UK to Australia VAT concerns

[Caylie]

Hi all,

I recently wrote when my husband and I decided to buy a boat and sail back to Australia! Well, we are nearly settled on a Sigma 38, and are set to sail on Easter Friday from the UK.

I say nearly settled- we have been trying to buy this boat for 6 months,due to several issues I won't bore you with. The final sticking point is this: the owner can not find the VAT certificate. He has letters from various people (the original company who made the boat), the Customs people etc who say that VAT WAS paid at sale, but no actual certificate. Now, the letter from the customs people says that they used to give out a statement to people in our position saying whether VAT had been paid or not, but due to popularity of this service, they couldn't cope and closed it down. They also say that 1) Evidence of VAT payment within the EC (i.e. purchase invoice) OR 2) evidence that the vessel was purchased within the EC second hand from a private individual(a Bill of Sale) will be enough to get us through any European port eithout being pounced upon for another VAT payment.

Is this the case? We can not afford to be landed with a VAT bill at some custom's officer's whim.

The boat is 1988/9 and has had a few owners (all from the UK/EU).

Please can someone give us a hand with this predicament- we have already invested so much time and money into this, and to lose her now would be dreadful.

Thanks heaps all

Caylie

[Hunter Wanderer]

The bill of sale from a UK resident or broker will be proof that the boat has been bought in the EEC so vat is taken as being paid.

No one really cares . Have you ever been asked for vat proof when visiting a UK marina?

[Jack Tyler]

Caylie, I believe there is absolutely no correlation between buying a boat in the UK and that meaning the boat is absent VAT liability. It may be true that local HM Customs folks, on seeing the Bill of Sale, will presume the obvious - they are generally very accommodating and reasonable - but that's quite different than saying you now have proof of VAT having been paid. (NB It is shameful that HM Customs have 'turned off' verification of VAT-paid status because of the fact it was a needed and used service; only a bureaucrat would oblige that logic.) A little research in YM or along the dock will produce many stories of boats being sold within the EU and, because they were in the CI or a sleepy Spanish village and so VAT was successfully avoided, they subsequently became VAT liable once questions started being asked.

To HW's point, it is unlikely that your initial route will produce few noisy officials. We just finished the England-CI-Spain-Portugal run as far as Lisbon and, while official clearance procedures are in place everywhere, you MAY not be asked to prove VAT status. OTOH this is no guarantee and it may surface as an issue, at which point you'll be stuck just as you fear. I'm sorry to not be more assuring but better you face the reality now, while still in the UK, than later.

Here's my suggestion: make the right connection with HM Customs via phone or referral - the office truly familiar with yacht VAT-related issues - then fax the builder's and the HM Customs letters to which you refer to them and ask for their assessment of your 'proof'. Don't be 'nice', be professional and assertive. You have a right to the professional opinion of those folks, and it's reasonable to expect it be delivered. Moreover, keep in mind there is no single 'VAT PAID' EU-based form; each country's Customs administers this independently. Imagine handing a Portuguese official your offical VAT paid paperwork in Swedish. You probably have enough there, and little enough exposure, to make it thru the EU successfully. But some port officers (e.g. Canaries & Azores) can be formally obnoxious, so best you have a professional viewing of what you do have before leaving.

If it's the right boat for you, I'd figure out how to work around this issue given your destination, rather than nix the deal because of grey bureaucratic details.

Jack

[Caylie]

Thank you Jack- that was the reply I was looking for- not what I wanted to hear, but exactly what we needed to hear. We will go down that avenue, as you suggest, being professional and assertive- it will be a £10000 payment if we don't do this correctly, which would stop our journey in its tracks. I will let you know how we get on.

Best wishes

Caylie

ps: anyone else been thru this? Any comments are welcomed.

[Swagman]

Hi Caylie,

Hello from a fellow Ozzie. We're resident in the UK. Have purchased two yachts whilst over here and sailed both though several EU countries. Only time VAT 'proof' was requested was in France when visited by financial police, and they were happy with the series of documents which tracking back, showed VAT had once been paid.

