Yacht VAT, RCD and Registration

The following is a very basic guide to VAT and RCD/RCR for yachts. It is by no means exhaustive and should not be used as the basis of formal advice. Further and more formal advice may be obtained from qualified sources such as the relevant customs authority or in the case of RCD/RCR, a notified body.

Yacht VAT

Following the UK’s withdrawal from the EU, there have been many questions that have caused confusion and uncertainty for the leisure marine sector both in the UK and in the EU. Arguably, the biggest has been around the VAT status of recreational craft at the end of the transition period.

In an unprecedented declaration of unity, the International Council of Marine Industry Associations (ICOMIA), European Boating Industry (EBI), European Boating Association (EBA), British Marine (BM) and the Royal Yachting Association (RYA) joined forces to provide clarification on VAT and customs for recreational boating companies and users. Showing the value of cooperation and membership organisations, the five organisations have taken the exceptional decision to release this guidance to members and non-members.

The group put forward the key scenarios affecting boaters and are pleased to confirm that the Commission has now responded, validating the interpretation of the guidance and how VAT should be applied under the various examples. This follows a push led by the EBI with the European Commission to provide this important clarification. For the original document, please contact the participating organisations.

The positive confirmation of the scenarios should now also be recognised by each EU country in their dealings under this matter. Failure to do so could result in formal complaints being made to the Commission. Further clarification will be sought from the European Commission on the documentation required and interpretation of the establishment of “person established in the customs territory of the Union”.

SCENARIOS AND THEIR IMPACT ON VAT PAID STATUS (VPS)

The following acronyms are used:

  • TPE = The time at which the transition period ended – 31 December 2020, 23:00 UTC
  • VPS = VAT Paid Status: i.e. in free circulation
  • EU28 = EU before TPE, i.e. including UK
  • EU27 = EU after TPE, i.e. excluding UK
  • GB = England / Scotland / Wales excluding Northern Ireland
  • TA = Temporary Admission
  • RGR = Returned Goods Relief
  • UCC = Union Customs Code

The Union Customs Code referred to within this document can be found here.

Scenario 1

  • GB owned/registered pleasure craft
  • In free circulation (VPS) within EU28 pre-TPE and has supporting documentary evidence
  • Within EU27 as at TPE

✓ EU VAT Paid Status – The boat retained EU VPS status.

Scenario 2

  • GB owned/registered pleasure craft
  • In free circulation (VPS) in EU28 pre-TPE (and has documentary evidence)
  • Within EU27 as at TPE
  • Boat leaves EU27 (for GB or elsewhere) and then returns to the EU27

✓ RGR & EU VAT Paid Status – Boat is eligible to RGR on return to the EU27 and will have EU VPS, provided that all the conditions established in Article 203 UCC are fulfilled and, for VAT, that the boat is imported by the same person who exported it.

Scenario 3

  • GB owned/registered pleasure craft
  • EU28 VPS pre-TPE (and has documentary evidence)
  • In EU27 as at TPE
  • VAT paid on original new purchase in GB a number of years ago
  • Subsequent ownership and location within the EU27

✓ EU VAT Paid Status – The boat keeps its Union status and it is therefore in free circulation with EU VPS.

Scenario 4

  • GB owned/registered pleasure craft
  • Business owned EU
  • EU VPS before TPE
  • In EU27 as at TPE
  • Kept and used within the EU27
  • Long-term lease to individual for private use
  • GB VAT accounted for on annual lease charge

✓ EU VAT Paid Status – According to the information provided, the boat has Union status and keeps it unless the boat is taken outside the customs territory of the Union.

Scenario 5

  • GB owned/registered pleasure craft
  • Owner is ordinarily resident in GB
  • Using boat within EU27 on TA
  • Owner has an EU27 holiday property where they keep the boat moored (in their name)

✓ Temporary admission – A person is established in the customs territory of the Union if he/she fulfils the conditions established in Article 5(31) UCC. If the person is not established in the customs territory of the Union, then he/she can declare the boat for temporary admission if it has non-Union customs status.

Scenario 6

  • GB owned/registered pleasure craft
  • In free circulation within EU28 pre-TPE (and has documentary evidence)
  • No evidence of having been in the EU27 previously; or
  • Long-term lease to individual for private use
  • In GB as at TPE

EU VAT Paid Status Lost – Article 203 UCC requires evidence of a previous export to the UK. The Commission guidance indicates that, in the absence of an export declaration, evidence of the previous movement of the boat to the UK is required. If the boat has never been in EU27 it is impossible to provide evidence of movement to the UK.

Scenario 7

  • GB owned/registered pleasure craft
  • In free circulation within EU28 pre-TPE (and has documentary evidence)
  • Had previously been evidenced as being within the EU27 within the last three years
  • In GB as at TPE
  • Same owner who brought it out of EU27, returned to the EU27 within three years of departure

Documentation required – It is for the Member State to decide whether the conditions for RGR is possible (Article 203 UCC) are met. Article 203 UCC requires evidence of a previous export to the UK. The Commission guidance indicates that, in the absence of an export declaration, evidence of the previous movement of the boat to the UK is required. Member State authorities must therefore assess whether that satisfactory evidence can be provided in this scenario.

