VAT

[timv]

Am I right in assuming if you bring a boat in from the channel islands 20% VAT would be due on the purchase price ? Or is the boat valued independently and VAT due on the valuation ? Is the standard 20% rate applied?

thanks
Tim

 

[Powersalt]

Interesting question. As there are a few bargains to be had in Jersey at the moment. My understanding is that you will pay vat and any import duties on a valuation established by the uk ( or place of import) customs office. I understand they use your purchase price, adverts in magazines, internet, and you insured valuation as measures to see if they agree with your valuation.

Bear in mind that if VAT was originally paid on the vessel and it has not been out of eu waters for more than 3 years (you need to check this timing) and no sale transactions have taken place out side of eu waters you can import showing the original vat receipt. That my understanding, but I am sure others will be along with practical ideas.

I have noticed though that the CI market which has been very slow, with lots of MOBOS going to Norway at low prices, is starting to pick up a bit now

 

[Antony Collis]

Don't forget you can pay in France if they give you a better deal. Just stop off on the way back.

 

[Tranona]

The rules give a choice of valuation to cater for different situations. For example a boat purchased some time before import is likely to have a value different from the purchase price either because of market conditions or significant work done on the boat. However it is difficult to argue for a different value if you have just purchased the boat. The rate is the standard rate used at the time.

 

[Hurricane]

Bear in mind that if VAT was originally paid on the vessel and it has not been out of eu waters for more than 3 years (you need to check this timing) and no sale transactions have taken place out side of eu waters you can import showing the original vat receipt. That my understanding, but I am sure others will be along with practical ideas.

Not sure that is strictly the case.
This is how I understand it but I may be wrong.
If VAT has been paid and the boat is owned by a private European person (not a VAT registered company) and has been in European waters in the last 3 years, then VAT would not be due if the boat was purchased inside Europe (no sold in the channel islands)
I think if all the above is met, then you should have the boat sailed to (say) France and make the actual purchase there.
I believe that the VAT "status" (hate saying that) is lost as soon as the boat is sold outside European waters.

Thats how I see it but there are experts on here that will confirm things.

 

[Tranona]

Not sure that is strictly the case.
This is how I understand it but I may be wrong.
If VAT has been paid and the boat is owned by a private European person (not a VAT registered company) and has been in European waters in the last 3 years, then VAT would not be due if the boat was purchased inside Europe (no sold in the channel islands)
I think if all the above is met, then you should have the boat sailed to (say) France and make the actual purchase there.
I believe that the VAT "status" (hate saying that) is lost as soon as the boat is sold outside European waters.

Thats how I see it but there are experts on here that will confirm things.

Powersalt's original is sort of correct, just badly expressed. Return Goods Relief permits re-importation without paying further VAT if it is done by the same person that took the goods out, and the return is normally within 3 years. That relief is not available if ownership changes while the boat is outside.

So it is quite possible that a boat could be located in the CIs but previously purchased in the EU. The owner (if still the same person) could take the boat to France or UK, sell it there and it would still be VAT paid if it met the Relief rules. However, boats in CI are usually not in that position and are "cheaper" than EU VAT paid as a result.

 

[Hurricane]

Powersalt's original is sort of correct, just badly expressed. Return Goods Relief permits re-importation without paying further VAT if it is done by the same person that took the goods out, and the return is normally within 3 years. That relief is not available if ownership changes while the boat is outside.

So it is quite possible that a boat could be located in the CIs but previously purchased in the EU. The owner (if still the same person) could take the boat to France or UK, sell it there and it would still be VAT paid if it met the Relief rules. However, boats in CI are usually not in that position and are "cheaper" than EU VAT paid as a result.

I think that was what I was trying to say but I didn't make it clear.
You always make things much clearer
The point I was making was that if the boat was VAT paid and in the CI it should be moved back into Europe if it is to be sold and keep its VAT status.
Otherwise, IMO it would need to be imported into Europe thus attracting an import/VAT tax
I think.

But, as you say, most CI boats are there because they are not VAT paid.

 

[Powersalt]

I think that was what I was trying to say but I didn't make it clear.
You always make things much clearer
The point I was making was that if the boat was VAT paid and in the CI it should be moved back into Europe if it is to be sold and keep its VAT status.
Otherwise, IMO it would need to be imported into Europe thus attracting an import/VAT tax
I think.

But, as you say, most CI boats are there because they are not VAT paid.

Not sure about the badly expressed bit, but never mind. I just get tired typing.

Most of the yachts in CI are owned by CI residents and so have paid their own tax( Jersey 5% , Guernsey 0%) at time of purchase but not EU vat. Hence why many boats are sold to Norway as anywhere in eu will be liable to a vat rate at place of import

 

[timv]

the agent informs me no tax has been paid on this boat so I assume it was purchased as a commercial venture.If this is correct am I right that VAT would be due at 20% of purchase price ?

 

[Tranona]

Not sure about the badly expressed bit, but never mind. I just get tired typing.

Most of the yachts in CI are owned by CI residents and so have paid their own tax( Jersey 5% , Guernsey 0%) at time of purchase but not EU vat. Hence why many boats are sold to Norway as anywhere in eu will be liable to a vat rate at place of import

The crucial bit I was trying to clarify is that you stated "you" could import it - by implication the buyer, but the important condition is that the relief is only available to the same person who took it out. So, the practical solution if the boat meets the criteria for relief is to move it to the EU before sale. There could of course be other reliefs available, for example returning resident relief, but that is even more restrictive and specific!

However, the OP says clearly now that no tax has been paid so it will be subject to 20%, plus, of course comply with the RCD.

