even if HMRC bought a new Fairline off Fairline Boats, they would be charged VAT on the invoice, or is there any difference between HMR&C and RNLI in this respect?
Edit: I just noted that jfm in his original post said "even if HMRC or RNLI"....?!
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.
[/ QUOTE ]Aha, interesting.
In other Countries, in this situation, the seller (RNLI, in this context) would be exempted from accounting for VAT also on its sale invoice, thus reversing the obligation upon the buyer, if and when appropriate (e.g. not with a foreign buyer, but definitely with a domestic one).
That was the rationale behind my post #2075784 and the following debate.
On a side note, I reckon from the above that you disagree with jfm when he says that even if HMRC bought a new Fairline off Fairline Boats, they would be charged VAT on the invoice, or is there any difference between HMR&C and RNLI in this respect?
Edit: I just noted that jfm in his original post said "even if HMRC or RNLI"....?!
MapisM
Well-Known Member
Pardon?
[ QUOTE ]
there are plenty of massive multibillion VAT exempt companies
...
There is (as you know!) no such thing as an exempt entity
[/ QUOTE ]
... And I was the one confusing matters? /forums/images/graemlins/laugh.gif
[ QUOTE ]
there are plenty of massive multibillion VAT exempt companies
...
There is (as you know!) no such thing as an exempt entity
[/ QUOTE ]
... And I was the one confusing matters? /forums/images/graemlins/laugh.gif
thefatlady
Well-Known Member
You've just given me an interesting thought. My little company at present makes only exempt supplies. We are about to branch out into supplies which, I suspect, may be zero rated. I guess that means that when we pass the threshold (if we don't, it will be a disastrous failure) we can VAT register and recover VAT on that part of our input which relates to the zero rated supplies.
That sounds good to me. I'd better do some checking.
That sounds good to me. I'd better do some checking.
Observer
Well-Known Member
[ QUOTE ]
[ QUOTE ]
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.
[/ QUOTE ]Aha, interesting.
In other Countries, in this situation, the seller (RNLI, in this context) would be exempted from accounting for VAT also on its sale invoice, thus reversing the obligation upon the buyer, if and when appropriate (e.g. not with a foreign buyer, but definitely with a domestic one).
That was the rationale behind my post #2075784 and the following debate.
On a side note, I reckon from the above that you disagree with jfm when he says that even if HMRC bought a new Fairline off Fairline Boats, they would be charged VAT on the invoice, or is there any difference between HMR&C and RNLI in this respect?
Edit: I just noted that jfm in his original post said "even if HMRC or RNLI"....?!
[/ QUOTE ]
No - I agree with jfm but it does need a bit more explanation.
First - RNLI's general status. As jfm said, organisations are not "exempt", transactions are exempt. RNLI is a charity so it does not make taxable supplies**. Therefore it cannot register for VAT and cannot recover VAT paid on the supply to it of VATable goods and services and (in general) suppliers have to charge VAT on goods supplied to the RNLI just like any other purchaser. So, unless Fairline are supplying a lifeboat (see below) to RNLI, they would have to charge VAT which RNLI could not recover, because it is not a taxable person. But, by the same token RNLI can sell goods it has previously purchased and paid VAT on (like the Fairline (non-life) boat) without accounting for tax on the sale price (in the same way as an individual who has bought, and subsequently sells, goods NOT for business purposes).
With respect to a lifeboat, there is special provision in VAT law for that to be zero rated BY THE SUPPLIER. However, because it has been zero rated, RNLI has to account for tax on the onward sale (when it is taken out of RNLI service), so the effective cost to the UK exchequer is VAT on the depreciation suffered.
** RNLI probably does make some taxable supplies (e.g. sale of goods to raise money for its principal activity), but this is probably contained in a separate entity (company) owned by RNLI that IS VAT registered. If that entity purchased the Fairline boat for business purposes, it COULD recover VAT but would have to account for VAT on a subsequent sale.
[ QUOTE ]
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.
[/ QUOTE ]Aha, interesting.
In other Countries, in this situation, the seller (RNLI, in this context) would be exempted from accounting for VAT also on its sale invoice, thus reversing the obligation upon the buyer, if and when appropriate (e.g. not with a foreign buyer, but definitely with a domestic one).
That was the rationale behind my post #2075784 and the following debate.
On a side note, I reckon from the above that you disagree with jfm when he says that even if HMRC bought a new Fairline off Fairline Boats, they would be charged VAT on the invoice, or is there any difference between HMR&C and RNLI in this respect?
Edit: I just noted that jfm in his original post said "even if HMRC or RNLI"....?!
[/ QUOTE ]
No - I agree with jfm but it does need a bit more explanation.
First - RNLI's general status. As jfm said, organisations are not "exempt", transactions are exempt. RNLI is a charity so it does not make taxable supplies**. Therefore it cannot register for VAT and cannot recover VAT paid on the supply to it of VATable goods and services and (in general) suppliers have to charge VAT on goods supplied to the RNLI just like any other purchaser. So, unless Fairline are supplying a lifeboat (see below) to RNLI, they would have to charge VAT which RNLI could not recover, because it is not a taxable person. But, by the same token RNLI can sell goods it has previously purchased and paid VAT on (like the Fairline (non-life) boat) without accounting for tax on the sale price (in the same way as an individual who has bought, and subsequently sells, goods NOT for business purposes).
