Extracts from HMRC Notice 8 ‘Sailing your pleasure craft to and from the UK’ – April 2012
3.5 Can a vessel lose its VAT paid status?
VAT is due on the importation of any vessel from outside the EU. However, there are provisions for this VAT to be relieved when an EU VAT paid vessel returns to the EU, refer to sub-section 3.4. If an EU VAT paid vessel leaves the EU, and whilst outside the EU it is sold, the new owner will, unless eligible for one of the reliefs described in this Notice, be liable to pay VAT if the vessel is brought back into the EU.
4.1 Will I have to pay VAT on a vessel to be kept in the EU?
4.2 What documents will be required to provide proof of the VAT status on a used vessel?
EU residents should only use a vessel in the Community if it is VAT paid or ‘deemed’ VAT paid. Documentary evidence supporting this should be carried at all times as you may be asked by customs officials to provide evidence of your vessel’s VAT status, either in the UK or in other Member States. Documentary evidence might include:
A registration document on its own does not prove the VAT status of the vessel, as there is no link in the UK between the registry of the vessel and the payment of VAT. If you have difficulty in providing the information, you should contact the VAT, Excise and Customs helpline on Telephone: 0300 200 3700.
Certain vessels that were in use as private pleasure craft prior to 1 January 1985 and were in the EU on 31 December 1992, may be deemed VAT paid under the Single Market transitional arrangements. As Austria, Finland and Sweden joined the EU later, the relevant dates for vessels in these countries are ‘in use’ before 1 January 1987 and moored in EU on 31 December 1994.
After this date there were no further transitional arrangements agreed by the EU Commission for subsequent EU expansions.
The following documents are useful to prove the age and location of the vessel:
If you are unable to provide any of the above for used vessels kept in the UK you should, whilst cruising within the EU, carry a Bill of Sale (if applicable and between two private individuals in the UK). Whilst this is not conclusive proof that VAT has been paid, it does indicate that the tax status is the responsibility of UK customs authorities. It is also advisable to contact the relevant authorities in the Member State you intend to visit, or their embassy in the UK, to confirm what documentation will be required in advance of your voyage.
When buying a used pleasure craft from any VAT registered business in the EU, you should make sure that the invoice shows separately any VAT which that business has charged to you on supply of the pleasure craft. If the invoice does not show VAT separately you may have difficulty in demonstrating that VAT has been paid. If you are buying from a business that does not charge VAT on the transaction or from a private individual in the EU and the seller states that VAT has previously been paid on the vessel, you should obtain evidence from the seller that VAT has previously been accounted for.
Further guidance notes courtesy of ABYA:
Boats being used in the EU should have VAT-paid status unless they are just visiting. The original VAT invoice, from when the boat was either first bought within the EU or when it was imported from outside the EU, is usually sufficient evidence. A boat that is VAT-paid but is sold outside the EU loses its VAT-paid status and therefore VAT must be paid if the boat is brought back into the EU. Boats kept outside the EU for over 3 years may have to pay again (See Customs Notice 8).
The above applies to all boats built or brought into the EU since 1 January 1985, or on the joining dates of States that have become EU Members since then. Boats already in EU Member States and territories on 1 January 1985 pre-date the requirement.
The evidence of VAT-paid status will generally be an invoice, showing the VAT element and a VAT number, or similar document, such as a completion statement. Boats sold between companies should show the VAT element on the invoice. Some EU states (notably Holland) ask for the original invoice, but otherwise a certified copy kept on board should be adequate. Keep the original and a couple of certified copies safely elsewhere. It is vital to pass this information on when the boat is sold, as it may be requested by Customs officers in either the UK or elsewhere in the EU.
In the case of home-builds and fit-outs, copies of all the major invoices should be kept and passed to subsequent owners to show VAT-paid status. Customs Notice 8 sets out further details.
Please note that HMRC do not have copies of individual VAT invoices from boat builders, dealers or other boat sales transactions.
Any queries should be referred to HMRCs VAT, Excise and Customs helpline – 0300 200 3700. If they seem unsure, ask for the matter to be referred to the HMRC Unit of Expertise on Yachts. Request any advice in writing, keep it with the boat’s documentation, and pass it on to any subsequent owners.
What is it?
The RCD is a European Directive that applies to virtually all recreational craft between 2.5m and 24m brought into or offered for sale in the EU market. It came into force on 16th June 1998. Boats covered by the Directive are required to comply with specific ISO standards, although equivalent standards may be applied. It is helpful to retain the compliance document with the boat’s papers for future owners and in case of any query.
Unlike the MoT for cars, compliance is not an on-going requirement. Evidence of compliance will be found on the plaque provided by the boat builder which will, amongst other things, give a HIN/CIN (Hull/Craft Identification Number). This is a 14-digit number containing the manufacturer’s code, year of build and model year. There should be a paper document as well – often found in the back of the owner’s manual – whose details should agree with the plaque. The builder’s invoice and/or certificate may also give the HIN. You should see a CE mark.
There are a few exemptions from the RCD such as boats built solely for racing, gondolas and commercial vessels (not recreational vessels used for charter, but vessels such as fishing boats and workboats).
Boats being brought into use or placed for sale onto the EU market for the first time must comply with the Directive at that time. Privately imported boats may need to be assessed for compliance with the Directive on arrival. Some US boats are built to the RCD and have the required documentation, but you need to find out before you buy. It is worth noting the possibility that the newly-imported boat may not economically be able to be brought to compliance, particularly if the engine does not meet the requirements. YDSA surveyors can give professional guidance, or use the RYA links below for additional information.
Boats that can show they were in an EU protectorate or other territory before 16th June are treated the same as boats within the EU States.
Boats built in the EU
Boats built in the EU since 1998 should have documentation that they complied with the RCD when first offered for sale, and the same is true of most boats imported through authorised dealer networks.
Boats built or in the EU prior to June 1998 were not expected to comply retrospectively. Boats coming back into the EU, perhaps following sale, retain their status provided the owner can provide evidence the boat was built or in the EU prior to June 1998 – the Builders Certificate is ideal. A Bill of Sale, marina receipt or other dated evidence for non-EU built but located in the EU before June 1998 should suffice.
A vessel that has been supplied as a shell, or a “sailaway”, or indeed built from scratch by a home builder, can be exempted from the certification and documentation requirements of the Recreational Craft Directive provided the builder retains ownership of the vessel for at least five years from the date that the vessel was first “put into commission”. Be aware that there are uncertainties around the meaning of “put into commission”: your surveyor should be able to provide some guidance in respect of your own case.
Hulls provided for fit-out should have an Annex 3 Declaration, which is the builder’s certification that the hull has been built in accordance with the RCD.
You can register your boat under Part 1 or Part 3 of the Registry of Shipping and Seamen. This is operated by the Maritime & Coastguard Agency (MCA) at Cardiff.
Part 1 is the closest to evidence of title. Applicants send the Registry a Declaration of Eligibility as well as Bills of Sale showing the history of the boat’s ownership for at least 5 years. If you plan to register your boat on Part 1 of the British Registry, this requires measurement by an approved Tonnage Measurer.
Part 3 (also known as ‘SSR’ – Small Ships Register) is a simple registration which does not provide any evidence as to title, or ownership, of a vessel. It is useful if, for instance, you want to take a ski-boat on holiday with you to Spain as it shows that you did not buy the boat in Spain and therefore Spanish taxes, etc. are not due. No measurement is required. If you are taking out marine finance over approx £50k you will be asked to register the boat so the finance can be noted against it, in the same way as a house mortgage on the Land Registry.
Key benefits to registration on Part 1: