Originally Posted by Rapanui
Strictly speaking as the boat has been outside the EU VAT area for 4 years, it should lose EU VAT status. However, assuming the OP wants to return his boat to the EU,
. . .
Nothing above should be construed as advice
to deprive the EU of it's rightful dues, i.e. the ability to charge VAT twice for the same boat
I have no skin in the VAT game
, being from Montana where there isn't any VAT, or Sales, or Use taxations, just income
and property taxes
I recommend that one review the Royal Yachting Association publication titled: Value Added Tax
Your frequently asked questions answered
Likely the same or similar guidance would apply to every other EU country's taxation authorities.
This document may be a bit outdated.
A5. If a vessel that qualifies for deemed VAT paid status
changes hands outside the EU, for instance in the
Channel Islands, does it lose it’s deemed VAT paid status?
Yes. If the vessel is sold (changes hands) outside the EU
it will lose its deemed VAT paid status and will no longer
be entitled to returned goods relief. This means that the
vessel will be liable to VAT upon importation into the EU.
Reference for further info:
Notice 236, Customs:
Importing returned goods free of duty and tax, contains
further information about this relief.
A8. Provided that the transfer of ownership
vessel is carried out within the UK/EU, does deemed
VAT paid status transfer to a new owner with changes
? If so, what documentation
(if any) must
be passed on to the new owner?
Yes, provided the sale
is not to a VAT registered business,
as this will constitute a ‘chargeable event’ which will affect
the VAT status of the vessel (see A1).
The new private owner of the vessel will need to carry a
copy of the relevant documents (which the previous owner
should have supplied), to prove the age and location of the
vessel on 31 December 1992 when the EU Single
Notice 8: Sailing your pleasure craft to and from the United Kingdom
D11. Is a copy of the original VAT invoice or invoice(s) acceptable to UK Customs?
If the vessel was purchased from a VAT registered taxable
person in the UK or another EU Member
State, you must
hold an original sales invoice showing the amount of VAT
that was paid.
If the vessel was purchased from a non-VAT registered
private individual, you must hold a copy1
of the original sales
invoice(s) showing the amount of VAT that was paid on the
initial sale, as well as a copy of the documentation evidencing
the subsequent sale(s) between non-VAT registered private
individuals where no VAT will have been due.
If the vessel was purchased in a non-EU country and
imported into the UK, you must hold the import
showing either the amount of VAT paid by the importer or
that the vessel was subject to VAT relief.
As the VAT paid status of a vessel can change (e.g. where
a VAT registered business exports a VAT paid vessel from
the EU and recovers the VAT paid), it is very important that
original tax documents are kept safe, otherwise it may not
be possible to demonstrate the tax status of the vessel
which could cause the owner difficulties when the vessel is
sold or sailed outside the UK.
1 Please note that although a copy may be acceptable to UK
Customs, this may not be acceptable to the authorities in
Notice 8: Sailing your pleasure craft to and from the United Kingdom
D14. Will Customs accept a Statutory Declaration from a person who paid VAT but who has no documentary evidence in support of the VAT payment?
A Statutory declaration is not acceptable as proof that VAT was paid.
D15. Will Customs check its records for evidence of the VAT paid status of a vessel?
HMRC does not hold records of the VAT paid status of a vessel.
It is the responsibility of the owner of the vessel to keep
evidence of the vessel’s VAT paid status so that it, if necessary,
can be provided to any Customs or tax authority who asks to
see it, or to a person or business that purchases the vessel.
It is not surprising that vessel's fail to retain all of their documents for most every transaction, including VAT, ownership changes, clearance documents, repair and purchase receipts, warranties, etc. for the life of the vessel. Many people are very careless or ignorant in this regard.
D18. If when sailing in the EU a UK yacht owner is challenged about the VAT
status of their vessel by a customs or tax official, is HMRC able to assist the
owner in any way?
It is the yacht owner’s responsibility to keep on their
vessel any documentation that will enable them to clearly
demonstrate its VAT status. If despite doing so, the owner
is unable to satisfy the authorities about the vessel’s VAT
status and a dispute arises, the owner must seek to resolve
the matter in discussions with the customs or tax authority
concerned. In other words it is not possible, and neither
would it be appropriate, for HMRC to intervene in any dispute
between a yacht owner and another customs or tax authority.
However, if a dispute does arise, it might be helpful for yacht
owners to know that in order to ‘effect a correct assessment
of VAT’, under the provisions of the EC VAT Administrative
Co-operation Regulation 1798/03, the customs and tax
authorities in each Member State are able to send requests
and to exchange information about VAT matters. Therefore, if
a customs or tax authority is uncertain about the VAT status
of a UK owned vessel, they can arrange to send a request for
additional information to HMRC and it might be possible for
us to assist the other authority with their enquiries.
UK yacht owners are welcome to draw the attention of the
Customs and tax authorities in other Member States to
these EC VAT Administrative Co-operation Regulations
In our experience on the rare occurrence of such a
situation, HMRC officials have been very helpful.
D19. Why won’t UK Customs issue a certificate or letter advising that a specified vessel is ‘VAT paid’ or ‘deemed VAT paid’?
