VAT

Tee hee. But you gotta remeber that there's the theory vs practical. The law is that there is no way on earth you owe any tax to HMRC if you buy that boat, and there is no "chargeable event" that triggers a VAT payment by anyone

But, sadly, there is massive urban myth here and folks have been widely advised that if Mr A fraudulently doesn't pay some VAT on a boat import or something, then Mr B buys it 2nd hand in good faith, then even Mr C buys it, Mr C can be made to pay Mr A's VAT. Total garbage, but a very widely held urban myth among lots of relevant folks incl yacht magazines, brokers, RYA, etc. While this urban myth exists, you will sadly face much hassle and demands for 15% discount when you on-sell the boat, so for this practical reason you ought to get a discount now.

I know you knew all that, just making it clear cos it can get lost in the technical stuff about whether VAT is due

I'll tell you how I get on at LIBS tomorrow. There might be a punch up :-)
 
What you're reporting is really un-be-lie-va-ble.
Particularly if they really told that you had to pay it again.
Paying a tax you were not liable for in the first place is not just a nonsense, it's illegal!!!
Not to mention that a request to pay it "again" would be illegal also if addressed to the proper subject.

But your last statement re.value assessment leads me to think that their recommendation might have been slightly different: didn't they possibly suggest to treat the boat as if you were importing it in the UK?
In that case, paying the VAT yourself (not "again", but never mind) would at least be plausible, and technically feasible.
Mind, I'm NOT suggesting to go that route just for peace of mind - btw, you should get it also CE-marked, in this case.
I'm just trying to imagine those officers' train of thought...

But I must say that I'm even more curious to hear about the explanation they'll give to jfm!!!
...assuming that he'll have internet connection in jail, after insulting HRMC officers, that is.
/forums/images/graemlins/laugh.gif
 
Yup. But th eofficer can't even suggest that a citizen tells HMRC that he has imported the boat, if he hasn't imported it. That too would be unlawful. It really is quite unbelievable, but proves my point that if you want tax advice on a complex matter don't get it from HMRC

Dont worry, I'll take my 3G stick to jail :-)
 
[ QUOTE ]
That too would be unlawful

[/ QUOTE ]Agreed. But you know, if someone ask them "how can I be absolutely on the safe side...", such route would have been at least feasible...
Good luck with the 3G stick, with those thick walls! /forums/images/graemlins/grin.gif
 
[ QUOTE ]
What you're reporting is really un-be-lie-va-ble.
Particularly if they really told that you had to pay it again.


[/ QUOTE ]

Yes, that was what was said. If I didnt posess a document evidencing that VAT had been paid at some point (as per their guidance notes), they would not be able to provide me with a copy, even if they knew from their own records that VAT had been paid on the vessel. (due to some historic problems)

They explaind to me that the only way for me to comply with the requirement of having a document proving that VAT had been paid at some point, was to pay it again, based on the average of 3 similar vessels, and make sure I look after the receipt.
 
[ QUOTE ]
even if they knew from their own records that VAT had been paid on the vessel. (due to some historic problems)

[/ QUOTE ]All right, I won't understand/defend HRMC officers anymore, it's a promise. And I apologise for having tried.
I'll rather bring some good bottle of wine to jfm in jail, because now I'm sure he'll not only insult, but also kick them in the arse.
What historic problems? They can't find in their records the specific manufacturer invoice because they never got it, and never will. Any officer who's not aware of that deserves all what jfm will throw at him/her.

Oh, and the second statement is also garbage, for the reasons already explained.
 
I hope not, I only logged on to see how he had got on educating them /forums/images/graemlins/smile.gif


May I suggest a new thread with a summary and the outcome jfm ?
 
Great post! I must give credit to all pro's taking part to this discussion- I really enjoyed reading it!

I am trying to give my point of view to this issue, as a EU- citizen, but non UK ( I am from Finland).

I have bought now 4 boats outside of Finland: from France, Guernsey, UK and Germany.

I have always experienced a lot of troubles with VAT status. I totally agree with jfm this VAT is always in seller's responsibility, not buyers. However, as many i this topic has said, when I buy a boat abroad I always want to have a proof of paid VAT. Why? I guess it is because I have seen and experienced so much troubles with different situations with it...

In my opinion all this hassle with VAT documents etc. are because of this EU, which in my opinion is a great thing but has made so easy illegally import a boat from outside EU ( especially taking advance of those UK non VAT status countries like Gibraltar etc.) Nowadays, I know too many people who has bought a boat with UK flag and have cruised the boat themselves into EU + sold the boat later with "VAT paid status". I still agree with jfm: it should not be the buyers responsibility of non paid VAT but for example here in Baltic Sea it is recommended to have VAT document with You when boating in foreign EU waters. You can have this document from local tax office by showing them needed documents ( i.e invoices).