With respect to a lifeboat, there is special provision in VAT law for that to be zero rated BY THE SUPPLIER. However, because it has been zero rated, RNLI has to account for tax on the onward sale (when it is taken out of RNLI service), so the effective cost to the UK exchequer is VAT on the depreciation suffered.
** RNLI probably does make some taxable supplies (e.g. sale of goods to raise money for its principal activity), but this is probably contained in a separate entity (company) owned by RNLI that IS VAT registered. If that entity purchased the Fairline boat for business purposes, it COULD recover VAT but would have to account for VAT on a subsequent sale.
Observer
Well-Known Member
[ QUOTE ]
You've just given me an interesting thought. My little company at present makes only exempt supplies. We are about to branch out into supplies which, I suspect, may be zero rated. I guess that means that when we pass the threshold (if we don't, it will be a disastrous failure) we can VAT register and recover VAT on that part of our input which relates to the zero rated supplies.
That sounds good to me. I'd better do some checking.
[/ QUOTE ]
If you're making zero-rated supplies, you can register anyway; the threshold is irrelevant, that applies to COMPEL you to register if the value of TAXABLE supplies is exceeded. (You will have to agree a 'partial exemption method' with HMRC.)
My wife owns a business that makes almost entirely zero-rated supplies but is (and always has been) registered and has full recovery of input tax, even though standard-rates supplies amount to no more than a few £000s a year.
You've just given me an interesting thought. My little company at present makes only exempt supplies. We are about to branch out into supplies which, I suspect, may be zero rated. I guess that means that when we pass the threshold (if we don't, it will be a disastrous failure) we can VAT register and recover VAT on that part of our input which relates to the zero rated supplies.
That sounds good to me. I'd better do some checking.
[/ QUOTE ]
If you're making zero-rated supplies, you can register anyway; the threshold is irrelevant, that applies to COMPEL you to register if the value of TAXABLE supplies is exceeded. (You will have to agree a 'partial exemption method' with HMRC.)
My wife owns a business that makes almost entirely zero-rated supplies but is (and always has been) registered and has full recovery of input tax, even though standard-rates supplies amount to no more than a few £000s a year.
jfm
Well-Known Member
Re: Pardon?
[ QUOTE ]
[ QUOTE ]
there are plenty of massive multibillion VAT exempt companies
...
There is (as you know!) no such thing as an exempt entity
[/ QUOTE ]
... And I was the one confusing matters? /forums/images/graemlins/laugh.gif
[/ QUOTE ]
Er no. You are quoting me from two different posts. In the first post I was using the term "VAT exempt companies" colloquially, in a context that had been coined by the poster to whom I was replying. It seemed easier to use the phrase incorrectly than write a paragraphpedantically correcting the use of jargon. In my second post (to Observer, who is expert in this stuff) the very context was precise use of the words and the distinction between entities and transactions. So no, if you read the posts properly there isn't any confusion. Juxtaposing 2 quotes taken out of different contexts in that fashion and trying to "catch me out" is a bit of a cheap trick though
[ QUOTE ]
[ QUOTE ]
there are plenty of massive multibillion VAT exempt companies
...
There is (as you know!) no such thing as an exempt entity
[/ QUOTE ]
... And I was the one confusing matters? /forums/images/graemlins/laugh.gif
[/ QUOTE ]
Er no. You are quoting me from two different posts. In the first post I was using the term "VAT exempt companies" colloquially, in a context that had been coined by the poster to whom I was replying. It seemed easier to use the phrase incorrectly than write a paragraphpedantically correcting the use of jargon. In my second post (to Observer, who is expert in this stuff) the very context was precise use of the words and the distinction between entities and transactions. So no, if you read the posts properly there isn't any confusion. Juxtaposing 2 quotes taken out of different contexts in that fashion and trying to "catch me out" is a bit of a cheap trick though
jfm
Well-Known Member
[ QUOTE ]
[ QUOTE ]
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.
[/ QUOTE ]Aha, interesting.
In other Countries, in this situation, the seller (RNLI, in this context) would be exempted from accounting for VAT also on its sale invoice, thus reversing the obligation upon the buyer, if and when appropriate (e.g. not with a foreign buyer, but definitely with a domestic one).
That was the rationale behind my post #2075784 and the following debate.
On a side note, I reckon from the above that you disagree with jfm when he says that even if HMRC bought a new Fairline off Fairline Boats, they would be charged VAT on the invoice, or is there any difference between HMR&C and RNLI in this respect?
Edit: I just noted that jfm in his original post said "even if HMRC or RNLI"....?!
[/ QUOTE ]
Mapis this line of posts is distracting from the main issue here but I'll answer briefly:
1. In EU countries other than UK, I strongly suspect you are wrong in saying (if this is what you are saying...) that a seller of VAT exempt goods sells without VAT and then the BUYER has to pay VAT. I think that's just plain wrong. Feel free to be more specific if you want.
