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Old 25-07-2016, 07:52   #16
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Re: VAT on pleasure craft (UK)

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Originally Posted by Dockhead View Post
It's complicated also in English law. In civil matters, much less in administrative ones, and much much less in administrative matters concerning taxes, there is no broad and categorical doctrine of ei incumbit probatio qui dicit, non qui negat as there is in criminal matters, where there exists a broad presumption of innocence (adopted only quite recently in many Continental nations). The initial proof required in an administrative matter may be very superficial indeed. I would definitely seek specific and qualified advice, before assuming that you can tell the authorities to "stuff themselves", in the absence of VAT documents. In other tax matters it requires very little to shift the burden of proof to the taxpayer. I don't know about this one, but I would be cautious about assuming anything. In very many tax matters, the authorities who will stuff you, not themselves, if you fail to produce this or that document, in the UK like anywhere else.

If you have more specific information to the contrary in this particular matter, then that would be different.
It is only if the matter is escalated that the burden of proof becomes an issue. As a low level dispute the authorities will use their power to intimidate and may make whatever demand they feel appropriate. A demand can be challenged and if you are right, then you should win.

Quite obviously no-one in their right mind would use those words: stuff-off. An egomaniac bureaucrat will have absolutely nothing he would like better to do than to attempt to exert his authority and to show you who is boss. Obviously also, if you are able to provide evidence you would as everyone wants an easy life. If you can't though, you shouldn't roll over and capitulate and pay wrongly demanded taxes. You do have rights and at that point you can stand on them.

The tax system works as I described. They can raise an unreasonable assessment, you will say you it is wrong, you say you are sorry you have no evidence and appeal the assessment and if they don't have justification for it then you will win. If they insist on making the tax assessment then they have to charge you with tax fraud and the burden of proof is on them. In the absence of evidence then they will not win and it almost certainly won't get to court.

As to information to the contrary. I don't think any questions have actually got to court, presumably because no such tax cases have taken place as they are so hard to prove. If it were different, we would surely have heard of them.

Please will you demonstrate if you can that the right exists to charge tax in the absence of evidence for it becoming due.
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Old 25-07-2016, 08:00   #17
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Re: VAT on pleasure craft (UK)

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Originally Posted by K_V_B View Post
Boats actually are different. They are considered vehicles for example... Try driving a vehicle on which all taxes and dues have not been paid, and claim it's not your responsibility...
Quite a few countries will not allow you to register a boat if you can't prove that VAT has been paid. In quite a few countries they will ask you to prove the vat status of your boat.
There are countries where you are liable for VAT if you walk out of a restaurant without a receipt...
I'm not talking about "all " taxes. Just VAT and boats are just like cars in the UK in that sense.

What other countries hold you responsible for VAT if you don't have a receipt like the restaurant example you made? That sounds very harsh. This wouldn't happen in an EU country, which is what we are talking about. It would make entertaining news copy for the Brexiteers.
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Old 25-07-2016, 09:00   #18
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Re: VAT on pleasure craft (UK)

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. . .Please will you demonstrate if you can that the right exists to charge tax in the absence of evidence for it becoming due.
As a general principle, one is legally obligated both in the U.S. and the U.K. to keep records and documents relevant to tax obligations, and you are legally obligated to produce them upon demand. If you fail to produce them, then you will be legally required to pay tax on an assessment of the tax due made by -- that is, dreamed up by -- the authorities. They do not have to prove what is in non-existent documents, which do not exist due to your failure to fulfill the record-keeping and maintenance obligations, they only have to show that the assessment was reasonable in light of the available information, which they do, of course, according to their own standards . And you can be prosecuted, even, for failing to pay such a tax once it is assessed.

That may not be directly relevant to this case -- I am not aware of any such record-keeping obligation concerning VAT paid on boats (the general VAT record keeping obligation for UK businesses only goes to six years), but it shows you how the system works in general.

The tax authorities have very, very broad powers, and many, many ways to f*** you. It may be somewhat better in the UK, a rather more civilized country than the U.S.. But in the U.S., the IRS is an agency more terrifying than the Soviet KGB, with similar powers, methods and ethics, which will hardly ever fail to f*** you if they make up their mind to do so. And they are professionals at doing so. If you ever want to do something other than what they ask you to do, you will really want to have serious professional help. Otherwise, they will eat you alive. This usually costs more than the case is worth, so the result is that in practice you don't have many real rights, that is, rights which will work for you in practical ways, as against the tax authorities. The best course of action in 99.9% of cases is to suck it up and do exactly what they ask you to do. It's unpleasant, but that's the world we live in.

In the Magic Circle-type law firm I used to practice in, the Tax department was consistently the most profitable department, raking in rivers of cash. Tax law is a complete racket. The same bureaucrats who write and enforce the regulations fight their way to the top jobs in the agency, and then quit and join law firms to represent people being screwed by their old agency. We had a former IRS Commissioner in our firm. Then you take up to $2000 an hour to solve the very same problems, you created in your former career. The incentives are extremely perverse.

