We have no proof of VAT, how much will this devalue the boat?

[wipe_out]

Hi,

When we bought the boat a couple of years ago we were new to boating and had no idea of the need for proof of VAT, just thought it was like buying a used car.. We bought through a broker and thought all was as it should be.. Also the boat was in a pretty bad way when we bought it so it was relatively cheap and we have invested quite a lot to get it back to a good condition..

I met with a broker the other day because we are looking to get something different and he asked if we had proof of VAT being paid.. I wasn't sure and I have now checked all the paperwork and I have the bill of sale from the previous owner to us and the bill of sale from the owner before that to him.. No VAT invoices..

What the broker has said is that this will mean we will probably need to accept a much lower selling price.. We are asking £24k which was based on his valuation but he feels we may have to accept a significantly lower offer purely because we have no proof of VAT..

Is no proof of VAT really that significant on a boat of this value? Are we in for the high jump on this?

Any advice appreciated..

 

[DavidJ]

My guess is when your broker comes to sell the boat he will market it at full value and keep his mouth shut.

There's a hint here at what you should do.

There is an introduction date of the VAT rule which others will tell you. If your boat is older then VAT proof not necessary.

 

[kashurst]

This VAT thing on older boats is a total pain in the ar*e. However at the price level you are at it may not be such a big deal. Have a look on internet for similar boats and see what they are priced at with/without vat. In the extremely unlikely event that someone from HMRC turns up and demands vat at some point in the future, the vat payable is based on the value at that point in time so not much probably. Also as far as we know on this forum it has never, ever happened. If you ask HMRC about it ( I have had similar problem in the past) they do not want to know and won't help you even if you offered to pay some vat. The only potential fly in the ointment is if the boat is taken abroad.

It doesn't strike me that your broker is being particulalry helpful - the boat is worth what someone is prepared to pay for it with or without a vat receipt. You have a set of bills of sale going back years so you can prove ownership - that to me is worth more than a tatty vat receipt that soemone could have knocked up at home. You can sell the boat privately without a broker and save the brokers fee as compensation, as quite a few on here have done in the past. You can download the verious forms from the internet and registration is easy too. Also you may well find someone who either doesn't care or doesn't know about the lack of a vat receipt. If your boat is in tip top condition and nice and clean and shiny it may be worth more than a similar poor example with a vat receipt.

Finally if you can find out the company that first sold the boat from bills of sale, labels on the boat, asking around etc, they may possibly be able to dig out a copy which is perfectly acceptable. Some of the so called vat receipts I have been given in the past have been poor, ripped, oil stained photo copies and could have been made up on a John Bull Printing set by a 6 year old. Have a rummage through any old service bills etc that came with the boat and see what you can find out. Also if possible contact previous owners - someone may have a copy in an old biscuit tin. Either way dont panic

 

[Nick_H]

What we've learnt on here from the various discussions (thanks yet again to jfm) is that it's an evidential system, because there's no register of which boats have had VAT paid on them. Even a genuine VAT invoice to an individual doesn't prove that the boat is VAT paid, but it's widely recognised as the best form of evidence. If you don't have the smoking gun of a VAT invoice, then you need other evidence to reduce the perceived risk for the buyer. Are both the bills of sale between private individuals? Do they say where the sale took place? Do you have marina receipts to show the boat has stayed in the UK? Did you keep the VAT invoices for the work you've had done?

I would gather what evidence you have together, tell the broker to advertise it as VAT paid, and if it becomes an issue for a buyer then show him the evidence. I'd also get hold of a copy of the article in MB&Y which explains it correctly (because jfm wrote it, or it was copied from his forum posts). People will trust the magazine article more than a forum, and if the buyer gets nervous you can send him or her a copy of the article to show there is no risk to them as long as the boat has not been imported, along with your evidence that it has not.

That's my reading of it anyway.

 

[Chris_d]

On a boat of that value with a clear history of ownership it shouldn't make any difference at all, broker shouldn't be perpetuating such tosh.

 

[oldgit]

On a boat of that value with a clear history of ownership it shouldn't make any difference at all, broker shouldn't be perpetuating such tosh.

+ 1

 

[wipe_out]

On a boat of that value with a clear history of ownership it shouldn't make any difference at all, broker shouldn't be perpetuating such tosh.