2. On the "side note" there is zero disagreement between Observer and me. If RNLI (or HMRC) bought a Fairline (which isn't a lifeboat) they would pay VAT. If RNLI bought an actual lifeboat they would pay VAT on it technically speaking, but at the zero rate. Either way VAT has been accounted for. When the Fairline is sold no further VAT is accounted for; when the lifeboat is sold VAT is generally accounted for at the standard rate.
Look, there are special VAT rules for charities and lifeboats. Indeed there are hundreds of special VAT rules for lots of things. It really confuses things to dwell on these matters in this debate and then say "Aha, jfm and Observer disagree!" when we are both trying to write short posts on a very complex subject. It's much better I suggest if we stick to the main issue which is ordinary pleasure boats bought/sold by ordinary individuals or limited companies, and bought thru dealers or from the shipyard. That's complex enough, without getting into the special lifeboat/charity VAT rules and suchlike
[ QUOTE ]
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.
[/ QUOTE ]Aha, interesting.
In other Countries, in this situation, the seller (RNLI, in this context) would be exempted from accounting for VAT also on its sale invoice, thus reversing the obligation upon the buyer, if and when appropriate (e.g. not with a foreign buyer, but definitely with a domestic one).
That was the rationale behind my post #2075784 and the following debate.
On a side note, I reckon from the above that you disagree with jfm when he says that even if HMRC bought a new Fairline off Fairline Boats, they would be charged VAT on the invoice, or is there any difference between HMR&C and RNLI in this respect?
Edit: I just noted that jfm in his original post said "even if HMRC or RNLI"....?!
[/ QUOTE ]
Mapis this line of posts is distracting from the main issue here but I'll answer briefly:
1. In EU countries other than UK, I strongly suspect you are wrong in saying (if this is what you are saying...) that a seller of VAT exempt goods sells without VAT and then the BUYER has to pay VAT. I think that's just plain wrong. Feel free to be more specific if you want.
2. On the "side note" there is zero disagreement between Observer and me. If RNLI (or HMRC) bought a Fairline (which isn't a lifeboat) they would pay VAT. If RNLI bought an actual lifeboat they would pay VAT on it technically speaking, but at the zero rate. Either way VAT has been accounted for. When the Fairline is sold no further VAT is accounted for; when the lifeboat is sold VAT is generally accounted for at the standard rate.
Look, there are special VAT rules for charities and lifeboats. Indeed there are hundreds of special VAT rules for lots of things. It really confuses things to dwell on these matters in this debate and then say "Aha, jfm and Observer disagree!" when we are both trying to write short posts on a very complex subject. It's much better I suggest if we stick to the main issue which is ordinary pleasure boats bought/sold by ordinary individuals or limited companies, and bought thru dealers or from the shipyard. That's complex enough, without getting into the special lifeboat/charity VAT rules and suchlike
MapisM
Well-Known Member
Listen J, I'm not so interested in this debate anymore, at least in the way it has developed.
So I'm more than glad to bow out and refrain from commenting further.
But just for the records, the following are some of the reasons, in a sort of reverse order starting from your last reply. Feel free to further bash or ignore them, I don't think I'll have the energy to dig further into the whole matter anyway.
- you suggest me to stick to the main issue, as if I were drifting, when actually we were simply debating the (imho interesting) case raised by JoeQ with his post #2075481. And on this specific subject, according to yourself it should be pretty obvious that he has no problem at all, whilst (aside from my "confusing" guesses) Observer himself in his post #2076664 said that maybe they should account (to themselves) for output tax on the sale of a boat ... I dunno. Mind, this is not meant to say "Aha, jfm and Observer disagree!" (where did I?). Just a matter of reading what has been written.
- I can live with your "strong suspects" about what I'm saying, but I don't see why they should be worth more than my guesses, for which you said that there is no place on this thread?
Oh, and your post #2076675 is plain wrong, and I'm neither suspecting nor guessing here.
- with regard to my comment about your usage of terminology, my criticism was actually even stronger than you understood (though not meant to "catch you out" at all, as the smiley - at least in my intentions - should have clarified).
In fact, your statement "only transactions are exempt, not entities" is useless at best, and pedantic at worst.
The terms " exempt insitutions" and "exempt goods or services" are commonly used, both in EU directives and in local legislations (also in UK apparently, for what a 3 minutes google search is worth). If you mean that those definitions of "exempt" should actually be expressed as certain transactions carried out between certain subjects and/or based on certain goods or services, fair enough. But I'd be curious to hear if anyone has better understood anything based on this semantic distinction alone.
Not arguing about many other concepts though, where the explanations you gave were pretty much spot on.
With another noticeable exception, possibly: "the boat is VAT paid" is not an oxymoron. You can call that sentence wrong, useless, or misleading if you want. But not an oxymoron.
Am I the pedantic one now? Guilty as charged, I'll live with that.
- last but not least, I frankly don't like hypocrisy-driven comments, as the one at the end of your post #2076522: I have no idea if a Frecnch citizen would have had different treatment.
I refrained from commenting on that so far, but I'm pretty sure that you're aware that most likely he would, and you perfectly know why as well.
And in spite of what I said at the beginning re. bowing out from the debate, I'll have no problem to further explain just this very specific point if you wish.
But just to avoid misunderstandings: I won't, unless asked by yourself.
