Update on Brexit and the VAT status of boats
Brexit.. Please see this update in respect of the VAT status of boats as Ancasta has been, and still is working hard to understand and interpret the changing rules that may apply to our clients into the foreseeable future.
Crucial to this subject matter are the provisions of the Returned Goods Relief regulations which allow that a vessel that had previously had VAT paid on it and had been exported from the UK/EU may qualify for relief on return if it:
- was imported normally within 3 years of its export from the UK or EU
- was imported by the person who exported it from the UK or EU
- has undergone no more than running repairs outside the UK and EU that did not increase its value.
Now HMRC are aware that a number of vessels which have had VAT paid on them have left the UK and been in free circulation in the EU or the rest of the world, for a time considerably longer than three years. They had provided a further concession to allow an extension period until 30 June 2022 for those boats to return to the UK and retain their VAT paid status.
We are very pleased to report that their advice has been further updated in early 2022 to allow boats which are returning to the UK, irrespective of how long they have been out of the country, to qualify for Returned Goods Relief provided that:
- the boat was previously in the UK and VAT paid when it left, and
- it is returning to the UK under the same ownership under which it left without having undergone extensive refit work.
Naturally, boats owned by UK residents, which are VAT paid and were sitting within UK waters as at 23h00 hours on Thursday, 31stDecember 2020, will be accepted as VAT paid in the UK. We strongly advise that you get in touch with your marina or harbourmaster and get written confirmation that your boat was on her berth in the UK at this time.
Please note that should these boats be sold in the UK thereafter, they will retain UK VAT paid status but will in all likelihood, not be considered VAT paid in the EU. Nevertheless, as is the case now, boats owned by UK residents, may be granted temporary admission to EU waters to sail for pleasure or leisure for periods of up to 18 months at a time subject to the local regulations that may be applied at that time by respective EU authorities.
It is for all boat owners to assess therefore whether it is best for their boats to remain where they are in the world, particularly if they are in the EU and more likely to be sold there, or to bring them back to the UK if the market is here for their resale.
Finally, where a UK VAT paid vessel has changed hands during its stay in the EU or elsewhere in the world, it will not qualify for the concession from HMRC because it will not be able to comply with the requirement to be returning under the same ownership.
As always these regulations are constantly under review by HMRC and may change so please do take your own tax advice as each situation is different but if you would like to discuss the sale of your boat, Ancasta brokers are always on hand to help, wherever your boat is lying.