I as a serious boater take this very serious and would not consider going in foreign waters without it so this also guides my buying decisions: I want to see if VAT is paid.

It must be said all the brokers I have met are very conscious with this issue and they now how it has been used illegal way. If VAT status is demanded by the buyer, the broker is not against it saying it is seller responsibility, they act for the buyer to prove it.

Of those four boats I have bought abroad, the easiest deal was to buy a boat from Guernsey with 100 % sure ex VAT status. When I imported it to EU it was easy to pay needed VAT and everything in my mind was settled.

In other case, when I bought my previous boat from UK it was advertised with VAT paid status. The fact behind the boat was in was originally registered in Gibraltar and the buyer ( UK citizen) "imported" it through Spain and paid VAT ( by the document I have) less than 4 % of the value of the boat. This was possible because Spanish authorities were not interested in real value. WIth this boat I never felt secure when cruising abroad...

The current boat I have I bought from Mallorca, once again VAT paid status and registered in Germany. I made the deal and strongly demanded to see a proof of paid VAT. Only a day before signing the contract ( after I hade made survey etc...) the seller "noticed" he hadn't paid any VAT when he bought this boat from his own company... luckily he was willing to pay it, and now I have a proof of paid VAT from German tax office!

By all this above I am just trying to say how many scams there are inside EU waters, and all countries are very aware of this! This must affect to the buyers also. Even Finnish Pleasure Craft Registry is strongly recommending to have this document with You.

As said many times before- it might be illegal to seize Your boat by foreign EU country oficers- but this is likely to happen, and this is why I want to keep my hands out of these boats with "shady" VAT status. In fact it seems like only problem are those company owned British flagged boats with exVAT rights- all other countires are very clear that VAT must be paid when bought new!

Only where I do not agree with jfm is the situation when You illegally have imported the boat to UK and then You are cruising to France- the boat has never entered legally EU and therefore it is not so clear You owe VAT to UK government, I am pretty sure the France customs could charge it in this case!

All the best to all of You struggling with this issue. Currently I am cruising with 21m, so VAT issue is mentally very big thing for me and I sleep much better when knowing it has been fully paid!!
 
[ QUOTE ]

Currently I am cruising with 21m, so VAT issue is mentally very big thing for me and I sleep much better when knowing it has been fully paid!!

[/ QUOTE ]

A good post on understanding that the theory sometimes encounters the practical. 21m?, yeah, I can understand you wanting to sleep soundly on that /forums/images/graemlins/smile.gif

But I also understand that someone somewhere would be happy to pocket the VAT on a boat of that (likely) value......and I too would not want to be the one having to deal with the consequences (whether I was legally right or not).
 
[ QUOTE ]
[ QUOTE ]

Currently I am cruising with 21m, so VAT issue is mentally very big thing for me and I sleep much better when knowing it has been fully paid!!

[/ QUOTE ]

A good post on understanding that the theory sometimes encounters the practical. 21m?, yeah, I can understand you wanting to sleep soundly on that /forums/images/graemlins/smile.gif

But I also understand that someone somewhere would be happy to pocket the VAT on a boat of that (likely) value......and I too would not want to be the one having to deal with the consequences (whether I was legally right or not).

[/ QUOTE ]

It all relative buddy /forums/images/graemlins/wink.gif
 
Managed to escape jail, phew. Went to LHR and Antibes after the show yesterday. Just going to airport now for flight home, will post VAT reply later tonight...
 
met HMRC at LIBS

Ok, quick report. I went to LIBS yesterday (satruday - was quite busy, have to queue for some boats and still couldn't get on the oyster!). I spoke to HMRC but dont have much to add that slipknot hasn't already said

I asked them who knew about boat VAT and was directed to a lady mid 30s in HMRC uniform. Told her I'm contemplating buying a 2nd hand boat with no VAT papers, owner has lost them

