What you say has some truth in it, but in the example you give the events you describe could not happen.
Section 728 is concerned with the New Means of Transport legislation and does not apply to vessels, vehicles or aircraft once over a certain age.
Section 7.1 in its entirity:
[ QUOTE ]
7.1 Who is entitled to a refund?
You may be entitled to a refund of VAT if you satisfy all the following conditions:
you are not registrable for VAT in the UK
you are selling your NMT to another person, and that person intends to remove the NMT to another Member State within two months of the date of supply
you can demonstrate that you have paid UK VAT on your NMT.
[/ QUOTE ]
The key phrase in the above rule is NMT. This is a clearly defined state, in section 2.1 of the same notice. Agin in full:
[ QUOTE ]
.1 What is a 'means of transport'?
A 'means of transport' is any of the following when it is intended for the transport of passengers or goods:
a boat more than 7.5 metres long (about 24.6 feet)
an aircraft with a take-off weight of more than 1550 kilograms (about 4417 lb), or
a motorised land vehicle which:
- has an engine with a displacement or cylinder capacity of more than 48 cubic centimetres, or
- is constructed or adapted to be electrically propelled using more than 7.2 kilowatts (about 9.65 horsepower).
[/ QUOTE ]
To be defined as 'New', a boat must:
when more than three months have elapsed since the date of its first entry into service (see paragraph 2.3),
it has, since its first entry into service, travelled under its own power for more than 100 hours if it is a boat
So unless the transfer takes place in the first 3 months and 100 hours, the VAT is locked an never reclaimable. So if you are buying a boat that is older than three months, and has more than 100 hours you can never be persued by any other EU state for non payment of VAT as you could never have reclaimed it.
NMT legislation is a [--word removed--] and is fraught with confusing information.