VAT on pleasure craft (UK)

[Mike1956]

I understand a little about this situation but would I be correct to think if the original VAT invoice is absent on a vessel post 1985 that VAT will be payable if asked by HMRC.

I can think of 1 exception. If the original builder was in a small way and his turnover was under the VAT threshold of the day, he/she would not be VAT registered and the vessel would not have been and still will not be subject to VAT. Is this a fair point?

Are there any other exceptions?

Thanks

Mike

[poiu]

What makes you think that?

Assuming it is a used boat, then so long as it was bought in the EU there is no vat to prove. If you buy a bicycle off eBay or a car in the uk privately or a whatever from wherever and if someone including HMRC wants you to pay it, you tell them to get stuffed as its not your responsibility or liability to pay or obligation to prove anything, including where you bought it. A boat is no different. It would just make things go smoother if you could do so of course.

[valhalla360]

Not sure if 1985 is the correct cut off year but if you have a boat built after the cut off, I've never heard of an exemption for a small builder. If true, do you have a link to this as it's a new twist on the VAT rules.


I have heard of residents repatriating get an exemption for bringing stuff back. Not a resident so haven't followed up on the details.


While I haven't heard of the UK actively seeking out non-VAT paid older boats, I'm pretty sure if they say you owe VAT, the burden will be on you to prove that it was paid (or that it's exempt). In most cases, a 30yr old boat won't be worth enough for them to take legal action to collect the vat. It will probably eat up 1/2 the VAT just to file a notice that they think you owe VAT. If you drag it out or actually take it to court, it's a losing proposition.

[poiu]

Originally Posted by valhalla360

While I haven't heard of the UK actively seeking out non-VAT paid older boats, I'm pretty sure if they say you owe VAT, the burden will be on you to prove that it was paid (or that it's exempt).

Not so.

If they did that you would say - I can't find proof, why do you think I should pay? Then you would appeal the assessment and it won't ever get that far. They would have no evidence and at that point you would tell them to get stuffed. They can't make you prove something and raise a demand without reasonable grounds. Even if they did come up with a reason, it would certainly be a former owner who is liable (as long as it was bought in the UK/EU by you).

[valhalla360]

Originally Posted by poiu

Not so.

If they did that you would say - I can't find proof, why do you think I should pay? Then you would appeal the assessment and it won't ever get that far. They would have no evidence and at that point you would tell them to get stuffed. They can't make you prove something and raise a demand without reasonable grounds. Even if they did come up with a reason, it would certainly be a former owner who is liable (as long as it was bought in the UK/EU by you).

Again, I don't think the UK is targeting older non-VAT paid boats, so it's likely a non-issue.

But good luck with your theory if they do decide to ask for proof of VAT.

[boatman61]

Its always been my understanding that under Marine Law the debt travels with the boat.. not with the previous owners..

[Rapanui]

Mike is correct, for boats owned by EU residents and located in the EU, unless you have proof that VAT has been paid on boats newer that 1985, VAT is liable at the current value of the boat. The fact that UK HMRC do not seem to actively seek out non-VAT paid boats does not remove the liability. Other countries definitely do check VAT status, some more diligently than others.
It is not true that all used boats purchased in the EU do not have to prove VAT status. I have had to pay VAT on our used boat and produce the evidence to obtain a cruising permit and marina berth in Croatia. Brokers have told me that lack of VAT status is a major reason for boat sales falling through.
The point Mike asks about boats originally sold by a small company that are not VAT registered is interesting. I suspect he is right but you would still need the original receipt for the purchase. In that unlikely event, I would get a T2L issued by the relevant tax authority to prove cummunity status, otherwise convincing a disbelieving foreign authority could be interesting.

[poiu]

Originally Posted by boatman61

Its always been my understanding that under Marine Law the debt travels with the boat.. not with the previous owners..

Vat isn't marine law and it is not levied on the boat. It is a tax on the value of the sale or attributed value at the time of importation and is to be paid by the importer. It is not charged to the boat. If you have bought it imported by someone else in the EU or an EU business then they carry the liability.