So I'd suggest all you may need is a simialr documentary track on the current vessel - simply a copy of the very first invioce from builder/yard to first buyer A (which showed VAT payment in our case from a German buyer to the Italian yard), then each subsequent bill of sale / invoice showing sale by owner A (our German) to owner B (a Belgian), then owner B (the Belgian) to ourselves.

Cheers

JOHN

[santeana]

Hello Caylie,

Maybe a long shot but have you checked if the Sigma has been Part 1 Registered and issued with a Certificate of British Registry (not the SSR, Small Ships Register). Proof of ownership, bills of sale inc VAT evidence would have been submitted for Part 1 approval. If it's a UK flagged vessel you come under UK jurisdiction and Part 1 should be acceptable for a 88/89 boat. Weird as it may seem if it was an older yacht (pre June 85) there are exemptions for VAT where it can be "deemed as paid" if certain proofs can be demonstrated - unfortunately, I don't think this will work for you. Try giving the RYA a call (their Legal Team are on 0845 345 0373). They're currently making representation to HM C&E and EU over this exact thorny issue and are asking for examples of personal cases.

As you have a letter from HMC&E saying VAT was paid, and are in effect 'exporting' the boat from EU, and are Aus nationals, I'd have thought you could claim to be in transit. Perhaps you could re-flag it as an Aus vessel as well. Try these on RYA. Limiting stopovers to non EU ports until you've "escaped" would be useful (Channel Islands, Gib, Malta, Croatia, Cypress, Turkey and N.African if going Med way). Beware EU admin islands if going South.

Hope all goes well.

Ron.

[Auzzee]

Hi, one of the problems with re-flagging your yacht as an Aussie vessel also concerns tax. When you bring the yacht to Oz it will be deemed as visiting (despite your nationality) and will only be allowed to stay in Aussie waters for a limited time. That is unless you do re-flag it. That will require the payment of import duty. I do not know the rate at which this is levied, but I understand it may be as high as 15% of the value of the vessel. I believe the value is determined by Australian authorities, and is set at the value which the boat could reasonably bring on the Australian market; not at the actual cost of the boat or its overseas value. Its determined value can then be reduced only by an amount which can be shown to be a reasonable cost related to the transport or importation of the craft. Everybody's out ta getcha $s. David.

[Jack Tyler]

Santeana, Caylie & the Group:

Actually, I think Notice 8 covers Santeana's last point well...and I don't know why I didn't mention it earlier. If you wish to and have the time, reflag the Sigma and you'll be no different than the rest of us who either sail our non-EU reigstered boats into the EU or who buy new or used boats in the EU and flag them back home. In both cases, the boat is allowed 18 months uninterrupted visitation within the EU absent VAT liability.

Because you are looking at an early departure (Easter? My goodness, that's early for those waters!), time may not be on your side to complete the new registration. The one thing you don't want to do is leave the UK as a 'stateless' vessel, in which case every customs officer would be at liberty to decide you owe VAT to his country, since you belong to "no one".

If working thru the registration process with your home govt. is not possible - and you still feel uncomfortable with your paperwork as it now stands, another option would be to flag it in the Channel Is. Being nearby, that should be logisitcally easy and they do not assess VAT altho' there are other charges involved.

Jack

[Caylie]

Thanks for the valuable information, fellas. We are in talks with customs right now via the very helpful RYA people (thanks Ron for the number) and have decided against registering her in Australia (can't afford GST as soon as we get back home!!). We are looking into the Channel Islands as an option. Will keep you up to date with what happens with our searches into VAT status with British Registration... and Jack, I am already part terrified of this journey, so mentioning that Easter may be a little early for a Biscay crossing could be enough to call off the whole project!! My husband told me to not read your remark for that reason!! ;-)

[JeanneP]

Old sailor's superstition: never start a passage on a Friday.

[Caylie]

does it count if we're not old sailors yet...?

