Buying second hand in Europe

[A.C.]

Does anyone have any experience of buying a second hand boat in Europe and bringing it back to the UK and any associated tax implications?

Details - The boat is built in the UK circa 1996 and is sold to a buyer in the UK who paid for the boat in full including VAT. The UK buyer keeps the boat for about 8 years before selling it on to a buyer in Southern Ireland and the boat is taken over to Ireland.
If I now purchase the boat in Ireland and bring it back over to England do I have to pay anything to HMRC?

I sent an email to HMRC and got a very generic email back which very much related to buying cars in Europe and bringing them to the UK. The line they took was that if I bring a vehicle into the UK I will have to pay 10% import duty and then 20% VAT. They also gave me a link relating to registration of the said vehicle in the UK which obviously would not be applicable as it is a boat and not a car.

Does anyone have any knowledge or experience of this type of thing?
If it is correct it would mean HMRC would get two chunks of VAT out of the same boat which sounds wrong to me but then again I am totally ignorant on such matters.

Any advice/information would be appreciated.

Andy

[Tim M]

It's a total minefield, I'm currently going through something similar with a larger yacht.

Have you got proof of the original VAT payment in the UK? If you have then my understanding is it's fine. If you haven't, then I believe VAT would need to be paid when you bring it back in the UK as following Brexit the VAT paid status from the EU is no longer valid in this country.

Of course, another option if you wanted to defer the payment (which is quite common particularly on larger boats) would be to have the boat registered somewhere other than the UK (The state of Delaware in the US is a hot spot for this) and then bring the boat into the UK as a visiting foreign flagged vessel - this gives you 18 months of VAT free time in the UK before the boat needs to leave the VAT area - note there's no time limit on how long it needs to be out before it can return and the clock starts again on the VAT clock. However, if it's a 1996 boat, paying the VAT might be cheaper and easier than dragging it out across the channel every 18 months.

Final point, you could just chance it having previously registered it on the SSR so at least you have some British paperwork to show anyone who might ask.

https://www.boatreg.com/

[A.C.]

I think I'm going to struggle on providing any paperwork from the original 1996 sale.
It's only a 21ft boat so it would come directly back into the UK.

It looks as if HMRC will gain two lots of money on this one.

[beamishken]

I think I'd just be dating the purchase invoice 6 months ago before brexit. Who's going to know when the boat actually came back to the uk?
It seems there are some "teething troubles" since brexit but hopefully once things settle down the whole process will become clearer & easier

[jakew009]

Originally Posted by Tim M

Have you got proof of the original VAT payment in the UK? If you have then my understanding is it's fine. If you haven't, then I believe VAT would need to be paid when you bring it back in the UK as following Brexit the VAT paid status from the EU is no longer valid in this country.

That is definitely wrong.

The only way of getting it back in without paying VAT again would be with returned goods relief. That normally had a 3 year cutoff (from the date of original export), but there’s a temporary 1 year truce for EU goods following Brexit where the cutoff is ignored.

Returned goods relief is available for goods that were in the EU on 31st Dec 2020, meaning you can reimport it retaining its original VAT paid status, assuming the following conditions (if it is imported before 1st January 2022)

a) be imported by the person who exported it and
b) have undergone no more than running repairs outside the UK that did not increase its value; and
c) have been UK ‘domestic goods’ (see note 2) at the time of export.

Point A is where the original poster is going to have a problem. I believe the only person who can bring it back to the UK is the original owner who sold it to the Irishman as he would have been the original exporter.

Point B should be workable but could be a problem if the boat had had major work done recently.

Point C I would I assume be proven with a paper chain of invoices showing the VAT transactions which may also be a problem for the OP.

In summary - it’s unlikely the OP will be able to get the boat back into the country without paying VAT on it again.

As an aside, this is a bit of an edge case for returned goods relief, as it’s usually used when the exporter hasn’t actually sold the goods (just used them abroad). However, there’s nothing to stop it being used in this way as far as I can see.

Of course, another option if you wanted to defer the payment (which is quite common particularly on larger boats) would be to have the boat registered somewhere other than the UK (The state of Delaware in the US is a hot spot for this) and then bring the boat into the UK as a visiting foreign flagged vessel - this gives you 18 months of VAT free time in the UK before the boat needs to leave the VAT area - note there's no time limit on how long it needs to be out before it can return and the clock starts again on the VAT clock. However, if it's a 1996 boat, paying the VAT might be cheaper and easier than dragging it out across the channel every 18 months.

This is also incorrect. What you are talking about is a Temporary Admission / TI. This is only available to a non UK resident (otherwise everyone would register their UK boat in say, Jersey, wouldn’t they?)

You could do this now we have left the EU if you intend to keep the boat in say France. Buy a non VAT paid boat, register it in the UK and take it to the EU on a TI. Take it 12 miles off shore every 18 months out of EU waters and reimport it on a new TI.