Scenario 8

  • GB owned/registered pleasure craft
  • In free circulation within EU28 pre-TPE (and has documentary evidence)
  • Had previously been evidenced as being within the EU27 within the last three years In GB as at TPE
  • Same owner who brought it out of EU27, returned to the EU27 within three years of departure

Documentation required – It is for the Member State to decide whether the conditions for RGR (Article 203 UCC) are met. Article 203 UCC requires evidence of a previous export to the UK. The Commission guidance indicates that, in the absence of an export declaration, evidence of the previous movement of the boat to the UK is required. Member State authorities must therefore assess whether that satisfactory evidence can be provided in this scenario.

For clarification of the rules relating to vessels within UK waters, please refer directly to the HMRC rules for sailing your pleasure craft to, from and within UK waters - June 2022

RCD / RCR– Recreactional Craft Directive (EU) / Recreational Craft Regulations (UK)

Guidance notes courtesy of HPI CE-Proof

Dates of Enforcement

The Regulations, in their current form, came into force on the UK’s official Exit Day from EU: 31 January 2020.  Prior to Brexit, however, the UK applied the European Recreational Craft Directive (RCD) whose dates are shown below. As the dates explain, there is a transition between the UK and EU regulations and markings.

16/06/1996 – EU RCD I (94/25/EC) & CE marking became optional for the first time
16/06/1998 – EU RCD I became mandatory
01/01/2006 – amendment (2003/44/EC) to RCD I became mandatory.
(PWC & emissions into scope for the first time)
18/01/2016 – EU RCD II (2013/53/EU) /became optional
18/01/2017 – EU RCD II became mandatory & EU RCD I ceased to exist
01/01/2021 – UKCA mark for RCR becomes mandatory for non-CE marked products and products previously CE certified to RCD by UK-based Notified Bodies
01/01/2021 – UKCA mark for RCR becomes optional for products CE marked to RCD II using module A and products certified to RCD by Notified Bodies located in EEA (i.e. not UK)
01/01/2022 – UKCA mark for RCR mandatory for all products within scope

Download the EU Commission’s brochure on CE marking recreational craft. (The UK recognises the same interpretations).

Click here to see a list of the differences between RCD I and RCD II/RCR and download a re-certification application form

Scope

The Regulations (& Directive) apply to the design and manufacture (but NOT operation) of watercraft (ie recreational boats & personal watercraft) that have a hull length between 2.5m and 24m (8ft 2in to 78ft 8in). All boats that are within the scope must be assigned a design category which is then used to set targets for the assessment of the craft. The Regulations also list 5 groups of components which are in scope and must be UKCA marked when placed on the UK market. In addition, the Regulations also include engines that are to be fitted on recreational craft. To earn their UKCA mark, all engines must meet exhaust emissions criteria and if the engine has an integral exhaust (eg an outboard or sterndrive) then it must also meet noise limits. If the engine does not have an integral exhaust and is fitted to a high speed boat, then the boat manufacturer must demonstrate that the boat & engine together meet the noise limits.

Standards

The detailed technical characteristics of the design, materials, production and testing are not laid down in the Regulations but in designated standards. (Europe calls them harmonised standards but they are exactly the same standards).

Conformity with designated standards “guarantees” conformity with the Regulations. Their application, however, is not mandatory. If designated standards are not suited to a specific product, any alternative standard or solution may be applied if it ensures equivalent safety. It can be difficult to demonstrate equivalent safety and harmonised standards should be applied wherever possible. HPi-CEproof can advise on alternative methods.

Click here to visit the UK Government’s website for an up-to-date list of designated standards for RCR.  A large number of the designated/harmonised standards are scheduled for update in the next couple of years.

Conformity Assessment Procedures

The Regulations have a wide range of Conformity Assessment Modules that define what documentation needs to be compiled and to what extent a Approved Body should be involved. The choice of modules is limited depending upon the risk (i.e. the design category) of the product. HPi-CEproof will advise on the options upon application.  For further details, download the HPi-CEproof Guidance Note – RCR Conformity Assessment Modules.

Yacht Registration (UK)

Guidance notes from the British Registry can be found here

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:

  • Following BREXIT, the Part 1 Registry is now open to a very broad range of further nationals including Argentina, Aruba, Bahrain, Brazil, the Canary Islands, China, the Faroe Islands, Haiti, Israel, Japan, Liberia, Madeira, the Marshall Islands, Monaco, Panama, South Korea, Switzerland, Suriname, the United Arab Emirates, and the United States of America.
  • Assists you to prove title to your boat;
  • Allows you to register a marine mortgage;
  • Provides internationally accepted documentation to ease passage to foreign ports;
  • Entitles you to protection from the Royal Navy and the services of British Consuls;
  • Can enhance the re-sale of your vessel;
  • Provides proof of date of build in respect of the EU Recreational Craft Directive;
  • Ensures that your boat's name is unique on Part 1

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