Moral -- don't mess with the tax man.
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Old 25-07-2016, 09:57   #19
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Re: VAT on pleasure craft (UK)

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Originally Posted by Dockhead View Post
As a general principle, one is legally obligated both in the U.S. and the U.K. to keep records and documents relevant to tax obligations, and you are legally obligated to produce them upon demand. If you fail to produce them, then you will be legally required to pay tax on an assessment of the tax due made by -- that is, dreamed up by -- the authorities. They do not have to prove what is in non-existent documents, which do not exist due to your failure to fulfill the record-keeping and maintenance obligations, they only have to show that the assessment was reasonable in light of the available information, which they do, of course, according to their own standards . And you can be prosecuted, even, for failing to pay such a tax once it is assessed.

That may not be directly relevant to this case -- I am not aware of any such record-keeping obligation concerning VAT paid on boats (the general VAT record keeping obligation for UK businesses only goes to six years), but it shows you how the system works in general.

The tax authorities have very, very broad powers, and many, many ways to f*** you. It may be somewhat better in the UK, a rather more civilized country than the U.S.. But in the U.S., the IRS is an agency more terrifying than the Soviet KGB, with similar powers, methods and ethics, which will hardly ever fail to f*** you if they make up their mind to do so. And they are professionals at doing so. If you ever want to do something other than what they ask you to do, you will really want to have serious professional help. Otherwise, they will eat you alive. This usually costs more than the case is worth, so the result is that in practice you don't have many real rights, that is, rights which will work for you in practical ways, as against the tax authorities. The best course of action in 99.9% of cases is to suck it up and do exactly what they ask you to do. It's unpleasant, but that's the world we live in.

In the Magic Circle-type law firm I used to practice in, the Tax department was consistently the most profitable department, raking in rivers of cash. Tax law is a complete racket. The same bureaucrats who write and enforce the regulations fight their way to the top jobs in the agency, and then quit and join law firms to represent people being screwed by their old agency. We had a former IRS Commissioner in our firm. Then you take up to $2000 an hour to solve the very same problems, you created in your former career. The incentives are extremely perverse.

Moral -- don't mess with the tax man.
We are talking about VAT, not other taxes, which have different rules. I essence, the rule at the heart of this issue is that the buyer is not obliged to pay or account for VAT on the purchase of a boat from a UK seller, so there can be no way that the tax people can ultimately prevail in this narrow matter.

Still, as you point out there is an obligation to keep income records for your personal income tax, but you are not right to suggest the authorities can charge tax when there is no evidence of it being due and just invent a demand that you have no choice but to pay. It also would not come to a prosecution as you would have to challenge them before then in the courts. To use your example let's say your house burned down and you lost all your bank statements at the same time as your bank lost all its records in a simultaneous fire, such is life... The tax people could raise a demand and if there was no reasonable evidence whatsoever to support it then you would refuse to pay and you would ultimately win. (UK, not USA). What is more, I am sure there would only be a certain amount of intimidation in that example such as a reminder of 100% penalties for concealment.

I thought there might be a US perspective there. I do in fact encounter the tax man routinely and I believe the UK authorities to be incomparably more benign than you describe for the US thankfully. From the stories I have heard, and confirmed again by you, I don't know how people sleep at night in the US. Keep your head down and your mouth shut. I think a fear of the consequences of prominence must keep so many away from the limelight. Heaven knows how the Donald gets away with it. All the enemies he must be creating. I suppose he will have his day, certainly Hillary came close with the FBI and hubby Bill, pretty nearly impeached some years ago.

My moral would be don't be frightened of the UK tax man and to stand up for your rights.
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Old 25-07-2016, 10:44   #20
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Re: VAT on pleasure craft (UK)

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. . . From the stories I have heard, and confirmed again by you, I don't know how people sleep at night in the US. Keep your head down and your mouth shut. I think a fear of the consequences of prominence must keep so many away from the limelight. . .
Indeed. And I haven't lived there, myself, in 25 years, although I still have many connections and entanglements there.
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Old 06-09-2016, 09:16   #21
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Re: VAT on pleasure craft (UK)

Can I jump in here with a newby question ? Im currently looking at a yacht in Turkey that is UK flagged but the vendor has just informed me that the vat has not been paid! Is the vat calculated on the offer I make (if accepted) or on the value of the yacht when it was built in 1999 ?
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Old 06-09-2016, 09:46   #22
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Re: VAT on pleasure craft (UK)

The VAT is payable on the value of the boat when the tax falls due which may or may not be the price you paid for it. The tax falls due on the first EU country the boat visits if owned by an EU resident paid at that countries rate. The only exceptions I know of are when the boat is owned by a non EU resident, when it is in charter or when the vessel has been issued with a time limited exemption to transit EU waters to be exported from the EU.
Some countries publish a list of values for production boats, e.g. Greece. Others, who knows. You might get some joy if you ask the intended country tax authority in advance
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Old 07-09-2016, 02:18   #23
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Re: VAT on pleasure craft (UK)

Thanks Rapanui, it just seems to be getting complicateder and complicateder with this project
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Old 09-09-2016, 00:18   #24
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Re: VAT on pleasure craft (UK)

To me, the VAT question is simple. If the seller does not have proof of VAT status, the boat is worth 20-25% less than one with proof, all things being equal. The rules are fairly straightforward, if you are a private owner residing in the EU with a boat younger than 1985 then you need proof that VAT has been paid to have your boat in the EU. You may think that citing international maritime law will protect you, but the issue only arises in territorial waters where sovereign law (which includes EU law implemented by the relevant country) reigns supreme.
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