Final point, you could just chance it having previously registered it on the SSR so at least you have some British paperwork to show anyone who might ask.

That would be to smuggle it into the UK illegally. You would obviously have to forge the purchase paperwork etc as well... probably not a great course of action.

[jakew009]

Originally Posted by A.C.

I think I'm going to struggle on providing any paperwork from the original 1996 sale.
It's only a 21ft boat so it would come directly back into the UK.

It looks as if HMRC will gain two lots of money on this one.

As per my previous post, and to answer your initial question, you’re basically going to have to pay the VAT again (on the purchase price you pay for the boat). Without a paper trail and the original exporter willing to reimport it, I don’t see you have any alternatives.

Ahh the benefits of the promised brexit wonderland

[jakew009]

Originally Posted by beamishken

I think I'd just be dating the purchase invoice 6 months ago before brexit. Who's going to know when the boat actually came back to the uk?
It seems there are some "teething troubles" since brexit but hopefully once things settle down the whole process will become clearer & easier

Which would obviously also be completely fraudulent, just to be clear.

Not sure what the penalties are for smuggling and VAT fraud, but it’s potentially jail time as HMRC love to make an example of this kind of thing.

[beerbelly]

if its a private transaction cant you just get the seller to give you an invoice saying you paid say £1500 for it then the vat hit wont be too bad .theres no law against getting a very good deal

[jakew009]

Originally Posted by beerbelly

if its a private transaction cant you just get the seller to give you an invoice saying you paid say £1500 for it then the vat hit wont be too bad .theres no law against getting a very good deal

You don’t think the small craft team at HMRC may cotton on to that?

Have a read of VAT Notice 252

3.7 What if customs has doubts about the transaction value?
Where we have doubts that the declared transaction value represents the total amount paid or payable, we will ask you for more information. If those doubts continue we shall notify you (in writing if you request) of the grounds for those doubts before making a final decision about the acceptability of the declared value. You’ll be given a reasonable opportunity to respond. Then we will make a final decision and notify you of it in writing (see paragraph 2.6 if you disagree with a customs decision).

[GeoffW]

Originally Posted by A.C.

I think I'm going to struggle on providing any paperwork from the original 1996 sale.
It's only a 21ft boat so it would come directly back into the UK.

It looks as if HMRC will gain two lots of money on this one.

It looks that way. It seems there are hidden costs and duty to pay on all goods coming from the EU to Uk now new or second hand. Not sure we all, or indeed if any of us understood that whatever side of the Brexit debate we were on. Perhaps you need to direct your question not to HMRC but to the person who negotiated the deal, I am sure there is an oven ready answer to the question you pose on Vat

On the other hand you could take the stance that we as a nation need every tax £ HMRC can get their hands on given we are in deep defecit land , however no one of likes paying more tax. Sadly I suspect boating and other activities are likely to get more expensive .

Perhaps you can let us know how this pans out as i am sure many on here may encounter similar issues whether its on boats or not.

Good luck, hope you get a clear answer that keeps you within the spirit and letter of the law.

[jakew009]

Originally Posted by GeoffW

It looks that way. It seems there are hidden costs and duty to pay on all goods coming from the EU to Uk now new or second hand. Not sure we all, or indeed if any of us understood that whatever side of the Brexit debate we were on. Perhaps you need to direct your question not to HMRC but to the person who negotiated the deal, I am sure there is an oven ready answer to the question you pose on Vat

On the other hand you could take the stance that we as a nation need every tax £ HMRC can get their hands on given we are in deep defecit land , however no one of likes paying more tax. Sadly I suspect boating and other activities are likely to get more expensive .

Perhaps you can let us know how this pans out as i am sure many on here may encounter similar issues whether its on boats or not.

Good luck, hope you get a clear answer that keeps you within the spirit and letter of the law.

To be fair HMRC have been pretty clear with how the rules are going to work around VAT paid boats in the EU wanting to come back to the UK.

You have got a year (until 1st January 2022) to reimport your goods back to the UK to take advantage of returned goods relief (and avoid the normal 3 year cutoff).

After 1st Jan 2022, normal rules for returned goods relief applies or otherwise it’s treated the same as any other import from a third country (with VAT being due).

Can’t see how it can be much clearer.

[beamishken]

Originally Posted by jakew009

Which would obviously also be completely fraudulent, just to be clear.

Not sure what the penalties are for smuggling and VAT fraud, but it’s potentially jail time as HMRC love to make an example of this kind of thing.

Technically fraudulent yes but whats to say the boat hasn't been in northern Ireland since pre brexit days? Or you actually bought it in northern Ireland. I'm sure hmrc have bigger fish to fry at the moment.
I'd definitely be looking for an alternative to paying vat on something that already had vat paid. I just sold a boat 3 weeks ago & the guy took it back to northern Ireland & he didnt even ask for a purchase receipt just drove onto the ferry so obviously no checks being done there & afaik no hard border between north & south so whats to stop you doing the transaction in northern Ireland?

