VAT

Re: met HMRC at LIBS

Quote "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

Somehow I don't think a 12 page thread from YBW.com ... will work quite as well as the original VAT documents"

Yeah yeah I know, that practical observation has been fully mentioned and agreed to by contributors to this thread.
 
Re: met HMRC at LIBS

Another vote of "well done" to jfm for challenging the accepted wisdom. Sad reflection on HMRC that they field someone at a boat show who doesn't know the basics of tax related to, let me see, ah yes, boats.

PS jfm - saw you coming off the larger Targa at LIBS on Saturday, was with family so didn't get chance to say hello. Met up with James B later in the day, will update you by PM.
 
Re: met HMRC at LIBS

Ah yes, was kinda looking out for you but it was crowded so hard to see people. Hope you had a good day boat buying. Yes, tell me by PM, interested to hear where you've got to on the boat search!

I've got some more VAT stuff to write, will make a post later just busy right now. I did eventually find the (limited) bit of UK law that allows HMRC to sieze Mr B's boat to pay Mr A's taxes (so, er, I get to drink my own case of champagne!)
 
Re: met HMRC at LIBS

[ QUOTE ]
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

[/ QUOTE ]Don't worry, even if theorically possible, that's a totally unrealistic scenario.
I didn't think of suggesting to jfm, before he went to the show, to check with HMRC another possible scenario.
Let's assume that a French citizen buys from another French citizen, in France, a French registered boat, and he has no VAT invoice.
And then he crosses the channel and cruises UK waters. What next, HMRC?
I would bet another case of champagne that they would have replied it wasn't their business.
Mind, even if - to be consistent with their position - they should have given the same answer as with the UK citizen scenario.
So, assuming that in the scenario you keep imagining you're a UK citizen onboard a UK registered boat, cruising anywhere in the med (which is the same as above, just reversed), for the same reasons it would be extremely unlikely that any local officers will bother you.
 
Re: met HMRC at LIBS

[ QUOTE ]
I did eventually find the (limited) bit of UK law...

[/ QUOTE ]By chance, has that to see with the fact that also the buyer "gains" from the dodgy transaction at the end, because he pays a lower price? Sorry, there's a legal term for that but can't find a better way to explain it.
I'm asking because in the meantime I also found something along these lines in IT laws.
 
Re: met HMRC at LIBS

The uk concept is called "unjust enrichment" but it wouldn't catch this case

Actually that reminds me - I'll tell a tale to illustrate unjus enrichment. I advised on the LBO of a large spectacle retailer, chain of high street stores, in mid 1990s. (They owned Salmoiraghi & Vigano in It in fact). Anyway, my cleints bought the company for about £90m (50% debt). i knew it had a massive unknown-about (to seller of the company, doh!) VAT refund in it, cos they were selling spectacles with 17.5% VAT, whereas they should have been selling them for 50% as product and 50% as medical supplies (zero VAT)

We claimed a £40m VAT refund, after buying the company. HMRC eventually agreed it was theoretically payable, but resisted on grounds of unjust enrichment. We defeated that argument on grounds spectacles are sold at "price points" like £99.99 etc. Whatever the VAT rate, these prices stick. Had the company known it was 50% medical they would not have charged £93 instead of £99, they'd still have charged £99 cos that is how markets work. So, no unjust enrichment

The judge agreed and the company got a £40m refund, so basically my clients kinda got the company's equity for free :-)

But getting back to boats, no the state cannot confiscate an unjust enrichment (in UK law). A party to civil litigation can have it taken into account in a settlement, but the state can't just confiscate it

I'll post later on VAT and confiscating boats - will take a while and I gotta run
 
Re: met HMRC at LIBS

Unjust enrichment, precisely. I would have never translated it as such, but that's what I meant.
Blimey, talking about cases of champagne, I take it that you got some of them from that customer of yours!
 
Re: met HMRC at LIBS

[ QUOTE ]
.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

[/ QUOTE ]

The point must be that YOU should not have to prove your self innocent, the foreign authorities must prove you guilty.

Chaining your boat up pending payment of a so called fee without a court order can be deemed as extortion.

The main problem is that government officials think they are above the law or don't know the law and work on the basis that they have the power and make it hard for normal people to resist their unilateral unlawful actions.
 
Re: met HMRC at LIBS

Jfm's plain English arguements are difficult to disagree with. The entire VAT issue has been carelessly and irresponsibly reported by the press. The question of proving if a boat is "VAT paid" arises when a boat moves from one EC member state to another.