I don't think the broker is perpetuating any mis-information just stating the situation as he knows it to be based on his knowledge and experience in selling boats.. I don't feel he is being dishonest or obstructive in any way.. He simply said that more buyers are asking these days about the VAT status and not having it makes the boat less saleable and will affect the price..

I think kashurst probably has the most accurate answer "the boat is worth what someone is prepared to pay for it with or without a vat receipt.".. Someone may come along who just likes it and doesn't care about the VAT situation..

Really all I was trying to establish is approximately how much of an effect not having an original VAT invoice has on the sale price..

Thanks to everyone for the advise and suggestions on providing historic evidence..

This morning I have managed to track down the company that had the UK agency for the these boats in 2002 (the year of our boat) and they are going to see if they have a sales invoice or anything that would be useful.. Fingers crossed that comes off and then there is no more problem..

 

[Imperial One]

A good course of action wipe-out, hope it all comes good for you.
Life is always much easier with a complete title trail.:encouragement:

 

[SwanseaBoat]

I was in same situation selling via a broker. Potential buyer in Denmark £33k.
I had bought privately, unaware of the VAT issue.
It let the broker do the legwork... he contacted previous Scottish supplier and obtained a receipt. Real or imagined. You pay the broker (quite a lot) to take the strain out of it.
Good luck.

 

[volvopaul]

Does he or anyone have proof the boat isn't vat paid, no I doubt it very much. I'd stick where you are on the price, vat is only a big issue in the higher numbers when selling.

 

[superheat6k]

AS VP says, if the boat has been used and owned by two British owners, and was likely to have always been based in the UK who is to say it hasn't had VAT paid. Possibly more difficult if it is some form of grey import or not CE marked

But the only real risk is a trip to some European EU Dictatorship ruled country such as Portugal, Holland or Belgium where some petty minded a'hole wants to know chapter and verse to justify his existence.

Having been on this forum for several years yet to see one real life report of a boat of any age reasonably based in the UK ever having been challenged to prove VAT, and besides even HMRC only require VAT records retained for 7 years. So if its a 2002 boat that's 12 years. So a non issue unless you declare it has VAT status documentary proof included when you agree the sale, and then cannot produce the documents when the sale comes to settlement. This happened with my current boat - I was told the VAT invoice was available, then when the sale concluded it wasn't. Simple for me at that point i negotiated a reduction, as in my view I had specifically asked the question at the outset and was specifically adivsed it was part of the deal. I then obtained a copy of the original invoice from Fairline after the sale had completed.

It is the case that Brokers are increasingly risk averse that they will be sued if they don't establish the boats authenticity, so this may explain his over arching concern. Notwithstanding the very worse case would be a 20% charge on the sale value, and I don't think HMRC would much fancy having to prove to the Judge it hadn't had VAT paid - how could they - the boat was new in 2002 after all.

Ultimately this would likely come down to the keeness of any would be buyer, bearing in mind there are plenty of 'pretend' would be buyers just looking for an opportunity to welsh on the deal they have made when they realise they will have to pay for their purchase.

 

[Momac]

You must be open and honest about all things at the first contact with and potential buyer .
If you should be prepared (if asked) to make a written offer to accept liability to pay any VAT if it became due perhaps that would satisfy any purchaser.





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[ari]

and besides even HMRC only require VAT records retained for 7 years. So if its a 2002 boat that's 12 years. So a non issue unless you declare it has VAT status documentary proof included when you agree the sale, and then cannot produce the documents when the sale comes to settlement.

Are you suggesting that the is no proof of VAT issue on boats originally sold before 2008!?

 

[RIN]

On a boat of that value with a clear history of ownership it shouldn't make any difference at all, broker shouldn't be perpetuating such tosh.

+1

But you could also contact the manufacturer and quote the Hull no or Yard no if you have it. They may be able to supply an official copy, this may not exactly match requirements but is is an extra proof and will be better than nothing if you are still concerned.

I contacted Princess and they were able to supply copies of

The builders certificate
The original Bill of Sale
The original VAT invoice (stamped and signed saying it was a copy)

all in a nice pack. It cost £35

 

[jrudge]

I agree with all of this, partake given the boats value.

The snag is if the buyer comes on here asking ... I am looking at this boat and it has no vat proof ... then the forum would most likely reply bid him 20% odd % less!

