VAT Advice in EU / UK

[rodsuter]

Buying a used sailboat in Europe, UK registered, but with complex history - VAT situation is difficult to establish - looking for a tax consultant, advice and experience - anyone who could point me in the right direction please ?

[Amouage]

Originally Posted by rodsuter

Buying a used sailboat in Europe, UK registered, but with complex history - VAT situation is difficult to establish - looking for a tax consultant, advice and experience - anyone who could point me in the right direction please ?

Probably not your first thought, but the Tax Office itself in your country.... If you want to get it VAT registered properly, why not asking the governing body. If they approve it, you're sure you will have no issues whilst sailing it around.

[Tupaia]

Contact

Pleasure Craft Unit of Expertise
Email: pleasurecraft.lcsouth@hmrc.gov.uk

My understanding is:

The vessel registration has no bearing on the VAT status.

A UK registered boat that was VAT paid in either the UK or the EU on change over day will retain its VAT paid status within the territory it was in on that date and visa versa. Some form of proof, typically marina receipts, are required if challenged.

There was an extension period granted during which time a VAT paid vessel that was previously in the EU could be sailed back to the UK to retain it's VAT paid status in the UK negating it's status in the EU. Details and proof of where the vessel was is therefore paramount.

Caveats
If the vessel retains it's VAT paid status in a different territory than the owner is "resident" then VAT becomes payable immediately should the vessel return to the owners' territory of residence and they will not be able apply for "temporary importation" that would allow VAT liability to be deferred by 18 months.

[2greens1red]

Serious apologies for this basic question, as I'm sure the answer is elsewhere on the forum.

A boat which was based in the UK, and UK VAT paid, left the UK 15 years ago for a circumnavigation. The owner (British, but I realise irrelevant) wishes to sell the boat, now in East Africa.

Am I correct in assuming it has irretrievably lost its VAT status, both for the owner, if they returned to the UK with the boat, or the new owner, if they entered the UK?

[boatman61]

Originally Posted by 2greens1red

Serious apologies for this basic question, as I'm sure the answer is elsewhere on the forum.

A boat which was based in the UK, and UK VAT paid, left the UK 15 years ago for a circumnavigation. The owner (British, but I realise irrelevant) wishes to sell the boat, now in East Africa.

Am I correct in assuming it has irretrievably lost its VAT status, both for the owner, if they returned to the UK with the boat, or the new owner, if they entered the UK?

Yes..

[goeasy123]

Originally Posted by 2greens1red

Serious apologies for this basic question, as I'm sure the answer is elsewhere on the forum.

A boat which was based in the UK, and UK VAT paid, left the UK 15 years ago for a circumnavigation. The owner (British, but I realise irrelevant) wishes to sell the boat, now in East Africa.

Am I correct in assuming it has irretrievably lost its VAT status, both for the owner, if they returned to the UK with the boat, or the new owner, if they entered the UK?

If the original UK owner returns to the UK with the boat it will resume its UK VAT paid status. The policy is set by NIRU who have the discretionary power to give relief. The owner can contact NIRU and get the assurance before they return. They tell NIRU that they have been on a 'once in a lifetime extended trip and will return the boat to the UK'.


An new owner, established in the UK will have to pay VAT on return.

[2greens1red]

After further research, from the RYA and CA in the UK, it looks as though after 3 years the original owner has a good chance of avoiding a 2nd dose of VAT, though not a new owner.

Here's the UK Cruising Association's interpretation (updated 24jan24)

D) Returned Goods Relief - UK and EU
Goods (including yachts and their equipment) can be re-imported into the UK or the EU without payment of VAT in certain circumstances under an arrangement called Returned Goods Relief (RGR).

The conditions that apply to RGR are similar in both the UK and the EU. For RGR to be available:

(a) the vessel must not have had more than "running repairs" to it during its period of export that do not increase its value;

(b) the goods must be returned to the UK or the EU (as applicable) within 3 years or, if they are returned outside the 3 year period:

(i) on a return to the EU there are "special circumstances" to justify the waiver of the 3 year requirement; and

(ii) on a return to the UK, the normal three-year time limit will be waived by HMRC for personal effects (including yachts) which are being returned to the UK for the personal (non-commercial) use of a UK resident person, without the applicant needing to prove that the effects could not be returned within the normal time limit

(c) the person importing the goods is the person who originally exported them.

The EU requirement for "special circumstances" if a return is made outside the 3 year period is assessed on a country by country basis. By way of example, pre-Brexit the UK rules stated that the 3 year period may be waived "to account for special circumstances where HMRC considers that it would be reasonable to do so".

In order for UK RGR to be claimed on an entry to the UK, Form 1331 must be completed. If the return is made outside the 3 year time limit an application for a waiver of the 3 year time requirement must also be made to HMRC on entry to the UK (through the Yachtline reporting processes as set out in HMRC Notice 8). As stated above, as long as the UK RGR conditions are satisfied the 3 year time limit will be waived by HMRC.

[kaz911]

We had some of the same issues buying ours despite it being in the UK at the time of sale.

But the people from HMRC were very helpful! Both on mail and on phone. So we finally got enough statements from HMRC to prove boat is VAT paid despite previous owners "lack" of doing correct entry procedure.

But for UK VAT to valid - it is important that the original owner sails her back to the UK and applies for the exemption. Only the original exporter can re-import.

But for both EU and UK VAT - if transaction + taking ownership of the vessel takes place OUTSIDE of EU or UK - VAT is lost right away. So buying in East Africa = VAT not paid. (So don't buy boats in fx Turkey claiming EU VAT paid unless transaction happens in EU/UK waters)

Some people ignore it and sail like the boat is EU/UK VAT paid. But the important thing is that a VAT inspection can happen anytime - especially in some specific countries - and it is the OWNERS job to PROVE VAT is paid. It is not the VAT inspectors job to prove it is not. Their initial stance is always that VAT is not paid, so you have to convince them. A VAT inspection can happen ANYTIME and even 10 years post your purchase. Then VAT is due at the value at the time of transaction and not the time of inspection.