VAT and customs clarification for recreational boaters
A consortium of British and European marine organisations, including the RYA and British Marine, has published a set of eight scenarios to help boat owners unravel the complexities of post-Brexit VAT status on second-hand boats.
As previously reported in PBO, since 1 January 2021 British owned/registered boats are only permitted free circulation (VAT paid) in EU countries under specific conditions. Furthermore, some of those boats may become liable for VAT upon re-entry to the UK – even if they have already paid before.
So which used boats will retain EU VAT-paid status and which ones won’t?
LOSING VAT-PAID STATUS Scenario 6 (see pbo.co.uk/vat) illustrates the reality of Brexit for the vast majority of British boat owners. Basically anyone whose boat was in GB (Northern Ireland is being treated differently) on Brexit day and who is unable to prove that their boat had been in a EU27 country in the last three years is not eligible for returned goods relief (RGR) and has ‘lost’ EU VAT-paid status (if they even knew they had it). Any EU buyer would be looking at having to pay an additional amount of VAT to formally import the yacht.
Scenario 5 illustrates a continuation of a VAT relief arrangement for a boat belonging to a person who normally lives in GB, but who owns property or a business in one of the EU27 countries.
The other six scenarios illustrate how certain boats can potentially maintain their EU VAT-paid status.
Scenarios 1-4 illustrate the most straightforward cases: any pleasure craft that was in a EU27 country on Brexit day and hasn’t changed hands since being ‘exported’ from the UK (all cross-Channel passages are now classed as import/export) is allowed to keep its EU VAT status.
Those same yachts can now also return (be exported) to GB without paying VAT again (claiming RGR) in either of two cases: if they’ve been out of GB for less than three years, or if they’ve been away longer, but are returned before 30 June 2022 (this is a one-off Brexit concession).
Thereafter, until the boats change hands in either of the jurisdictions, or three years passes without a new import/ export, these yachts are permitted to claim RGR in both the UK and the EU.
Marine VAT expert Simon Anslow has written a comprehensive guide to understanding the topic for berthoninternational.com explaining that some of the boat owners referenced above may effectively be able to maintain dual status.
But he also references a further group of boat owners that may benefit from the RGR/import/export loop, which is illustrated in scenarios 7 and 8. He states:
‘Going back to our owner whose VPS yacht [VAT-paid status in UK or EU] was in the UK at Brexit – we know that that yacht now has UK status and effectively lost its EU27 status, BUT if that owner has had the yacht within the EU27 at any time and they return to the EU27 within three years of the last departure (and this can be evidenced), then they have a potential eligibility for RGR and reviving their EU27 VPS. Further if they return to the UK within three years… and so on, so while they cannot technically have dual status, they do for all practical purposes.’
Cruising Manager at the RYA, Stuart Carruthers, adds: “This is another post-Brexit minefield that many of our members have had difficulty in negotiating. We hope this set of scenarios will help with that.”