She said "Don't buy it. You need to be able to prove VAT status"
To whom? I said.
HMRC she said.
I said why; the only transaction I'm doing is buying a boat (not importing it, it's already in UK) so I can't have a VAT bill at all.
She said no, I have to prove VAT status.
What if I can't, I said.
Well you will have to pay the VAT then, or have the boat confiscated.
But I dont have any VAT obligation to HMRC, all I did was buy a boat.
But it's not a VAT piad boat, she said
I said there isn't such a thing as "VAT piad" is there. VAT is applied to transactions not boats, right?
Then she repeated herself lots (At this point I could tell from her manner/hesitation she didn't know the law)
I said let's suppose a previous owner had fraudulently imported boat Jersey-UK and not paid VAT. Now I am 3 owners along the line and I own the boat. Surely I am not resp for another citizen's VAT?
Look, if you're sailing a boat in EU water it must be vat paid.
Where's the law? I said.
She handled me an irrelevant leaflet
Look I said, if a previous owner failed to pay VAT at import you need to chase him not me, right?
No, if you own the boat it's your VAT oblig she said
Please can you point me to the law I said. She opened a leaflet and pointed me to a sentence that mentioned an Act of Parliament but it was a random refernece, it didn't confirm her contention at all, she hadn't a clue about the actual law.
She turned to my son and said "Is he always like this?"
Suppose it wasn't a boat that I bought, but a very vlauable piano, I said
Ah that's ok, if pian isn't VAT paid we wont chase after you
So why the difference?
Well there are different rules for boats she said
Ah, right, so can you point me to the VAT law which applies just to boats I said
She gave me a leaflet about sailing your boat into UK waters.
That doesn't apply to me I said. I'm buying a boat in the UK. I'm not importing it
Well the boat still has to be VAT paid if you own it Sir
Ok, I said, if the previous owner didn't pay import VAT and now I own the bot, you're saying I have to pay his tax?
She hesitated. Yes
Can you think of any other area of UK law in which citizen B pays citizen As tax?
Er, well, no.
I politely told her I thought she was wrong. I said she is mixing up the concept of (a) me importing the boat and failing to pay the VAT, in which case it could be colloquially said to be "not VAT paid" and liable to confiscation from me to pay my tax debts, with (b) the situation of the next owner. I politely asked her to ask a senior colleague back at the office to show her the code section that says B's boat is confiscated to pay A's tax, becuase it is an utterly daft idea. but if the code exists her boss should be able to point to the actual sentence. She said she would, and a small penny dropped in her head that her story didn't make sense, I think
She gave up at this point and so did I.

Like I said, nothing new to report really. It was obvious this person had only the slightest grasp of tax law, no more.

I might write to HMRC to get a written view from their senior people. I'm still disappointed the mags MBY/MBM are not more on the case with this. It affects their readership hugely
 
Re: met HMRC at LIBS

Deja vu!

Well done JFM for taking this up with HMRC, you clearly got exactly the same story as I did, despite your very significant knowledge and confidence to challenge them on the subject.

Come on RYA, dont you think this is a matter you should take up, and sort out in the best interest of your members? (ie me!)

I intend to email the legal dept at the RYA today refering to this thread and including some specific excerpts inviting them to respond.
 
Re: met HMRC at LIBS

Well done jfm

Nothing new here but I, too, think its about time that the organisations that are representing us should "speak out" and put this matter to bed. After all, Gordon says that he "leads the world" - maybe we should do the same here.

So - here's the challenge.
The RYA SHOULD be the people to cary this forward - in fact they could do so much good for their members here and take all the credit if they actually get their act together.
However, I think you all know my views of the RYA - a complete waste of time - they will do nothing - come on, RYA, prove me wrong - I'm prepared to eat humble pie if you take this one up.

Now to the mags - particularly IPC's ones.
I have great respect for your commitment to our industry but I would be a bit dissapointed if you dont run with a few articles on this matter. The subject affects most of us. I'm sure you also have good contacts elsewhere (the BMF for example) and between you you could raise a strong campaigne.

Come on guys (the professionals I mean) go for it - sort out this mess.
 
Re: met HMRC at LIBS

[ QUOTE ]
She turned to my son and said "Is he always like this?"

[/ QUOTE ]
/forums/images/graemlins/laugh.gif




[ QUOTE ]

I might write to HMRC to get a written view from their senior people.

[/ QUOTE ]

Thats the best way to sort it out, once they try to put it in writing they will soon realise the reality of the situation.

Perhaps a low value Tender should be quoted in case it goes wrong, after all how many boats are sold with VAT documentation along with a dinghy that doesn't even get a mention.
 
Re: met HMRC at LIBS

Does it need to be that expensive? The RYA have lawyers who could draft a letter to counsel. The questions are quite straight forward, and it seems from responses on here that the law is quite clear, so I can't see counsels fees being more than £10k? IPC, RYA, BMF and YBDSA can pay £2.5k each?
 
Re: met HMRC at LIBS

I deal with Customs and Excise in South Africa every day, who's laws are very simular to that of the UK, and in fact UK case law is oftain quote. I have been following this with great interest and add if comment.

My view is that HMRC cannot incest on the buyer to proofing that payment of VAT has been made at it is the responsibility seller to collect and pay the VAT to HMRC if the seller is a VAT registered company.

If the seller did not pay the VAT over for any sale not just boats he has committed the crime of tax evasion for which HMRC must charge him and take him to court.