Best bet has to be to try and track down the invoice or some other combinations of proof that make it reasonable it has been paid.

When I bought my first boat I contacted the prior owners (nothing to do with VAT - wanted prior service bills) and it did not take long to fund them all on the phone and get copies of the bills from the supplier.

It won't always be the case, but this is a decent starting point.

Also ask the broken that sold it to you. It is not at all impossible it is sitting in his file!

 

[Tranona]

Are you suggesting that the is no proof of VAT issue on boats originally sold before 2008!?

The 7 years is a red herring. There is no legal requirement for a buyer to keep the receipt for any length of time. The person who issues it - that is the VAT registered vendor is the one under an obligation to keep records supporting his VAT returns for 7 years. So, even if he is still in business, the original vendor may not be able to provide a copy of a specific invoice. The marine business being what it is many builderrs and dealers have gone out of business making it even more difficult to trace the original invoice.

 

[ari]

I agree with all of this, partake given the boats value.

The snag is if the buyer comes on here asking ... I am looking at this boat and it has no vat proof ... then the forum would most likely reply bid him 20% odd % less!

Best bet has to be to try and track down the invoice or some other combinations of proof that make it reasonable it has been paid.

When I bought my first boat I contacted the prior owners (nothing to do with VAT - wanted prior service bills) and it did not take long to fund them all on the phone and get copies of the bills from the supplier.

It won't always be the case, but this is a decent starting point.

Also ask the broken that sold it to you. It is not at all impossible it is sitting in his file!

Indeed. There seems to be two opposing views regularly wheeled out depending on whether the asker is selling or buying.

 

[ari]

The 7 years is a red herring. There is no legal requirement for a buyer to keep the receipt for any length of time. The person who issues it - that is the VAT registered vendor is the one under an obligation to keep records supporting his VAT returns for 7 years. So, even if he is still in business, the original vendor may not be able to provide a copy of a specific invoice. The marine business being what it is many builderrs and dealers have gone out of business making it even more difficult to trace the original invoice.

Exactly my thoughts, thanks. If the lack of VAT paid proof reared its head the excuse of 'boat is over seven years old thus no requirement for it' wouldn't cut much ice!

 

[superheat6k]

Are you suggesting that the is no proof of VAT issue on boats originally sold before 2008!?

I am simply saying that in business you are only required to maintain records, including those for vat, for 7 years. The onus would be on HMRC to prove vat hadn't been paid, so for a boat with 7 years + ownership records being in the UK and owned by UK or EU citizens, not sure they could do that to the satisfaction of a Court.

Has anyone on here, or does anyone on here know of someone else who has been made to pay vat on a boat more than 7 years old with reasonable ownership history > 7 years in the UK ? (e.g. part 1 or 3 registration and / or mooring receipts).

In my case I asked and was told the original vat invoice was included, so when it later wasn't I had a legitimate reason to tackle the vendor. My boat has 29 years ownership history and was made in the UK, it wasn't a deal breaker, but having a clean title makes later selling less of an issue because of this vat liability concern.

Payment of vat remains the responsibility of the original vendor when selling the boat new, or from a business transaction where vat was previously reclaimed, but as far as I understand it vat is not payable on secondhand goods. If I buy an item that would at some point have held a requirement for a vendor to pay vat I have no idea nor means to know if that vat was actually paid, even if I have an invoice saying it was - after 7 years neither do HMRC. The only reason this becomes a concern for a boat is the possibility it was an undeclared import - I am saying 7 years ownership within the EU should negate this as a realistic likelihood.

Hence my question for this perennial subject - is vat liability a myth after 7 years provable UK / EU ownership ?

 

[Nick_H]

Hence my question for this perennial subject - is vat liability a myth after 7 years provable UK / EU ownership ?

I think you may have a point.

We know that the only circumstance where a private individual could become liable for VAT on the purchase of a used boat in the EU is if the boat had been illegally imported (ie. smuggled). I believe HMRC are on record as saying that even in this circumstance, they would not try to recover VAT if the buyer had acted in good faith.

So, all a buyer needs to show is that they acted in good faith, and one of the best ways to do this is to ask for a VAT invoice, or some other compelling evidence that the boat has not been smuggled. Having got this evidence, how long do they have to keep it? You'd have thought 7 years, though of course it makes lots of sense to keep it until you sell the boat.