HMRC guidance is you should carry a receipt as proof. This is to make their and your life easier. It is also to try to overcome the failings in the robustness of the law by misleading the public. it does not say and it is not the case that you must be able to prove VAT is paid.

It sounds like the Croatian marinas have their own rules and these are not VAT laws.

[valhalla360]

Originally Posted by poiu

Vat isn't marine law and it is not levied on the boat. It is a tax on the value of the sale or attributed value at the time of importation and is to be paid by the importer. It is not charged to the boat. If you have bought it imported by someone else in the EU or an EU business then they carry the liability.

HMRC guidance is you should carry a receipt as proof. This is to make their and your life easier. It is also to try to overcome the failings in the robustness of the law by misleading the public. it does not say and it is not the case that you must be able to prove VAT is paid.

It sounds like the Croatian marinas have their own rules and these are not VAT laws.

It's not an import tax and there are exemptions to paying it. Example, there is a way to get an exemption for charter boats but once the charter boat is sold for non-charter use, the tax is due.

You may or may not be correct about who is responsible for providing documentation but in practice, if the Croatian marina or Italian port captain say provide proof or we will assume it hasn't been paid...telling them to stuff it won't work out so well.

[Rapanui]

You are correct that VAT is due on a qualifying vessel the first time it enters the EU when owned by an EU resident. However, if that has not occurred i.e. if it has been imported by the previous owner and he has not paid and then subsequently sold, the new owner picks up the liability. There are of course reasons why a non-VAT paid boat is legally in the EU, charter boats and those owned by foreign residents for instance. Look at any broker site and you will see a large number (probably the majority) of boats for sale in the EU identified as non-VAT paid.
With regard to my comment regarding the marina in Croatia requiring evidence of VAT status, it is because they are regularly inspected by Croatian officials to check. In 30+ years sailing UK and France this has never happened to me, but I have heard it is common in Spain also. Both are destinations with large numbers of charter boats and foreign owned vessels.

[poiu]

Originally Posted by Rapanui

... if it has been imported by the previous owner and he has not paid and then subsequently sold, the new owner picks up the liability.

No he doesn't. That is not how VAT works. The liability is for the seller/importer to collect it and pay it on. The buyer has no obligation. The Government misleads with their advice and boaters get the wrong end of the stick. The message is repeated so often it finally becomes assumed to be the truth and real practical problems are created that shouldn't be created.

[Dockhead]

Originally Posted by poiu

Not so.

If they did that you would say - I can't find proof, why do you think I should pay? Then you would appeal the assessment and it won't ever get that far. They would have no evidence and at that point you would tell them to get stuffed. They can't make you prove something and raise a demand without reasonable grounds. Even if they did come up with a reason, it would certainly be a former owner who is liable (as long as it was bought in the UK/EU by you).

That's a question about legal presumption. I don't know the answer to it, but it would not be weird for the presumption to be that VAT is owing if the owner has no proof, however oppressive that might sound. Especially if EU regs are involved -- they are frequently like that.

[poiu]

Originally Posted by Dockhead

That's a question about legal presumption. I don't know the answer to it, but it would not be weird for the presumption to be that VAT is owing if the owner has no proof, however oppressive that might sound. Especially if EU regs are involved -- they are frequently like that.

The OP originally asked about the situation in the UK. I know how the UK system works and it is as I have stated. I don't believe there is an EU regulation on this, maybe a directive or regulation enacted by the members, so separate law under each country. In other EU countries maybe it is different, but I doubt it as these questions are also right at the heart of what is the burden of proof and really basic human rights even, which are very similar around Europe to that in the UK.

[Dockhead]

Originally Posted by poiu

The OP originally asked about the situation in the UK. I know how the UK system works and it is as I have stated. I don't believe there is an EU regulation on this, maybe a directive or regulation enacted by the members, so separate law under each country. In other EU countries maybe it is different, but I doubt it as these questions are also right at the heart of what is the burden of proof and really basic human rights even, which are very similar around Europe to that in the UK.

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.

[K_V_B]

Originally Posted by poiu

A boat is no different.

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...