Boat Registration and future VAT

[Skylarks]

Currently having a boat built in South Africa , when it’s finished we plan to sail around the world slowly, definitely would like to cruise the ICW as well At some point the boat will eventually end up in UK or Med.
I am a UK Citizen but have non residence status as working overseas at present.
Trying to figure out the best place to register the boat , I do want the red ensign but would also like to negate / minimise / delay VAT. Any advice would be appreciated.

[boatman61]

If it is going to be your home and will have been this for a while I belive VAT can be avoided.. the payment of VAT would only arise when you come to sell her..
If you want UK reg I would suggest Part 1.

[Gruz]

Originally Posted by boatman61

If it is going to be your home and will have been this for a while I belive VAT can be avoided.. the payment of VAT would only arise when you come to sell her..
If you want UK reg I would suggest Part 1.

Correct me if I am wrong but I think that Part I registration is the only option available if the boat is over 24 metres or a person or company lending money on the security of the boat requires a marine mortgage to be registered against it.

[duncan_ellison]

Hello Skylarks,

Firstly, do not confuse YOUR residency/citizenship with the flag state of the vessel. The two are separate things. The red ensign has little, if anything, to do with your liability to VAT and import duty when bringing a vessel into the EU.

Of course all this may change in a few months time if / when the UK leaves the EU and / or the Customs Union, but for now, the rules on this are basically EU rules and therefore the same regardless of which EU country you bring your boat to.

Put simply, ANY vessel coming into the EU is liable for VAT and Duty. However .... if you are not considered an EU resident, you can apply for 'Temporary Import Relief' which normally lasts 2 years, but after that you have to leave the EU or pay the VAT.

Your problem is going to be establishing that for these purposes you are non-resident as the rules for that as far as HMRC are concerned are complex.

One potential relief open to you is if you move your PERMANENT place of residence from somewhere outside the EU to the UK. In these specific circumstances, you are allowed to import 'personal possessions' (furniture / household items / clothes etc) into the UK free of VAT and duty. What's not well known is that can extend to include a boat (the size / value isn't specified) PROVIDED you can prove that it was part of your personal household possessions at the time of the move. The only gotcha here is that HMRC can make a determination when you actually arrive with your yacht, that you don't fulfil the narrow criteria for this and you get immediately stung for the VAT.

I'm making an assumption here that you would be, indeed, moving a household to the UK, but if that's the case, you will need to fill in a form declaring your possessions. The best way to avoid surprises would be to declare the yacht at this time and allow HMRC to say if they provisionally accept it.

Also note that DUTY (2%) is payable only if your vessel has an LOA of less than 12m, after that it's considered 'sea going' and no duty is (currently) payable.

The duty / VAT may not be your only problem. If we stay in the EU / Customs Union or if (quite likely) we simply adopt EU rules on these things, you will have to prove that the vessel conforms to the Recreational Craft Directive when you import it.

Note that the standard has changed recently and it must conform the the LATEST version of the RCD.

Note also that you just saying that it conforms isn't enough, the vessel MUST have a manufacturers plate stating compliance AND you must also have a 'Certificate of Conformity' specifically relating your your vessel from the manufacturer, otherwise you will have a long and rocky road importing it at all.

Since you are still having the vessel built, I suggest that you check with the builders that they are building it to Directive 2013/53/EU standards and that they are going to provide you with a CoC.

Duncan

[Skylarks]

Originally Posted by Gruz

Correct me if I am wrong but I think that Part I registration is the only option available if the boat is over 24 metres or a person or company lending money on the security of the boat requires a marine mortgage to be registered against it.

Boat 44 ft no marine mortgage . So I take it there will be no issues sailing globally with a non VAT paid boat?

[duncan_ellison]

Yes... and No.

If you ever bring it into the EU, you will have to contend with the VAT issues mentioned above.

However ... most countries in the world only allow a certain period of time before they consider that you have 'imported' the boat (as opposed to being a temporary visitor) and then you are subject to that country's rules.

