Hello, I wonder if I could get some advice on vat. I have researched vat status extensively but still can't figure out my potential liability
I am considering buying a yacht lying in Greece from a uk resident. The boat Is advertised vat paid but no evidence is available. The vat should have been paid years ago when imported from turkey to uk but no evidence is forthcoming. The seller is prepared to adjust the price appropriately as the vat status is not proved or likely to ever be provable.
My problem is when, how much and to whom do I pay the vat? Arguably, normalising the vat is the owner's issue but I am keen to understand what is involved.
I plan to buy the boat via a uk contract and all monies are uk. The sale is not a chargeable event is it? Do I need to sail it to turkey and back to create such an event and then settle? (pita)
If I wait until I plan to go to turkey or Croatia and then return to eu am I committing an offence In the meantime and subject to not just the tax but a fine? Is the amount due the amount originally due (large as the boat was newer) or current value?
And is either the price paid, or my surveyor's valuation likely to be accepted by whoever I am due to pay the vat to? Or do I need to pay for another independent valuation later?
Any advice appreciated. Keen not to bear any significant risk of being impounded half way through a cruise and would rather get things straight.
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10-03-12, 21:31 #1Registered User
Location : Us: Essex Boat: Spain
- Join Date
- Mar 2012
VAT on privately owned Greek yacht
13-03-12, 11:25 #2
Is the boat Greek registered, UK registered, or Turkey registered? And do you know where the boat was lying when the present owner bought it? And are you certain of his title?
Greek registration proves title, and there will be a file in its registration office which tells the story of where it came from and whether it paid VAT.
UK registration, part III, tells you nothing except that the applicant gave a UK address. Check title thoroughly. If there is no previous bill of sale or VAT record, be very wary.
If the boat was outside the EU when it last changed hands, it is definitely not VAT paid, unless it paid VAT to enter/register in Greece.
So, a bit more about where it's registered?JimB
http://jimbsail.info helps Skippers plan Europe Cruises
13-03-12, 11:49 #3
Get the owner/seller to sort it out,or the broker.
Otherwise walk away. Plenty more boats in the sea!
13-03-12, 12:13 #4Registered User
- Join Date
- Nov 2007
The registration is strictly speaking irrelevant, although it can be an indicator of where any issues may lie.
You need to determine when and where the boat entered the EU. There are many possible scenarios. For example the original owner could have paid VAT in, say the UK, sailed the boat to Turkey and subsequently brought it back into the EU under the returned goods provision. In that case the original VAT status is still valid, and if you buy it from him no VAT is involved. If he does not have any evidence of VAT it will be no different from many boats already in the EU. Unsatisfactory, but normally not a problem if you can show the boat has not been out for an extended period (the norm is 3 years).
If, on the other hand it has changed hands while in Turkey, the VAT status is lost and VAT would be due on entry (presumably in Greece). It would also be due if the boat was originally exported direct to Turkey without VAT being paid, either because the owner was a non EU resident or it qualified under the sailaway scheme. In this situation, VAT would be payable on entry, based on valuation (or purchase price if recent) direct to customs and a receipt issued. The responsibility for paying is with the individual who imported the boat, but if not paid, the liability stays with the asset.
Without any evidence such as the original VAT invoice and the detailed history, or the customs invoice, it is reasonable to assume that VAT has not been paid. As Jim says some registries require evidence of VAT status before registration, but this is not the case with UK registration, so you have no way of checking without the document.
As to what you do about it depends on the circumstances. It is not your responsibility to pay VAT unless you become the importer. To do this you would have to buy the boat outside the EU and then import it. The VAT can only be triggered by a chargeable event, and is due in the state where that occurs. Therefore you cannot pay it in the UK if the chargeable event (importing the boat) takes place in Greece, even if you paid the vendor in the UK.
The $64k question is, though, what are the chances of ever being questioned? If you bought the boat and it was clearly a transaction between two private EU residents, then no VAT is payable and you cannot have committed an offence. The offence if any lies with the original importer, but there is always the outside chance that the authorities may pursue him for unpaid VAT and could seize the boat until it is paid. This, however, is highly unlikely given the experience that few checks are ever made on VAT status, except where there are clear triggers that an offence may have been committted. A UK registered and owned boat with a Bill of Sale in the UK between two UK residents is not likely to raise any suspicions - again no different from hundreds of UK boats cruising around the Med.
Hope this helps (a bit)
13-03-12, 13:59 #5Registered User
Location : Us: Essex Boat: Spain
- Join Date
- Mar 2012
Thanks for the replies. The boat is UK registered, part 3. I will separately be checking title carefully as advised. There is a complete bill of sale history from new.
As far as we can tell, the boat was sold by turkish charter company to uk individual some owners ago. Assuming the uk owner was not using a "charter company" approach to avoiding VAT, this is when UK VAT should have been paid.
Regardless, at some point prior to the current owner purchasing the boat, it was imported into the UK as that's where he bought it. No evidence of VAT payment exists.
RYA suggest that in the absence of a new chargeable event, the original VAT liability may be due to HMRC which is preferable to dealing with Greeks and 3% cheaper.
But still there is no chargeable event, which means neither the vendor nor I have a straightforward way to normalise the VAT position.
The point about not committing an offence seems reasonable.
So if I keep it in the EU, there may be a risk of being checked, but more likely this won't happen until I take it out the EU and re-import. I could wait for Croatia to accede before I visit there and then the only non-EU place I would want to take it would be Turkey.
I am inclined therefore to keep 20% of the sale price in the bank, reflect this potential liability in the purchase price and wait until I get challenged, re-import or sell before stumping up.
As for the 'walk away' option, of course this is a possibility. But this is a unique boat (of course they all are) and there aren't many like it around.