The subject of VAT in regard to vessels of any type can be a complex issue. As an ABYA member Mark Cameron Yachts will collate all the information available for any yacht we are marketing and present the information in a clear manner to any prospective purchaser. The purchaser must however satisfy themselves that the papers accompanying the vessel in regard to the vessels VAT and RCD status are correct.
For those wishing to buy a boat privately we can provide a Yacht Conveyancing service. This service provides an additional level of comfort for both purchasers and vendors with the use of standard ABYA contracts and our own Client Account for the transfer of monies.
Below are some guidance notes on the matter of VAT in relation to vessels. This information is provided for the purposes of guidance only and does not constitute professional advice. If in doubt you should seek further advice from a qualified body or the relevant customs authority.
Extracts from HMRC Notice 8 ‘Sailing your pleasure craft to and from the UK’ – April 2012
3.5 Can a vessel lose its VAT paid status?
VAT is due on the importation of any vessel from outside the EU. However, there are provisions for this VAT to be relieved when an EU VAT paid vessel returns to the EU, refer to sub-section 3.4. If an EU VAT paid vessel leaves the EU, and whilst outside the EU it is sold, the new owner will, unless eligible for one of the reliefs described in this Notice, be liable to pay VAT if the vessel is brought back into the EU.
4.1 Will I have to pay VAT on a vessel to be kept in the EU?
- you import a vessel into the EU you will have to pay VAT on the vessel’s value at the time of import; however in certain circumstances reliefs may be available for vessels imported from outside the EU
– you are buying a new pleasure craft in the EU and intend to keep it in the EU, you will have to pay VAT on the purchase price. If you are keeping the vessel in the UK, the VAT due will be payable in the UK. If you buy a new vessel in one Member State but intend to keep it in another Member State, you should consult VAT Notice 728 New Means of Transport which explains the relevant rules
4.2 What documents will be required to provide proof of the VAT status on a used vessel?
EU residents should only use a vessel in the Community if it is VAT paid or ‘deemed’ VAT paid. Documentary evidence supporting this should be carried at all times as you may be asked by customs officials to provide evidence of your vessel’s VAT status, either in the UK or in other Member States. Documentary evidence might include:
- Original invoice or receipt
- Evidence that VAT was paid at importation
- Invoices for materials used in the construction of a ‘Home-Built’ vessel
A registration document on its own does not prove the VAT status of the vessel, as there is no link in the UK between the registry of the vessel and the payment of VAT. If you have difficulty in providing the information, you should contact the VAT, Excise and Customs helpline on Telephone: 0300 200 3700.
Certain vessels that were in use as private pleasure craft prior to 1 January 1985 and were in the EU on 31 December 1992, may be deemed VAT paid under the Single Market transitional arrangements. As Austria, Finland and Sweden joined the EU later, the relevant dates for vessels in these countries are ‘in use’ before 1 January 1987 and moored in EU on 31 December 1994.
After this date there were no further transitional arrangements agreed by the EU Commission for subsequent EU expansions.
The following documents are useful to prove the age and location of the vessel:
- Marine survey
- Part 1 Registration
- Builders Certificate
- Insurance documents
- Receipt for mooring
- Receipt for harbour dues
- Dry dock records
If you are unable to provide any of the above for used vessels kept in the UK you should, whilst cruising within the EU, carry a Bill of Sale (if applicable and between two private individuals in the UK). Whilst this is not conclusive proof that VAT has been paid, it does indicate that the tax status is the responsibility of UK customs authorities. It is also advisable to contact the relevant authorities in the Member State you intend to visit, or their embassy in the UK, to confirm what documentation will be required in advance of your voyage.
When buying a used pleasure craft from any VAT registered business in the EU, you should make sure that the invoice shows separately any VAT which that business has charged to you on supply of the pleasure craft. If the invoice does not show VAT separately you may have difficulty in demonstrating that VAT has been paid. If you are buying from a business that does not charge VAT on the transaction or from a private individual in the EU and the seller states that VAT has previously been paid on the vessel, you should obtain evidence from the seller that VAT has previously been accounted for.
Further guidance notes courtesy of ABYA:
Boats being used in the EU should have VAT-paid status unless they are just visiting. The original VAT invoice, from when the boat was either first bought within the EU or when it was imported from outside the EU, is usually sufficient evidence. A boat that is VAT-paid but is sold outside the EU loses its VAT-paid status and therefore VAT must be paid if the boat is brought back into the EU. Boats kept outside the EU for over 3 years may have to pay again (See Customs Notice 8).
The above applies to all boats built or brought into the EU since 1 January 1985, or on the joining dates of States that have become EU Members since then. Boats already in EU Member States and territories on 1 January 1985 pre-date the requirement.
The evidence of VAT-paid status will generally be an invoice, showing the VAT element and a VAT number, or similar document, such as a completion statement. Boats sold between companies should show the VAT element on the invoice. Some EU states (notably Holland) ask for the original invoice, but otherwise a certified copy kept on board should be adequate. Keep the original and a couple of certified copies safely elsewhere. It is vital to pass this information on when the boat is sold, as it may be requested by Customs officers in either the UK or elsewhere in the EU.
In the case of home-builds and fit-outs, copies of all the major invoices should be kept and passed to subsequent owners to show VAT-paid status. Customs Notice 8 sets out further details.
Please note that HMRC do not have copies of individual VAT invoices from boat builders, dealers or other boat sales transactions.
Any queries should be referred to HMRCs VAT, Excise and Customs helpline – 0300 200 3700. If they seem unsure, ask for the matter to be referred to the HMRC Unit of Expertise on Yachts. Request any advice in writing, keep it with the boat’s documentation, and pass it on to any subsequent owners.