For example, if you intend to do the ICW, when you arrive in the USA, you will apply for a 'Cruising License', this is valid for 12 months and you are expected to be out of US waters before it expires otherwise, they might take the view that you have permanently imported it into the US and are therefore liable for customs duties.

Moral of the story... you have to keep moving to avoid paying money to governments for no good purpose.

[Skylarks]

Originally Posted by duncan_ellison

Hello Skylarks,

Firstly, do not confuse YOUR residency/citizenship with the flag state of the vessel. The two are separate things. The red ensign has little, if anything, to do with your liability to VAT and import duty when bringing a vessel into the EU.

Of course all this may change in a few months time if / when the UK leaves the EU and / or the Customs Union, but for now, the rules on this are basically EU rules and therefore the same regardless of which EU country you bring your boat to.

Put simply, ANY vessel coming into the EU is liable for VAT and Duty. However .... if you are not considered an EU resident, you can apply for 'Temporary Import Relief' which normally lasts 2 years, but after that you have to leave the EU or pay the VAT.

Your problem is going to be establishing that for these purposes you are non-resident as the rules for that as far as HMRC are concerned are complex.

One potential relief open to you is if you move your PERMANENT place of residence from somewhere outside the EU to the UK. In these specific circumstances, you are allowed to import 'personal possessions' (furniture / household items / clothes etc) into the UK free of VAT and duty. What's not well known is that can extend to include a boat (the size / value isn't specified) PROVIDED you can prove that it was part of your personal household possessions at the time of the move. The only gotcha here is that HMRC can make a determination when you actually arrive with your yacht, that you don't fulfil the narrow criteria for this and you get immediately stung for the VAT.

I'm making an assumption here that you would be, indeed, moving a household to the UK, but if that's the case, you will need to fill in a form declaring your possessions. The best way to avoid surprises would be to declare the yacht at this time and allow HMRC to say if they provisionally accept it.

Also note that DUTY (2%) is payable only if your vessel has an LOA of less than 12m, after that it's considered 'sea going' and no duty is (currently) payable.

The duty / VAT may not be your only problem. If we stay in the EU / Customs Union or if (quite likely) we simply adopt EU rules on these things, you will have to prove that the vessel conforms to the Recreational Craft Directive when you import it.

Note that the standard has changed recently and it must conform the the LATEST version of the RCD.

Note also that you just saying that it conforms isn't enough, the vessel MUST have a manufacturers plate stating compliance AND you must also have a 'Certificate of Conformity' specifically relating your your vessel from the manufacturer, otherwise you will have a long and rocky road importing it at all.

Since you are still having the vessel built, I suggest that you check with the builders that they are building it to Directive 2013/53/EU standards and that they are going to provide you with a CoC.

Duncan

Thank you the really helpful reply. Boat over 12 m (44ft) and builders will supply a CoC. Will be a UK citizen but non resident at time of purchase and for the following 3 years at least. Then either sailing full time or alternate sailing and UK - family commitments determined. Any advantage registering UK vs Uk protectorate eg Gran Cayman. Sorry if seem clueless but just researching now. boat will be finished end of year.

[Pete7]

If you have a UK address or family then Part 3 will be simpler.

The import of household goods is called Chattel on the HMRC website:

[boatman61]

If you have a valid UK address and proof.. ie recent bills recieved/paid in your name then yes SSR can be a way to go.. however this is a fast closing loophole and suspect applications are checked out and can be refused as a Brit member here discovered recently.. also it is not proof of ownership. £35 every 5yrs.

Part 1 on the other hand does provide proof of ownership and the distribution of the 64 shares between the named owner/s.. ie wife, mortgage etc.
It has no size restriction and that I know as I owned a 31ft boat with Part 1 for over 4yrs.
Really it depends what suits you best.. info on both of the above is available online.. there are a lot of companies charge £350+ to do it for you but it is simple enough to do yourself and it only costs £153 for the first 5yrs and £49 for each 5yr renewal thereafter.

https://www.gov.uk/register-a-boat/the-uk-ship-register

[helise]

Originally Posted by Skylarks

Currently having a boat built in South Africa , when it’s finished we plan to sail around the world slowly, definitely would like to cruise the ICW as well At some point the boat will eventually end up in UK or Med.
I am a UK Citizen but have non residence status as working overseas at present.
Trying to figure out the best place to register the boat , I do want the red ensign but would also like to negate / minimise / delay VAT. Any advice would be appreciated.