And not before tomorrow anyway - I'm rushing to the airport and won't have any web access fow some time.
Take care of the madhouse in the meantime....
So I'm more than glad to bow out and refrain from commenting further.
But just for the records, the following are some of the reasons, in a sort of reverse order starting from your last reply. Feel free to further bash or ignore them, I don't think I'll have the energy to dig further into the whole matter anyway.
- you suggest me to stick to the main issue, as if I were drifting, when actually we were simply debating the (imho interesting) case raised by JoeQ with his post #2075481. And on this specific subject, according to yourself it should be pretty obvious that he has no problem at all, whilst (aside from my "confusing" guesses) Observer himself in his post #2076664 said that maybe they should account (to themselves) for output tax on the sale of a boat ... I dunno. Mind, this is not meant to say "Aha, jfm and Observer disagree!" (where did I?). Just a matter of reading what has been written.
- I can live with your "strong suspects" about what I'm saying, but I don't see why they should be worth more than my guesses, for which you said that there is no place on this thread?
Oh, and your post #2076675 is plain wrong, and I'm neither suspecting nor guessing here.
- with regard to my comment about your usage of terminology, my criticism was actually even stronger than you understood (though not meant to "catch you out" at all, as the smiley - at least in my intentions - should have clarified).
In fact, your statement "only transactions are exempt, not entities" is useless at best, and pedantic at worst.
The terms " exempt insitutions" and "exempt goods or services" are commonly used, both in EU directives and in local legislations (also in UK apparently, for what a 3 minutes google search is worth). If you mean that those definitions of "exempt" should actually be expressed as certain transactions carried out between certain subjects and/or based on certain goods or services, fair enough. But I'd be curious to hear if anyone has better understood anything based on this semantic distinction alone.
Not arguing about many other concepts though, where the explanations you gave were pretty much spot on.
With another noticeable exception, possibly: "the boat is VAT paid" is not an oxymoron. You can call that sentence wrong, useless, or misleading if you want. But not an oxymoron.
Am I the pedantic one now? Guilty as charged, I'll live with that.
- last but not least, I frankly don't like hypocrisy-driven comments, as the one at the end of your post #2076522: I have no idea if a Frecnch citizen would have had different treatment.
I refrained from commenting on that so far, but I'm pretty sure that you're aware that most likely he would, and you perfectly know why as well.
And in spite of what I said at the beginning re. bowing out from the debate, I'll have no problem to further explain just this very specific point if you wish.
But just to avoid misunderstandings: I won't, unless asked by yourself.
And not before tomorrow anyway - I'm rushing to the airport and won't have any web access fow some time.
Take care of the madhouse in the meantime....
jfm
Well-Known Member
Mapis, I just looked back and I think some of my posts above were a bit "rough" and combative. Typed quickly, but that's no excuse. I apologise for coming across a bit rude to you, it wasn't meant or felt that way, sorry. "Madhouse" is quite a good description, and I am as mad as the maddest mad people in the madhouse Best wishes.
Best wishes.
Observer
Well-Known Member
mapis,
jfm, who I know quite well, from direct acquaintance, is really knowledgeable about VAT (and loads of other stuff) - basically, if he asserts he knows (rather than speculates, or guesses) he KNOWS.
You probably wouldn't appreciate that, as (I assume) you don't know him. I do, and I KNOW he KNOWS what he asserts to be true - if he doesn't KNOW he (almost invariably, from my direct experience) qualifies what he says as opinion. Look back on his posts and you'll see that's true.
VAT (indirect tax) is complicated, and, in the context of an internet forum, it's impossible, without, spending an inordinately long time composing posts, and referencing to law/regulation/authority, to be absolutely precise in meaning and to encompass exceptions to general principles. The 'advice' he dispenses is ALWAYS, in my experience, well founded and, if dispensed by a practitioner, on a 'paid for' basis, it would cost £000s.
I don't, and I'm sure jfm doesn't, expect you just accept what he write without question, but it's fair for me to add some background to what I know about him and his expertise.
jfm, who I know quite well, from direct acquaintance, is really knowledgeable about VAT (and loads of other stuff) - basically, if he asserts he knows (rather than speculates, or guesses) he KNOWS.
You probably wouldn't appreciate that, as (I assume) you don't know him. I do, and I KNOW he KNOWS what he asserts to be true - if he doesn't KNOW he (almost invariably, from my direct experience) qualifies what he says as opinion. Look back on his posts and you'll see that's true.
VAT (indirect tax) is complicated, and, in the context of an internet forum, it's impossible, without, spending an inordinately long time composing posts, and referencing to law/regulation/authority, to be absolutely precise in meaning and to encompass exceptions to general principles. The 'advice' he dispenses is ALWAYS, in my experience, well founded and, if dispensed by a practitioner, on a 'paid for' basis, it would cost £000s.
I don't, and I'm sure jfm doesn't, expect you just accept what he write without question, but it's fair for me to add some background to what I know about him and his expertise.
MapisM
Well-Known Member
Thanks Tim,
actually you're not telling me anything new, but I appreciate your clarification efforts anyhow.
