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Thread: VAT

  1. #51
    pheran's Avatar
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    Default Re: VAT

    I can only conclude you are deliberately missing the point I was making. Unfortunately, one has to deal with the world as it exists and operates, not as one thinks it should. As I said, there were reports, in the boating press, of foreign boats having been seized in Spain because of an inability to prove their VAT status. I didn't hear the outcome, but at best, I guess it would have involved a great deal of inconvenience for the owners. So I'll continue in my possibly misguided view, that I wouldn't touch a boat that didn't have cast-iron VAT provenance
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  2. #52
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    Default Re: VAT

    [ QUOTE ]
    No. There's no EU law that directs the UK or any other member state to enact a law saying that Mr B is liable for Mr A's taxes, VAT or otherwise, nor that Mr B's assets may be seized to collect Mr A's taxes. All the Directives are online starting with the treaty of Rome, and all are text-searchable. Find the clause if you think I'm wrong. I can't give you a citation to prove the absence of a legal provision

    [/ QUOTE ]

    So why do we hear stories of boats being impounded in (say)France due to owners being unable to prove to customs that the vessel is VAT paid? Surely the retort should be "well you'd better go find the first owner then and speak to him"?

    Clearly that doesn't work though.
    Ari

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  3. #53
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    Default Re: VAT

    [ QUOTE ]
    There is no UK law that says the debt follows the boat, period. If anyone thinks there is, post it here and I'll shut up.

    [/ QUOTE ]

    I'm confused by this one.

    Howabout finance or mooring fees? Finance companies have (successfully) persued boats new owners after being unable to collect an outstanding loan from the previous owner. The new owner has ended up responsible for this debt.

    Likewise marinas have refused to release boats that have changed hands but the previous owner owed berthing fees that had not been settled.

    Surely both examples of debts following boats not owners?
    Ari

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  4. #54
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    Default Re: VAT

    It depends on the circs, as "not vat paid" can mean several things. Here's a shot at covering the main (but not all)scenarios:

    Assuming the boat is physically in UK, "Not VAT paid" can mean it is being sold as by a dealer who has bought from a VAT reg customer, or it is a brokerage boat being sold by a VAT reg owner. Eg if buyer A (a business) buys boat for 100+ VAT from builder, they pay 117.5 cash to builder and reclaim the 17.5 VAT. When they sell that boat (let's assume 10% depr) they sell for 90+ VAT. This is normally advertised as "90 not vat paid". If you bought the boat, you would pay cash of 105.75 and you'd have a VAT invoice showing 15.75 VAT. you'd also hopefully have the original 100+17.5 VAT invoice, so that boat would have TWO VAT invoices. If you were a business you might reclaim the 15.75 VAT that you just paid.

    If alternatively you took delivery in say Guernsey you would pay just the 90 cash, no more, yet you'd still have a VAT paid for the boat invoice being the original 100+17.5 (crafty eh?). So there's a "VAT paid" boat according to the invoice, yet it's most certianly not VAT paid. (Which illustrates what bollox all this invoice-is-king stuff is).

    Anyway, if you buy in good faith you NEVER have a liability to HMRC. If you paid the seller 90 + 15.75 VAT the only person who is liable to pay the tax to HMRC is seller. HMRC can never come after you or seize the boat, even if seller absconds with the 15.75

    Now, following the above, if you took delivery in Guernsey and then reimported it EU, let's assume UK, YOU are liable to 17.5% VAT on value at time of import. You can call in at Weymouth (and other places) and pay over the counter and get a VAT paid certif (I sort of did that in 1999 - delivery skipper did it for me). you might well agree with them that it's worth 80 at the time of import and pay 14 VAT

    Reference your last sentence, no. Both (i) the VAT laibility on the previous owner's import of the boat, or (ii) the VAT payable by the guy who sold it to him, never pass to you as the third owner of the boat. And HMRC have no "mortgage" claim on YOUR boat in respect of that tax.

    I've excluded from all this special cases like Mediterranean leasing and the commercial boat programs in the Med countries, all of which can produce tax paid boats with little or no actual VAT being cash paid. I've also excluded discussion of VAT "schemes". There are some truly awful imho schemes around, some marketed by ads in MBY, and they are badly designed by numpties and wouldn't stand up in court. But there are also perfectly good purchase structures including some that let you own a boat without paying VAT and still have a VAT paid invoice. Alas they don't belong on an open forum :-)

  5. #55
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    Default Re: VAT

    Yes, those are indeed examples of debts following boats. But they do not prove that a person's tax debt follows his boat after he has sold it.

    The finance co has a mortgage, granted to it by the then owner of the boat by private contract. That mortgage can survive a change in ownership of the boat. Finance co can then seize the boat even from its new owner. Caveat emptor. HMRC have no such mortgage

    Marinas "impounding" boats is done using liens. Liens exist in limited areas of law, but the crucial aspect of a lien is it allows someone to RETAIN possession of a boat which they ALREADY have LAWFUL possession of. A lien never allows someone to seize a boat and TAKE IT INTO their possession. If the marina fee wasn't paid and your boat had gone to another marina, the first marina couldn't lawfully seize your boat. Indeed, if you took your boat away under cover of darkness and dispossessed the marina of it, they would have lost their lien and couldn't re-take the boat.

    HMRC have no lawful pre-existing possession of you boat, so can never have a lien on it

    You are getting into some complex and different areas of law now, the above is but a very brief summary! And the qabove is England and Wales law only. Scotland and RoW are different

  6. #56
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    Default Re: VAT

    Thank you for that clarification.

    I have to say that your take on this is extremely interesting. It really does sound as though the biggest problem is that no one has actually bothered to look into the legal aspect of this.

    This is exactly the sort of thing that MBY/MBM ought to be taking up because it probably directly affects 50% of boat owners.
    Ari

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  7. #57
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    Default Re: VAT

    Yup, MBY/MBM or RYA should take it up. It is of massive interest to their constituencies.

    Hey listen I dont claim to be the country's top VAT expert. I have read most of the UK's 7000pages of tax legislation but not all of it, and the dullest chapters are VAT. I think what I'm saying is right, but will happily back down/humble pie if someone can find the bit of law saying HMRC can seize Mr B's boat.

    MBY/MBM/RYA should engage someone who really knows VAT to write something definitive. That'll cost them about 50k, by the way. I'll happily chip in to the project and make sure the right areas are being covered/right questions asked. Also, the top VAT QCs in this country will not understand mediterranean yacht VAT so that would have to be excluded from the project. The list of folks who are well credentialised in tax law AND have lived and breathed first hand mediterranean VAT-free boating (and I don't mean those leasing schemes, pah!, they are for second division operators)is pretty short, but I might just scrape onto it, so if you are buying a Med boat you'll have to get your VAT advice by PM :-)

    But, back to your point, yes wouldn't it be great if MBY/MBM and RYA could take a lead on this? (Is Hugo or Rod Carr reading this? Any thoughts gents?)

  8. #58
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    Default Re: VAT

    Can anybody come up with actual evidence of boats being impounded because they lack VAT paid documentation?

  9. #59
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    Default Re: VAT

    [ QUOTE ]
    Also, the top VAT QCs in this country will not understand mediterranean yacht VAT so that would have to be excluded from the project.

    [/ QUOTE ]
    With respect, this exclusion would leave a lingering doubt regarding the VAT status in the rest of Europe and would reduce the value of such a document.

    Pete

  10. #60
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    Default Re: VAT

    Am advised this morning, by RYA, that following discussions with HMCE, Section 8(?) is being revised to indicate that copy invoices will be acceptable as proof of VAT payment.

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