In most countries the prosecution must prove you have committed the crime you have been charges of. In this case VAT may or may not have been paid there is not proof that it has not been paid so no proof that a crime has been committed. In any case if it was not paid it is the seller of a VAT registered company who has committed a crime and must be charged not the purchaser.

I have said this before that if you take your car to France no one is interested in the VAT status of your car so why boats.
 
Re: met HMRC at LIBS

[ QUOTE ]
I might write to HMRC to get a written view from their senior people.

[/ QUOTE ]

I hope you do this. It would be quite amazing if the boat buying punter could be liberated from the urban myth.
 
Re: met HMRC at LIBS

[ QUOTE ]
[ QUOTE ]
I might write to HMRC to get a written view from their senior people.

[/ QUOTE ]

I hope you do this. It would be quite amazing if the boat buying punter could be liberated from the urban myth.

[/ QUOTE ]

IMO it would be quite amazing if HMRC put anything useful in writing /forums/images/graemlins/frown.gif



[ QUOTE ]
Ok, quick report. I went to LIBS yesterday (satruday - was quite busy, have to queue for some boats and still couldn't get on the oyster!). I spoke to HMRC but dont have much to add that slipknot hasn't already said

I asked them who knew about boat VAT and was directed to a lady mid 30s in HMRC uniform. Told her I'm contemplating buying a 2nd hand boat with no VAT papers, owner has lost them

She said "Don't buy it. You need to be able to prove VAT status"
To whom? I said.
HMRC she said.
I said why; the only transaction I'm doing is buying a boat (not importing it, it's already in UK) so I can't have a VAT bill at all.
She said no, I have to prove VAT status.
What if I can't, I said.
Well you will have to pay the VAT then, or have the boat confiscated.
But I dont have any VAT obligation to HMRC, all I did was buy a boat.
But it's not a VAT piad boat, she said
I said there isn't such a thing as "VAT piad" is there. VAT is applied to transactions not boats, right?
Then she repeated herself lots (At this point I could tell from her manner/hesitation she didn't know the law)
I said let's suppose a previous owner had fraudulently imported boat Jersey-UK and not paid VAT. Now I am 3 owners along the line and I own the boat. Surely I am not resp for another citizen's VAT?
Look, if you're sailing a boat in EU water it must be vat paid.
Where's the law? I said.
She handled me an irrelevant leaflet
Look I said, if a previous owner failed to pay VAT at import you need to chase him not me, right?
No, if you own the boat it's your VAT oblig she said
Please can you point me to the law I said. She opened a leaflet and pointed me to a sentence that mentioned an Act of Parliament but it was a random refernece, it didn't confirm her contention at all, she hadn't a clue about the actual law.
She turned to my son and said "Is he always like this?"
Suppose it wasn't a boat that I bought, but a very vlauable piano, I said
Ah that's ok, if pian isn't VAT paid we wont chase after you
So why the difference?
Well there are different rules for boats she said
Ah, right, so can you point me to the VAT law which applies just to boats I said
She gave me a leaflet about sailing your boat into UK waters.
That doesn't apply to me I said. I'm buying a boat in the UK. I'm not importing it
Well the boat still has to be VAT paid if you own it Sir
Ok, I said, if the previous owner didn't pay import VAT and now I own the bot, you're saying I have to pay his tax?
She hesitated. Yes
Can you think of any other area of UK law in which citizen B pays citizen As tax?
Er, well, no.
I politely told her I thought she was wrong. I said she is mixing up the concept of (a) me importing the boat and failing to pay the VAT, in which case it could be colloquially said to be "not VAT paid" and liable to confiscation from me to pay my tax debts, with (b) the situation of the next owner. I politely asked her to ask a senior colleague back at the office to show her the code section that says B's boat is confiscated to pay A's tax, becuase it is an utterly daft idea. but if the code exists her boss should be able to point to the actual sentence. She said she would, and a small penny dropped in her head that her story didn't make sense, I think
She gave up at this point and so did I.

Like I said, nothing new to report really. It was obvious this person had only the slightest grasp of tax law, no more.

I might write to HMRC to get a written view from their senior people. I'm still disappointed the mags MBY/MBM are not more on the case with this. It affects their readership hugely

[/ QUOTE ]

Fair play to you for going into this - and I suspect that you may be the one who is right.......but I keep imagining something like the above conversation in French, Spanish or Greek.....with it up to me to "prove" my innocence through a foreign legal processs (£££) - otherwise the boat remains chained to the dock /forums/images/graemlins/frown.gif

Somehow I don't think a 12 page thread from YBW.com (even if gone through Google translate /forums/images/graemlins/ooo.gif) will work quite as well as the original VAT documents. (of course each to their own on what docs folk want when buying or selling).
 
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