I'll also throw in a bit of explanation of why I'm already aware of what you're saying - after all, the subject of the debate has now moved from indirect taxation to people and communication, and that's FAR more interesting.
Firstly, your assumption is correct, I never met jfm.
But I read quite a number of his posts, and that's more than enough to understand that he always qualifies properly what he's saying. In fact, I would not even start debating a serious subject with anyone who pretend to pontificate while is actually telling porkies.
And that's why I always try to do exactly the same myself: I'm not going to re-read the whole thread right now, but I'm pretty sure that wherever jfm stated that I was wrong, it was against something I mentioned as a possibility/guess/thinking etc. Similarly, I can't remember any point where I said he was wrong, that he hadn't qualified in a similar way, to start with.
In fact, I have no problem at all in accepting "without question" what he (or anyone else, for that matter) writes: as long as I know that the speaker is reliable and knowledgeable about the subject, I'm always interested to learn.
But in the case of this thread, since I also pretend to know a few things about the subject, and I found major discrepancies between some of the technicalities discussed and those which I know for sure that are applied in some other Countries, the debate became tricky and my contribution useless at the end, at least for the other readers - another reason why I found appropriate to bow out of it.
Secondly, I couldn't agree more with your third paragraph. Not only with regard to the complication of the subject, but also because I know first hand the hourly rates that Deloitte and the likes charge for their partners, having signed myself a fair number of payments for their fees. Mind, the quality of their services is not always up to such costs (down here, at least), but that's another story, and has nothing to see with jfm of course.
And as a last consideration, even without considering the previous points, the last jfm reply alone would have been sufficient to understand a lot of the writer. It takes a very clever mind to concentrate in a few lines a comment which is so elegant and smart at the same time.
And I mean it - chapeau!
BUT - and I'm speaking to jfm now - I'm afraid I can't agree with your madness self-qualification, on the other hand.
In this respect, my ...guess is that you're just an amateur compared to some other posters who are real pros.
Including myself, obviously.
actually you're not telling me anything new, but I appreciate your clarification efforts anyhow.
I'll also throw in a bit of explanation of why I'm already aware of what you're saying - after all, the subject of the debate has now moved from indirect taxation to people and communication, and that's FAR more interesting.
Firstly, your assumption is correct, I never met jfm.
But I read quite a number of his posts, and that's more than enough to understand that he always qualifies properly what he's saying. In fact, I would not even start debating a serious subject with anyone who pretend to pontificate while is actually telling porkies.
And that's why I always try to do exactly the same myself: I'm not going to re-read the whole thread right now, but I'm pretty sure that wherever jfm stated that I was wrong, it was against something I mentioned as a possibility/guess/thinking etc. Similarly, I can't remember any point where I said he was wrong, that he hadn't qualified in a similar way, to start with.
In fact, I have no problem at all in accepting "without question" what he (or anyone else, for that matter) writes: as long as I know that the speaker is reliable and knowledgeable about the subject, I'm always interested to learn.
But in the case of this thread, since I also pretend to know a few things about the subject, and I found major discrepancies between some of the technicalities discussed and those which I know for sure that are applied in some other Countries, the debate became tricky and my contribution useless at the end, at least for the other readers - another reason why I found appropriate to bow out of it.
Secondly, I couldn't agree more with your third paragraph. Not only with regard to the complication of the subject, but also because I know first hand the hourly rates that Deloitte and the likes charge for their partners, having signed myself a fair number of payments for their fees. Mind, the quality of their services is not always up to such costs (down here, at least), but that's another story, and has nothing to see with jfm of course.
And as a last consideration, even without considering the previous points, the last jfm reply alone would have been sufficient to understand a lot of the writer. It takes a very clever mind to concentrate in a few lines a comment which is so elegant and smart at the same time.
And I mean it - chapeau!
BUT - and I'm speaking to jfm now - I'm afraid I can't agree with your madness self-qualification, on the other hand.
In this respect, my ...guess is that you're just an amateur compared to some other posters who are real pros.
Including myself, obviously.
Tranona
Well-Known Member
Sorry to come in at the tail end of this thread, but I am in China at present, and although I have been able to read, this is the first time i have been able to log on.
I am with jfm on this subject. Perhaps a bit of history would help explain why HMRC take such an unreasonable line on the VAT subject. When we joined the "Common Market" and VAT was introduced, the traditional work of C&E declined substantially as import duties disappeared. Our wonderful government in its wisdom thought AHA we will have pay all these people off - so why not make them responsible for administering VAT. Traditionally C&E had wide ranging powers of search and investigation - far wider than police because the law allowed it for the sections of government revenue for which they were responsible. They seem to assume they still have those powers, although in VAT law they only have powers in relation to VAT registered entities.
There is no legal requirement on private individuals to keep any record of VAT, whether it be for a boat, a car, caravan, DIY goods bought from B&Q or whatever. The only two situations in our context where individuals have any direct dealings with HMRC and VAT is if they are personally importing a boat into the EU and the state of entry is the UK, or if they are exporting a boat from the EU without paying VAT. There are well defined rules covering both and failure to follow those is an offence.
