2 BREXIT VAT EXTENSION
Owners of UK VAT paid boats that have been in EU waters for more than three years have been granted extra time to bring their boats home. The original date of 31 December 2020 has been extended by one year to 31 December 2021. Boats returning to the UK after that date will attract a further UK VAT charge based on the boat’s value at the time of import.
The original deadline appears to have been pushed back after lobbying from the Royal Yachting Association, The Cruising Association and British Marine. They had been asking for a date of 31 December 2023, given the difficulties of repatriating boats during the pandemic, but HMRC has only agreed to a one year extension. The ruling appears to mean the following:
1) A UK VAT paid boat moved to the EU by a UK resident can be brought back by the same owner without another UK VAT charge, regardless of when it was originally exported, provided it occurs before 31 December 2021.
2) After that date, a UK VAT paid boat taken into the EU by a UK resident can still be brought back by the same owner without another UK VAT charge if it is returned within three years of departure, under Returned Goods Relief rules.
3) In all other cases involving boats owned privately overseas by UK residents, UK VAT is payable on entry or return to the UK, even if
VAT has already been paid previously.
This last point is of particular relevance to owners of boats that are VAT paid in one of the EU27 countries rather than the UK. In this case UK VAT will be payable if the boat returns to the UK after 31 December 2020 as HMRC’S extension doesn’t apply in this case.
However, from 2021, UK residents will be able to take VAT or non-vat paid boats into EU waters for up to 18 months at a time without triggering an EU VAT charge under the EU’S Temporary Admission Rules. At that point they must either leave EU waters (24 hours suffices) and reapply for Temporary Admission or face an EU VAT charge. The three-year rule will still apply to boats returning to the UK, however.
The new ruling is likely to cause turmoil in the market for used boats, according to Lesley Robinson, CEO of British Marine. Owners and dealers wanting to buy or sell VAT paid boats for use in the Med, for instance, will be likely to do those transactions in the EU rather than the UK to avoid a second VAT charge.
This isn’t the only Brexit issue troubling
British boat owners. An RYA survey suggests that up to 900,000 UK boaters may be hit by restrictions on how long they can stay in Europe without visas after 31 December 2020. With the end of free movement of people, UK citizens will no longer be able to spend more than 90 days in a rolling 180-day period in the Schengen Area without obtaining a visa for each Schengen country they visit.