VAT Exemption For Older Yachts (Virgo Voyager)?

[VicTheViking]

I bought a 1981 Newbridge Virgo Voyager recently. I took the former owner's word for it that VAT was exempt. Being built before 1985.

It has just come to my attention, however, that it may be necessary to prove the location of the vessel on December 31st 1992. Is this actually the case? If so what exactly constitutes proof?

I have been digging about in the documents in my possession. I have the names and addresses of all four owners since the boat was new, including the original builder's certificate. All owners addresses are in the UK. Is that satisfactory in itself?

The owner before me had the vessel from 1995, so I am unable to gather any additional information from him as to the physical location during 1992.

Any advice gratefully received.

[admin]

Unfortunately, yourself and many others are in what appears to be an uncertain position re VAT. If you have the original bill of sale, including VAT details, then you are _probably_ fine. Assuming you do not have:

You will require proof that your vessel was constructed in the UK prior to 1985.

AND

You will require proof that your vessel was physically present in EU waters on 31st December 1992.

If you cannot provide BOTH of these items, then you are potentially without valid VAT exemption documentation, and are therefore potentially liable to pay the VAT.

As I write, the RYA are in communication with HMRC, and are putting together a new F.A.Q. about the whole VAT situation. This is due to be published on the RYA website some time around the beginning of February 2008. They do not say they are negotiating for change however, so I anticipate that it may simply be a re-iteration of the facts.

The RYA have a member's questionnaire online which they have been using to collect details of any incidents occurring involving boat owners being queried on their VAT status. From what I can gather, the results of this seem to be that very very few people have had a problem. In fact, reading around the net, it seems that a great number of people are travelling around the EU in vessels of questionable status without problem; so it may well be that if you are the relaxed type, you do not need to fret about the situation.

Arguably, your biggest problem will come when you decide in the future to sell your boat on. If your potential buyer is aware of the VAT situation, they may well require that you prove the exempt status to them prior to completing the sale, or reduce the sale price by the appropriate amount (17.5%).

I suggest that you take the following actions:

1. If you are not already a member, join the RYA. They have a wealth of information on their website which is extremely readable and to the point. As a member you also have access to free advice on various email addresses and telephone numbers they publish online for members only. RYA website is here: http://www.rya.org.uk

2. Attempt to dig out the appropriate documents for proof of VAT exempt status.

2.1. Original UK bill of sale including VAT details. Contact the Virgo owners club - perhaps they know a way of accessing original sales invoices.

2.2. Builder's certfificate. Again, get in touch with the owners club and see what they can tell you.

2.3. Proof of location on 31/12/1992. Once again, it might be that your boat was in the ownership of a member of the owners club in 1992 (unsure if the club was running then). If so, they may also know where the vessel was kept at the time, and _they_ may still have records.

(I think the moral of the story here is that you should join the owners club if you have not done so already)

Best of luck with getting sorted out. I guess this is a heads up for the future for yourself and other readers to do some through research before buying ANY boat, and don't take the word of the seller - regardless of how well meaning and honest they think they are being. Many people are not fully aware of the VAT situation.

If any other readers have anything to add to the above, please do!

[bobholiday]

Aaaagh! I'm in the same boat (scuse pun). How stupid!

I just called the UK Customs Helpline on 0845 010 9000, and they said the following:

Because the purchase was made from a non VAT registered UK individual, no VAT is liable for payment in the UK. However, if you were to leave UK waters and go to France, and could not show the appropriate documentation that they might request to prove VAT exemption, there will be a charge of 17.5% of the boats estimated value at the time of entry into French waters. The UK's required documentation is an original VAT receipt from the first sale of the boat... but this will not necessarily be acceptible by the French authorities. You should contact French customs before making your journey, and ask them what documentation they would require

So if I remain in UK waters, by the sound of it, I am free from liability... but potentially, if I go to France (et al) I might get stung with a pretty substantial VAT bill.

I feel so stupid not to have looked into this before completing on the sale. This is bound to affect the sale price when I decide to upgrade or whatever. Feck.

[bobholiday]

Well. An interesting afternoon this has been!

I asked for some advice on the Westerly Owners Association Yahoo group, and got some very rapid assistance. I ended up having a chat with the last but one owner of my yacht, and he gave me a load of info about where it was on the all important date. Unsure if I yet have enough to satiate HMC&E, but I'm making some progress.

However, I just read a post on the WOA group which linked into the HMC&E's official line on this subject. The document can be downloaded as a PDF here:

http://customs.hmrc.gov.uk/channelsPort ... _CL_000289

See PAGE 17

(unsure how to positively verify that this is the correct, most recent version, but I think it is)

Important paragraph on page 17 says:

If you are unable to provide any of the above, whilst cruising within the EU you should carry a Bill of Sale (between two private individuals in the UK). Whilst this is not conclusive proof that VAT has been paid, it does indicate that tax status is the responsibility of UK ustoms. It is also advisable to contact the relevant authorities in the Member State, or their Embassy in the UK, to confirm what documentation will be required in advance of your voyage.

Does that mean that you don't actually need the other proof then, if you have a private sale agreement? Who knows.

I'll post more when/if I know it.

Thanks for the heads up Vic!

[bobholiday]

Apparently not... read on down and there's some issues regarding returning to UK or EU waters after leaving them.

The search for the missing documents continues...

[VicTheViking]

Oh dear. There's zero chance of me finding the 1992 proof or the original sales receipt. I shall have to chalk this one up to experience and hope that if/when I come to sell, I can find a buyer who's not too bothered. I think in my case that might be reasonably likely though - not many Virgo Voyagers venture all that far to be honest. Thanks for all of the advice, especiallly admin, a great help. Good luck with your Bob, it sounds like you might be OK.

[bobholiday]

I'm fubared I found the yacht club where my boat was wintered - and found that they scrap all documents older than 7 years.

Gonna just have to cross fingers like you Vic.