Hi!
Just contact Info.marine@rocketmail.com or whattsapp +6019-7990170 to register with Langkawi International Yacht Registry (LIYR). No taxes, no import duty, no GST, no VAT, no hassle. Straight forward registration within 10 working days with MMSI NO. Fast and cheap.
Regards.

[drcot3]

Hello
I have just renewed my part 1 registration today and its now £72 for 5 years. I have had my boat on the part 1 since 2000 and it`s slowing risen to today rates.

I have never been asked for my vat status by any official in Spain/Gib/Morroco

The red ensign will always be on my boat as I am proud to be English, sorry British as only Scots / Welsh / Irish can have their nationality, before you get writing I have many friends who are the above and we just laugh about it, as do my other nationality friends, its just the small minority who take it serious. we are all just human beings / monkeys / or apes (that's me)
Take your pick.

But I can show my vat status if required, it`s not worth the risk, although if you are outside the EU who will ask?

WHY should boat owners be taxed for owning a boat by local USA states / countries as we spend loads of money where we leave our boats? I have had boats since 1997 and still not learnt its expensive owning a boat but I love my boat. Rant over back to normal, back to the silent majority.
Happy sailing/cruising to all also "liveaboards" as we all are at times.

[anacapaisland42]

Register the boat in the country that will give you the best help if you get into trouble. Ignore the $$!

Bill

Originally Posted by Skylarks

Currently having a boat built in South Africa , when it’s finished we plan to sail around the world slowly, definitely would like to cruise the ICW as well At some point the boat will eventually end up in UK or Med.
I am a UK Citizen but have non residence status as working overseas at present.
Trying to figure out the best place to register the boat , I do want the red ensign but would also like to negate / minimise / delay VAT. Any advice would be appreciated.

[blubaju]

Most is well said, but EU is not only mainland! There are member states with overseas islands. As EU resident there is no vat - grace period when you import your yacht, but maybe as British you will soon not care about EU regulations. Take the ship importation in EU very serious, you would not be the first trying to sail away again. The paper your builder signs must be covered by his registration with, to say it easy: a company like Lloyds or you must make the whole procedure on your expenses, only worth for expensive yachts - and they register in panama or elsewhere. My boat was built in the Philippines and is registered in EU, sailing Asia ;-)

[Skylarks]

Thanks for all the advice

[boatman61]

Originally Posted by duncan_ellison

I'm making an assumption here that you would be, indeed, moving a household to the UK, but if that's the case, you will need to fill in a form declaring yo
The duty / VAT may not be your only problem. If we stay in the EU / Customs Union or if (quite likely) we simply adopt EU rules on these things, you will have to prove that the vessel conforms to the Recreational Craft Directive when you import it.

Note that the standard has changed recently and it must conform the the LATEST version of the RCD.

Note also that you just saying that it conforms isn't enough, the vessel MUST have a manufacturers plate stating compliance AND you must also have a 'Certificate of Conformity' specifically relating your your vessel from the manufacturer, otherwise you will have a long and rocky road importing it at all.

Since you are still having the vessel built, I suggest that you check with the builders that they are building it to Directive 2013/53/EU standards and that they are going to provide you with a CoC.

Duncan

Regarding the CE Certificate/RCD that should only apply if/when he comes to sell it.. that was my understanding when I brought a Hunter 37 across to the UK.
As long as I owned it a CE was not required however if I chose to sell it in the UK/EU then she would have to be made compliant with the CE inspection.
Basically a surveyor comes on board and checks various things like gas lockers, hoses, toilets etc then either gives you a list of jobs needed doing or a pass certificate and a bunch of stickers.. sets you back a few grand.