 

[Deleted User YDKXO]

the agent informs me no tax has been paid on this boat so I assume it was purchased as a commercial venture.If this is correct am I right that VAT would be due at 20% of purchase price ?

Er, praps I shouldn't say this because its probably illegal but maybe you want to ask the seller for 2 invoices for the boat, one for the boat itself at a relatively low value and the other for the fixtures and fittings! Also it would be worth keeping the boat in the CI for a while before importing it into the EU because then you could argue that the boat had depreciated since you bought it. Whatever, its worth trying to understand how HMRC would value the boat on importation, whether they take account of the payment invoice or whether it's by independent valuation. If the former, then there may be scope for reducing the VAT due

 

[timv]

I like your thinking !

Er, praps I shouldn't say this because its probably illegal but maybe you want to ask the seller for 2 invoices for the boat, one for the boat itself at a relatively low value and the other for the fixtures and fittings! Also it would be worth keeping the boat in the CI for a while before importing it into the EU because then you could argue that the boat had depreciated since you bought it. Whatever, its worth trying to understand how HMRC would value the boat on importation, whether they take account of the payment invoice or whether it's by independent valuation. If the former, then there may be scope for reducing the VAT due

 

[Tranona]

Er, praps I shouldn't say this because its probably illegal but maybe you want to ask the seller for 2 invoices for the boat, one for the boat itself at a relatively low value and the other for the fixtures and fittings! Also it would be worth keeping the boat in the CI for a while before importing it into the EU because then you could argue that the boat had depreciated since you bought it. Whatever, its worth trying to understand how HMRC would value the boat on importation, whether they take account of the payment invoice or whether it's by independent valuation. If the former, then there may be scope for reducing the VAT due

Fixtures and fittings are also subject to VAT!

Think you will find that HMRC have already thought of all the potential dodges. Underinvoicing is an obvious one, but understating the value would almost certainly lead them to use their own valuation. The trick is to present a value that is believable and avoids any potential for argument. As we often argue, establishing a "market value" for a used boat is difficult and the closest approximation is the transaction value of the last boat sold on the open market - and therefore a good basis for VAT if import occurs at around the same time. A delay in import may well provide a basis for a different valuation, but you would need to gather your evidence to support it.

As you know from your experience in Croatia, states go about establishing values in different ways as the rules give options, so if there is a large sum involved it may well be worth doing some research to find out which state will give the lowest valuation (and/or lowest rate), but guess one would need a professional who knew their way around to get good advice.

 

[Deleted User YDKXO]

Fixtures and fittings are also subject to VAT!

Think you will find that HMRC have already thought of all the potential dodges. Underinvoicing is an obvious one, but understating the value would almost certainly lead them to use their own valuation. The trick is to present a value that is believable and avoids any potential for argument. As we often argue, establishing a "market value" for a used boat is difficult and the closest approximation is the transaction value of the last boat sold on the open market - and therefore a good basis for VAT if import occurs at around the same time. A delay in import may well provide a basis for a different valuation, but you would need to gather your evidence to support it

As you know from your experience in Croatia, states go about establishing values in different ways as the rules give options, so if there is a large sum involved it may well be worth doing some research to find out which state will give the lowest valuation (and/or lowest rate), but guess one would need a professional who knew their way around to get good advice.

Yes I knew that the fixtures and fittings invoice would also be subject to VAT! Of course massive under invoicing would be stupid and probably counter productive but if the OP could show an invoice for the boat at the low end of the possible market price range, that would be believable and at least a basis for arguing the value with HMRC or French customs. I don't see that a delay in import would have to be justified. The OP could quite legitimately argue that he fancied spending the summer exploring the CI and he could also legitimately argue that the extra hours he put on the engines doing so had caused the value of the boat to depreciate. It is not for the HMRC to decide when somebody should decide to import their boat into the EU.
As for Croatian VAT, I don't think my experience there is relevant to this situation. The Croatian authorities decided that they would accept a valuation given by a qualified independent surveyor appointed by the boat owner/customs agent so there was 'scope' for ensuring that a valuation was as low as believably possible. In the case of HMRC and I guess, French customs, I assume they wouldn't accept a valuation obtained by the owner/importer. However, my business experience with importing other types of machinery into the UK from outside Europe is that HMRC will inevitably assess VAT on the invoice value of the goods. I have never experienced a situation in which HMRC questioned the invoice value although, of course, that might be different for boats.
And yes it would be a good idea to speak to a customs agent specialising in boat imports from outside the EU but I don't have any experience of one myself. It might be worth the OP speaking to somebody like http://www.ward-mckenzie.co.uk to see if they could recommend a company or handle it themselves

 

[Tranona]

It wasn't the delay itself that would need any justification, it would be the value you were claiming if it were different from the purchase price. Loss of value from depreciation, wear and tear etc - or on the other hand, appreciation from having value enhancing work done since purchase - for example new engines.

Suspect that each case is likely to be dealt with on its merits as the ways in which individual boats are imported and subject to tax are varied. For example somebody buying a new boat VAT free and sailing off round the world then deciding to bring the boat in 5 years later would negotiate a value reflecting the 5 years' usage. Very different situation from the OP buying and importing the boat at the same time. Much more scope for the former to find a state that is more relaxed about valuations!

 

[Powersalt]

Interesting topic. I dont know how you can negotiat prior to bringing the boat into the EU. Would be very interested in anyone who may have had success at doing this. My understanding is that it is assesed at time of import. I am not even sure you are then able to disagree and sail it back??? any thoughts