In all private dealings there is only a chargeable event if the seller is a VAT registered trader. It might be sensible for a buyer in this case to keep the VAT invoice in case HMRC investigates the seller. I have just bought a boat from a Greek dealer and paid VAT. I keep the receipt as evidence that any query on VAT on the transaction that involved me is of no concern to HMRC - should I bring the boat to the UK. However, once I sell it to a private EU citizen, it ceases to have any relevance. As many have said, VAT is not a Boat tax. There is no record that attaches the VAT payment to the boat, other than the details might be on the VAT invoice. They are not on mine. It simply says "Supplied Bavaria 37" and the contract price and VAT sum. The invoice does have the vendors VAT details. My title to the boat is through the Bill of Sale and the deregistration document from the Greek registry.
Several posters have raised the issue of HMRC boarding yachts at random and asking for documents. They have no right to do this unless they suspect you of an offence over which they have powers, such as smuggling or trying to avoid VAT on an imported boat. As there is no legal requirement in the UK to register a private boat, insure it or equip it to a particular standard, there is nothing they can check. Equally ownership is not their concern - that is a police matter if there is suspicion that the boat is stolen.
If part of government already exceeds its legal powers, can you imagine what it is going to be like if the crazy EBorders proposals become law!
Returning to the original issue, I would support lobbying RYA to get HMRC to either state clearly the law that underpins their advice about providing VAT "evidence" at the time of a private sale where no VAT is involved, or to withdraw the advice.
I am with jfm on this subject. Perhaps a bit of history would help explain why HMRC take such an unreasonable line on the VAT subject. When we joined the "Common Market" and VAT was introduced, the traditional work of C&E declined substantially as import duties disappeared. Our wonderful government in its wisdom thought AHA we will have pay all these people off - so why not make them responsible for administering VAT. Traditionally C&E had wide ranging powers of search and investigation - far wider than police because the law allowed it for the sections of government revenue for which they were responsible. They seem to assume they still have those powers, although in VAT law they only have powers in relation to VAT registered entities.
There is no legal requirement on private individuals to keep any record of VAT, whether it be for a boat, a car, caravan, DIY goods bought from B&Q or whatever. The only two situations in our context where individuals have any direct dealings with HMRC and VAT is if they are personally importing a boat into the EU and the state of entry is the UK, or if they are exporting a boat from the EU without paying VAT. There are well defined rules covering both and failure to follow those is an offence.
In all private dealings there is only a chargeable event if the seller is a VAT registered trader. It might be sensible for a buyer in this case to keep the VAT invoice in case HMRC investigates the seller. I have just bought a boat from a Greek dealer and paid VAT. I keep the receipt as evidence that any query on VAT on the transaction that involved me is of no concern to HMRC - should I bring the boat to the UK. However, once I sell it to a private EU citizen, it ceases to have any relevance. As many have said, VAT is not a Boat tax. There is no record that attaches the VAT payment to the boat, other than the details might be on the VAT invoice. They are not on mine. It simply says "Supplied Bavaria 37" and the contract price and VAT sum. The invoice does have the vendors VAT details. My title to the boat is through the Bill of Sale and the deregistration document from the Greek registry.
Several posters have raised the issue of HMRC boarding yachts at random and asking for documents. They have no right to do this unless they suspect you of an offence over which they have powers, such as smuggling or trying to avoid VAT on an imported boat. As there is no legal requirement in the UK to register a private boat, insure it or equip it to a particular standard, there is nothing they can check. Equally ownership is not their concern - that is a police matter if there is suspicion that the boat is stolen.
If part of government already exceeds its legal powers, can you imagine what it is going to be like if the crazy EBorders proposals become law!
Returning to the original issue, I would support lobbying RYA to get HMRC to either state clearly the law that underpins their advice about providing VAT "evidence" at the time of a private sale where no VAT is involved, or to withdraw the advice.
slipknot
Well-Known Member
I am currently trying to buy a 1989 boat wich is being sold by executors, and I have no doubts that the previous owner (in my opinion) was a private individual. Unfortunatly in dealing with the estate it appears that the original 1989 invoice cannot be found (assuming it was available in the first place)
I am keen to complete the purchase of this boat witout any ongoing potential liability (of any sort, cost, inconvenience, worry, etc etc etc) so I took the opportunity to ask for some advice from HMRC representatives at the London boat show last week, as to the best way to proceed. To quote them word for word, their advise was "dont touch it with a barge pole!"
Clearly I did not find this to be particulrly constructive advice, but even after pressing them further, this was without doubt their position.
I tried to discuss with them how best to overcome this issue, bearing in mind that the original VAT invoice from 1989 was not available.
They said that they would not re issue the recipt (even if they had a record that VAT had been paid) as a result of previous litigation they had been involved in. The only way I could obtain a new receipt would be to pay it again and thereafter look after the receipt.
In my case the ball is in the court of my seller. However, as a potential buyer, despite all of the very intersting information provided by the posters in this thread I am obliged to listen to the advise given to me by HMRC and ensure that the potential liability is addressed by the seller now, at the time of the charegeable event. If not I am inclined to walk away from the deal. Short of the seller producing the original VAT receipt, or reduciing the price by the VAT liability as explained to me by HMRC that is what I will do. They will have to continue to advertise the boat untill someone else appears on the scene who is prepared to accept the onging liability which only seems to exist in the eyes or HMRC.