It is quite possible for the first ( private & non VAT registered)owner of a boat, who has paid the VAT to the builder/dealer and still retains this VAT receipt, to sell the boat to a person who then moves that boat to another EC member state. The vendor can then claim a VAT refund on the sale value. Part of the refund process is handing over the original VAT receipt to HMRC. See HMRC Notice 728 Para 7.1

So, a private British person, non VAT registered, buys a shiney new Sunseeker, enjoys it for a few seasons in the UK and then sells it to a Frenchman who takes it to the South of France. The British guy claims a VAT refund and the Frenchman has to pay VAT when sailing his boat to France. So, this is how a perfectly normal sale of a boat, within EC member states can loose its "VAT paid" status.

Or the British seller, who is very nice, gives the Frenchman the original VAT receipt, hence the Frenchman has no VAT to pay on entry to France.

A boat selling from one British person to another British person and staying in the Uk will never be requested to prove its "VAT status" by UK HMRC as the boat has never left the UK triggering the possible VAT refund. Even if this boat is cruising but not becoming resident in another EC member state, the "VAT Status" is only a matter for UK HMRC ( See HMRC Notice 8).

I believe the "logic" behind this VAT issue, is that a boat, when moving from one member state to another, may be the subject of a VAT refund as described above, hence a boat arriving and wishing to stay in another EC member state without a VAT receipt is, by default, considered to be "VAT Unpaid".

Of course, the VAT receipt could quite simply be lost and the boat then falls into the same "VAT Unpaid" category as the para above. Which then comes back to Jfm's arguements !
 
Re: met HMRC at LIBS

What you say has some truth in it, but in the example you give the events you describe could not happen.

Section 728 is concerned with the New Means of Transport legislation and does not apply to vessels, vehicles or aircraft once over a certain age.

Section 7.1 in its entirity:

[ QUOTE ]
7.1 Who is entitled to a refund?
You may be entitled to a refund of VAT if you satisfy all the following conditions:

you are not registrable for VAT in the UK

you are selling your NMT to another person, and that person intends to remove the NMT to another Member State within two months of the date of supply

you can demonstrate that you have paid UK VAT on your NMT.

[/ QUOTE ]

The key phrase in the above rule is NMT. This is a clearly defined state, in section 2.1 of the same notice. Agin in full:

[ QUOTE ]
.1 What is a 'means of transport'?

A 'means of transport' is any of the following when it is intended for the transport of passengers or goods:

a boat more than 7.5 metres long (about 24.6 feet)

an aircraft with a take-off weight of more than 1550 kilograms (about 4417 lb), or

a motorised land vehicle which:
- has an engine with a displacement or cylinder capacity of more than 48 cubic centimetres, or

- is constructed or adapted to be electrically propelled using more than 7.2 kilowatts (about 9.65 horsepower).



[/ QUOTE ]

To be defined as 'New', a boat must:

when more than three months have elapsed since the date of its first entry into service (see paragraph 2.3),

and

it has, since its first entry into service, travelled under its own power for more than 100 hours if it is a boat

So unless the transfer takes place in the first 3 months and 100 hours, the VAT is locked an never reclaimable. So if you are buying a boat that is older than three months, and has more than 100 hours you can never be persued by any other EU state for non payment of VAT as you could never have reclaimed it.

NMT legislation is a [--word removed--] and is fraught with confusing information.
 
Re: met HMRC at LIBS

Steve, that really is quite wrong. The sunseeker owner absolutely cannot get that refund. Nor does the French buyer have any VAT to pay on the import into france

There is a very limited exception under the NMT regs when a boat is new, but your sunseeker isn't new (as defined - new means very new)

More generally, I have got to the bottom of this and there are some limited cases where a boat CAN be seized by HMRC, and intriguingly paying 100/115 of the purchase price as oft recommended is no remedy

I will write a longish post in a few days - as hinted above it'll involve some limited back-tracking by me but I'm happy to feast on humble pie (and champagne!). I have started to draft that post but v busy with travel right now (see the time!) so it'll be in a few days.

Edit - I see jez already covered this!
 
Re: met HMRC at LIBS

Jez & jfm, I stand corrected. Agreed, only applies to very new boats.

So, is the VAT, by default, imbedded in the price of a second hand boat ( not a NMT), which first entered service in the EU and never left the EU ? I'm certain the answer is yes because as Jez says, no owner can claim a VAT refund.

Can this boat loose its VAT paid status, in some other way, if it continues to stay in the EU ? It would seem not. Therefore, an original invoice/receipt is not required by an owner.

The above is assuming boats owned by private, non VAT registered individuals.
 
Re: met HMRC at LIBS

Just caught up with all of this and it is fascinating! Especially enjoyed JFM's "head to head" with HRMC. /forums/images/graemlins/grin.gif

JFM, I look forward to your next writings, it sounds a little like you've found a fly in the ointment?
 
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