[SixtyNorth]

If I was you I would just look for a boat that is for sale in the U.K. It will work out easier and cheaper. For example, put the VAT money towards the used boat instead and therefore possibly get something a little newer.

[willk]

Originally Posted by jakew009

Which would obviously also be completely fraudulent, just to be clear.

Not sure what the penalties are for smuggling and VAT fraud, but it’s potentially jail time as HMRC love to make an example of this kind of thing.

Is that a professional threat or just your friendly tuppence worth?

[jakew009]

Originally Posted by beamishken

Technically fraudulent yes but whats to say the boat hasn't been in northern Ireland since pre brexit days? Or you actually bought it in northern Ireland. I'm sure hmrc have bigger fish to fry at the moment.
I'd definitely be looking for an alternative to paying vat on something that already had vat paid. I just sold a boat 3 weeks ago & the guy took it back to northern Ireland & he didnt even ask for a purchase receipt just drove onto the ferry so obviously no checks being done there & afaik no hard border between north & south so whats to stop you doing the transaction in northern Ireland?

I’m not an expert on the Northern Ireland situation (frankly who is at the moment?), but I don’t think it would make a lot of difference in this situation.

You are correct in as much as if you backdated a transaction between Southern Ireland and Northern Ireland pre Brexit date, you could then claim that you had been keeping the boat in Northern Ireland and are now bringing it back to the England (or Wales / Scotland). It wouldn’t then need returned goods relief as it’s effectively already in the UK / NI union.

However, obviously that would require the seller willing to conspire with you to backdate the transaction which is totally fraudulent so no benefit if you want to stay on the right side of the law.

Depending on the value of the boat (which in this case, considering it’s a 1996 boat, is probably not that much), the paper trail is going to be suspect to any mindful purchaser in the future (who may well question the boats VAT paid status and try and chip you on it).

Fundamentally this all comes down to whether you are prepared to effectively smuggle the goods back into the UK or not. If you don’t care about the law, sure, there are a million ways of bringing it back illegally (hell, just sail it across, no customs to deal with then). As long as no one dobs you in and HMRC have no other reason to investigate your affairs, you’ll probably never get caught.

If however you want to do it legally, your only option as far as I can see is to pay the VAT again.

In the case of your purchaser, again it gets horribly complex, but as far as I am aware, he has to pay no import VAT / duty when he takes it to Northern Ireland, but if he then want to ‘export’ it to the Republic or rest of the EU, he’d have to pay VAT (unless he had proof he’d already paid it when he brought it into Northern Ireland).

[jakew009]

Originally Posted by willk

Is that a professional threat or just your friendly tuppence worth?

Don’t see how it’s a threat or my ‘tuppence worth’.

My point was, forging documentation and evading VAT / smuggling goods in is a criminal offence. You can’t necessarily just play dumb and offer to cough up if you get caught.

Whether you get caught is a whole different matter. Brexit has created all sorts of opportunities for creative accounting.

[GeoffW]

Originally Posted by jakew009

Don’t see how it’s a threat or my ‘tuppence worth’.

My point was, forging documentation and evading VAT / smuggling goods in is a criminal offence. You can’t necessarily just play dumb and offer to cough up if you get caught.

Whether you get caught is a whole different matter. Brexit has created all sorts of opportunities for creative accounting.

Agree entirely.

As i said above, I think its important to obey the spirit and letter of the rules and law. Rather than thinly disguised dodges to cheat. If we go down that route you end up with a spiv economy and we are all losers in that game.

[beamishken]

Originally Posted by GeoffW

Agree entirely.

As i said above, I think its important to obey the spirit and letter of the rules and law. Rather than thinly disguised dodges to cheat. If we go down that route you end up with a spiv economy and we are all losers in that game.

We're talking about a 25 year old boat that the chancellor has already had his vat from & you want to "do the British thing" which is roll over & pay again. I dont see that as fair to be honest & if I could avoid paying the tax twice then I'd definitely do that

[GeoffW]

I agree the obvious fairness of the point you make it’s a boat at has been paid a long time ago it’s unfair to attract VAT again. But that’s the reality of where we are now. But equally we can’t interpret Rules and regulations to suit our own sense of what’s fair as that’s not how HMRC operate. But again. You make a valid point. It doesn’t seem fair.

[jakew009]

Originally Posted by GeoffW

I agree the obvious fairness of the point you make it’s a boat at has been paid a long time ago it’s unfair to attract VAT again. But that’s the reality of where we are now. But equally we can’t interpret Rules and regulations to suit our own sense of what’s fair as that’s not how HMRC operate. But again. You make a valid point. It doesn’t seem fair.

I assumed the original poster was looking at how to import the boat legally. If he doesn’t care about the legality I doubt he would have bothered posting on here in the first place...

If he wants to do it legally he needs to contact HMRC small craft unit and take it from there.

If he wants to smuggle it in, asking how to do it on a public forum is probably not the best of ideas