Perhaps the RYA would want to take up this transaction as a test case and draw HMRC into resolving this dreadfull situation once and for all.....
I am keen to complete the purchase of this boat witout any ongoing potential liability (of any sort, cost, inconvenience, worry, etc etc etc) so I took the opportunity to ask for some advice from HMRC representatives at the London boat show last week, as to the best way to proceed. To quote them word for word, their advise was "dont touch it with a barge pole!"
Clearly I did not find this to be particulrly constructive advice, but even after pressing them further, this was without doubt their position.
I tried to discuss with them how best to overcome this issue, bearing in mind that the original VAT invoice from 1989 was not available.
They said that they would not re issue the recipt (even if they had a record that VAT had been paid) as a result of previous litigation they had been involved in. The only way I could obtain a new receipt would be to pay it again and thereafter look after the receipt.
In my case the ball is in the court of my seller. However, as a potential buyer, despite all of the very intersting information provided by the posters in this thread I am obliged to listen to the advise given to me by HMRC and ensure that the potential liability is addressed by the seller now, at the time of the charegeable event. If not I am inclined to walk away from the deal. Short of the seller producing the original VAT receipt, or reduciing the price by the VAT liability as explained to me by HMRC that is what I will do. They will have to continue to advertise the boat untill someone else appears on the scene who is prepared to accept the onging liability which only seems to exist in the eyes or HMRC.
Perhaps the RYA would want to take up this transaction as a test case and draw HMRC into resolving this dreadfull situation once and for all.....
jfm
Well-Known Member
Slipknot, you need to realise that the HMRC folk at the boat show (not intended as an insult, just realistic view) know little about VAT. They are junior tax officers or such like and have no high level legal qualifications or serious experience in understanding the non mainstream aspects of this very complex law. They are, very frequently, plain wrong. I fear anyway you asked them the worng question. You should have asked "If I do buy the boat, what will actually happen to me vis a vis HMRC? Will I get a VAT bill?"
The answer is that if you buy that boat you have ZERO, absolutely zero, liability to pay VAT to the government. They'll never ever ask you for it, and even if I'm wrong on that they'll never succeed in collecting it. Their suggestion to you of re-paying the VAT and saving the new receipt is outrageous. HMRC can not lawfully accept or retian your money if you attempt to pay voluntarily this "tax", nor is there any provision in law permitting them to issue a receipt for VAT paid on the boat.
I know this is a case of an anonymous internet poster disagreeing with a uniformed HMRC officer, and the latter might seem the one you should believe, but I can assure you I have stacks more tax law knowledge and tax law qualifications than they have
You say you're "obliged" to listen to their advice. Why? Are you saying government officials are always right? Come on, get real. Then you mention "chargeable event". There is no VAT chargeable event when you buy a used boat from the estate of a deceased private individual. If you or HMRC disagree that, show me the tax code provision. It's just plain wrong. And then you talk about VAT liability or potential liability. There is no liability!
Thr downside of buying the boat without a VAT doc is that these VAT misunderstnadings have gained common currency and you might be asked for VAT papers if you take the boat abroad. There are very few/zero first hand accounts of trouble on this score, but there are rumours/urban myths at least that it could cause you hassle. And of course when you sell the boat the next buyer will behave as you are doing and resist buying it due to, for example, duff advice from HMRC. So, for these purely practical reasons you ought to look for a discount approaching 15% compared to a VAT-documented boat, if its the sort of boat that might regulalry cross the channel. But don't "not touch it with a barge-pole".
I'm at LIBS on saturday. I think I'll raise the same subject but take it further. I'll tell them I've bought a 2nd hand boat within the UK, pravately, and it hasn't got a VAT receipt. I'll give them my name and address and tell them I'm very keen to pay tax so please would they send me an assessment for the tax. They'll have fun trying to find a button to press on the computer to raise that bill. In fact, to make sure I'm telling the truth, I'll buy my brother's boat tomorrow (I can just sell it back to him next week, no worries), cos I know that has no VAT paperwork
The answer is that if you buy that boat you have ZERO, absolutely zero, liability to pay VAT to the government. They'll never ever ask you for it, and even if I'm wrong on that they'll never succeed in collecting it. Their suggestion to you of re-paying the VAT and saving the new receipt is outrageous. HMRC can not lawfully accept or retian your money if you attempt to pay voluntarily this "tax", nor is there any provision in law permitting them to issue a receipt for VAT paid on the boat.
I know this is a case of an anonymous internet poster disagreeing with a uniformed HMRC officer, and the latter might seem the one you should believe, but I can assure you I have stacks more tax law knowledge and tax law qualifications than they have
You say you're "obliged" to listen to their advice. Why? Are you saying government officials are always right? Come on, get real. Then you mention "chargeable event". There is no VAT chargeable event when you buy a used boat from the estate of a deceased private individual. If you or HMRC disagree that, show me the tax code provision. It's just plain wrong. And then you talk about VAT liability or potential liability. There is no liability!