The EC VAT system uses ‘VAT invoices’ as the basic means
for demonstrating that VAT has been paid. For vessels
imported into the EU it is the import documentation
which demonstrates the vessel’s VAT paid, or ‘deemed’
paid, status. Any alternative arrangements, such as the
issuing of VAT Paid Certificates, has no vires in EC VAT
law, would not be recognised by other EU Member States
and could result in tax fraud, as the tax status of a vessel
could change the day after a ‘certificate’ was issued if a
‘chargeable event’ occurred.
When the EU Single
Market was created in 1993, in order
to assist UK yacht owners, for a short transitional period
HM Customs & Excise (which is now part of HM Revenue &
Customs) issued ‘tax opinion’ letters to owners of vessels
who provided commercial
evidence to demonstrate their
vessel’s VAT paid, or ‘deemed’ paid, status. However,
even at the time these transitional arrangements created
difficulties and were challenged by an owner who did not
have the necessary commercial
evidence. As a result the
Department reviewed its arrangements, took legal
and stopped issuing the tax opinion letters. Since that time
we have made it clear that commercial documentation (eg
VAT invoices) must be the primary evidence to demonstrate
a vessel’s VAT status. This has remained our policy since
D20. On the basis that the ‘original’ VAT document is such an important
document, and the fact that paper and water
do not mix terribly well, do Customs think it is reasonable to require a private individual to keep the original on his vessel at all times?
It should be possible to keep important documents safely
on board a vessel in either a watertight compartment or
document case. If for some reason the vessel’s owner does
not consider this is possible, they should keep a certified
copy on board and retain the original in a safe place on
land. However the owner should ensure that they are able
to quickly access the original documents, as if the vessel
is challenged, it is possible that the customs authorities in
some Member States may not allow the vessel to proceed
until the originals have been produced.
D21. In Notice 8 HMRC advise that in the absence of conclusive evidence of
VAT paid status, a bill of sale may
be useful, but that this must be between two private individuals in the UK. Why is there this restriction?
The bill of sale between two private individuals in the UK
is useful as it indicates to a foreign official that the VAT
status of the vessel is the business of HMRC, as the last
transaction involving the vessel took place in the UK.
A bill of sale between an EU individual and a UK individual
does not indicate that the last transaction was within the
jurisdiction of the UK and therefore does not offer the
same message to the foreign authority.
It flags the transaction as perhaps having been in their VAT jurisdiction and thus motivation for pursuit of collection of VAT at that country's rate.
D22. I own a boat which I believe is VAT paid, but I don’t have any documentary evidence, what do I do now?
Without knowing the circumstances and the specific
reason(s) why the vessel’s owner is concerned about
the VAT status of the vessel, it is not possible for us to
comment, or to provide advice.
There is very little that can be done to rectify the situation.
The owner should attempt to locate previous owners in order
to trace the original or copies of the VAT documentation.
The paperwork no longer being in existence does not
remove the need for the owner of a vessel permanently
based in the EU to be able to satisfy the relevant
authorities (both here and across the EU) that the vessel is
VAT paid or ‘deemed’ VAT paid. However the RYA has little
of UK registered vessels being stopped, simply to
ask them to prove their VAT status, whilst cruising within
UK territorial waters and those of other EU states.
In the unlikely scenario that the documents are not
available because the VAT was not paid at the time of the
chargeable event, the liability for VAT usually remains
with the person from which the monies were due (i.e. the
person involved in the chargeable event), even if the vessel
subsequently changes hands.
A new owner should however be aware that if they do not
obtain suitable proof that the vessel is tax paid at the time
of purchase, should they do something with the vessel
which results in another chargeable event (such as taking
the vessel to the Channel Islands), they will be unable, on
their return to the EU, to prove that they are entitled to
relief from VAT, the new chargeable event will over-ride
the un-paid liability and the new owner will be liable to pay
the monies due as a result of this latest chargeable event.
HMRC has the right to impose sanctions in the event of
unpaid VAT on a vessel; this may involve civil proceedings
against the person liable for the VAT payment. HMRC are
only likely to exercise the right to impose sanctions against
the person liable for VAT as a last resort. There is a time
limitation on HMRC enforcing sanctions but this is very
much dependent upon the circumstances of the case. If
HMRC take action against you as the current
you may have recourse via civil action against the person
involved in the chargeable event.
2 This statement is based on the outcome of two surveys
conducted by the RYA in 2006 and 2007
The factor of reimposing VAT after a 3 year period of time of exporting seems a bit odd / illogical, given that ordinarily with a Value Added scheme one gets to take credit on VAT paid upon purchase of the inputs of the good [or service] and only pays VAT on ones truly value added. Most boats depreciate in value over time they rarely increase in value, that saying there is rarely an addition to value unless there was a major refitting / upgrading. It seems the EU simply has taken the basis that it is a new import no longer just a return from a temporary export. Well no one ever said that taxes
need to be logical, they just are.
Also of issue is where the vessel will be used, e.g., imported into or remaining outside of the EU Customs territory [and / or the UK after Brexit has transitioned, and I suppose since the OP is a Scot whether Scotland
stays or exits the EU / UK].
And what is the residency status of the owner, given non-resident exemption prospects to EU taxation. And perhaps an additional factor may be under which flag the vessel is registered as I believe flagging under an EU country may results in VAT being due since the boat has been granted that nation state's nationality. [again not certain on that best check with a professional].