Thr downside of buying the boat without a VAT doc is that these VAT misunderstnadings have gained common currency and you might be asked for VAT papers if you take the boat abroad. There are very few/zero first hand accounts of trouble on this score, but there are rumours/urban myths at least that it could cause you hassle. And of course when you sell the boat the next buyer will behave as you are doing and resist buying it due to, for example, duff advice from HMRC. So, for these purely practical reasons you ought to look for a discount approaching 15% compared to a VAT-documented boat, if its the sort of boat that might regulalry cross the channel. But don't "not touch it with a barge-pole".
I'm at LIBS on saturday. I think I'll raise the same subject but take it further. I'll tell them I've bought a 2nd hand boat within the UK, pravately, and it hasn't got a VAT receipt. I'll give them my name and address and tell them I'm very keen to pay tax so please would they send me an assessment for the tax. They'll have fun trying to find a button to press on the computer to raise that bill. In fact, to make sure I'm telling the truth, I'll buy my brother's boat tomorrow (I can just sell it back to him next week, no worries), cos I know that has no VAT paperwork
slipknot
Well-Known Member
jfm, thanks for the reply, which makes absolute sense to me, as do all of your previous posts and explanations on the subject.
On the other hand our friends at HMRC clealy have a different interpretation and as a consequence are giving out incorrect advice to people like me who are not so well equiped as you to challenge them. The RYA seem to be doing little to clarify matters either.
Negotiating a 15% discount with the seller to allow for a nonexistant/potential VAT liability should not be necessary, but may be apporopriate purely on the strength of the poor advice/interpretation of HMRC. Further, I am not sure what event would trigger me handing over my 15% to HMRC anyway.
Thanks again for the reply. Have a great day at the boat show and good luck with our friends at HMRC. I hope you will be able to speak to someone with some authaurity and detailed knowledge on the subject. With a bit of luck you may be able to raise awareness of the matter within HMRC and bring about some change. I will be very interested to hear the result.
On the other hand our friends at HMRC clealy have a different interpretation and as a consequence are giving out incorrect advice to people like me who are not so well equiped as you to challenge them. The RYA seem to be doing little to clarify matters either.
Negotiating a 15% discount with the seller to allow for a nonexistant/potential VAT liability should not be necessary, but may be apporopriate purely on the strength of the poor advice/interpretation of HMRC. Further, I am not sure what event would trigger me handing over my 15% to HMRC anyway.
Thanks again for the reply. Have a great day at the boat show and good luck with our friends at HMRC. I hope you will be able to speak to someone with some authaurity and detailed knowledge on the subject. With a bit of luck you may be able to raise awareness of the matter within HMRC and bring about some change. I will be very interested to hear the result.
Whitelighter
Well-Known Member
[ QUOTE ]
I'm at LIBS on saturday. I think I'll raise the same subject but take it further. I'll tell them I've bought a 2nd hand boat within the UK, pravately, and it hasn't got a VAT receipt. I'll give them my name and address and tell them I'm very keen to pay tax so please would they send me an assessment for the tax. They'll have fun trying to find a button to press on the computer to raise that bill. In fact, to make sure I'm telling the truth, I'll buy my brother's boat tomorrow (I can just sell it back to him next week, no worries), cos I know that has no VAT paperwork
[/ QUOTE ]
oooohhhh - I am going to look forward to the report on this one. JFV vs. HMRC.
They dont stand a chance /forums/images/graemlins/smile.gif
I'm at LIBS on saturday. I think I'll raise the same subject but take it further. I'll tell them I've bought a 2nd hand boat within the UK, pravately, and it hasn't got a VAT receipt. I'll give them my name and address and tell them I'm very keen to pay tax so please would they send me an assessment for the tax. They'll have fun trying to find a button to press on the computer to raise that bill. In fact, to make sure I'm telling the truth, I'll buy my brother's boat tomorrow (I can just sell it back to him next week, no worries), cos I know that has no VAT paperwork
[/ QUOTE ]
oooohhhh - I am going to look forward to the report on this one. JFV vs. HMRC.
They dont stand a chance /forums/images/graemlins/smile.gif
jhr
Well-Known Member
[ QUOTE ]
They dont stand a chance
[/ QUOTE ] Ain't that the truth! I await the outcome with interest - this is going to be fun................. /forums/images/graemlins/grin.gif
They dont stand a chance
[/ QUOTE ] Ain't that the truth! I await the outcome with interest - this is going to be fun................. /forums/images/graemlins/grin.gif
slipknot
Well-Known Member
Just for info and to hopefully bring a smile to your face, when I spoke to HMRC at the show about making a VAT payment to obtain the proof of VAT payment documentation they require, they explaind to me that instead of using the purchase price of my boat to establish the VAT due, they would use the average of my purchase price plus 2 other vessels currently on the market to arrive at the VAT payment due. You really couldnt make it up....
Nick_H
Well-Known Member
[ QUOTE ]
I'm at LIBS on saturday. I think I'll raise the same subject but take it further.
[/ QUOTE ]
It's almost worth a 300 mile round trip to LIBS just to watch that /forums/images/graemlins/grin.gif
I'm at LIBS on saturday. I think I'll raise the same subject but take it further.
[/ QUOTE ]
It's almost worth a 300 mile round trip to LIBS just to watch that /forums/images/graemlins/grin.gif