[JeanneP]

Well, sometimes paying attention to those superstitions ensures that you live to be old sailors.

[Auzzee]

Older sailors with a Saturday morning hangover.

[Caylie]

Jeanne, just to let you know that we have taken you very seriously on the Friday Passage superstition, and are now leaving on Thursday before Easter- I was only muckin' about with my young sailor comment . Thank you very much for the tip- that one slipped us by, but now we've talked to others, it seems that everyone seems to know this one but us!

On the better side of things- we, as of Friday, are the proud owners of a Sigma 38, called Steamy Windows. We are carrying on the tradition from the last owner and calling all those who crew on her 'Team Steamy' and are planning to spend the next 4 weeks sailing her at every opportunity (David is doing his yachtmaster aboard her, with a few others and me as crew!).

So thanks for the support everyone- the VAT situation has been cleared by some lovely people at HR Customs, and we have a file with all relevent information (except the VAT cert.) but this has been OK'ed by UK Customs people.

Safe and Happy sailing- we'll update you on our progress as we go.

Caylie

[santeana]

Caylie

Well done - glad to hear the authorities were constructive and helpful. All the best for your cruising future. Keep them windows steamy!

Ron

[zerubb]

Originally Posted by name='Converted Post'

Originally posted by Caylie

Hi all,

I recently wrote when my husband and I decided to buy a boat and sail back to Australia! Well, we are nearly settled on a Sigma 38, and are set to sail on Easter Friday from the UK.

I say nearly settled- we have been trying to buy this boat for 6 months,due to several issues I won't bore you with. The final sticking point is this: the owner can not find the VAT certificate. He has letters from various people (the original company who made the boat), the Customs people etc who say that VAT WAS paid at sale, but no actual certificate. Now, the letter from the customs people says that they used to give out a statement to people in our position saying whether VAT had been paid or not, but due to popularity of this service, they couldn't cope and closed it down. They also say that 1) Evidence of VAT payment within the EC (i.e. purchase invoice) OR 2) evidence that the vessel was purchased within the EC second hand from a private individual(a Bill of Sale) will be enough to get us through any European port eithout being pounced upon for another VAT payment.

Is this the case? We can not afford to be landed with a VAT bill at some custom's officer's whim.

The boat is 1988/9 and has had a few owners (all from the UK/EU).

Please can someone give us a hand with this predicament- we have already invested so much time and money into this, and to lose her now would be dreadful.

Thanks heaps all

Caylie

[zerubb]

Originally Posted by name='Converted Post'

Originally posted by Caylie

Hi all,

I recently wrote when my husband and I decided to buy a boat and sail back to Australia! Well, we are nearly settled on a Sigma 38, and are set to sail on Easter Friday from the UK.

I say nearly settled- we have been trying to buy this boat for 6 months,due to several issues I won't bore you with. The final sticking point is this: the owner can not find the VAT certificate. He has letters from various people (the original company who made the boat), the Customs people etc who say that VAT WAS paid at sale, but no actual certificate. Now, the letter from the customs people says that they used to give out a statement to people in our osition saying whether VAT had been paid or not, but due to popularity of this service, they couldn't cope and closed it down. They also say that 1) Evidence of VAT payment within the EC (i.e. purchase invoice) OR 2) evidence that the vessel was purchased within the EC second hand from a private individual(a Bill of Sale) will be enough to get us through any European port eithout being pounced upon for another VAT payment.

Is this the case? We can not afford to be landed with a VAT bill at some custom's officer's whim.

The boat is 1988/9 and has had a few owners (all from the UK/EU).

Please can someone give us a hand with this predicament- we have already invested so much time and money into this, and to lose her now would be dreadful.

Thanks heaps all

Caylie

Hi Caylie

I have just seen your post rgarding bringing a boat into Oz. I have recently been doing some investigation with regard to binging a boat from USA. Slightly different case, but import rules are the same. The bottom line is you will have to pay 5%import duty + 10%GST The calculations are based upon purchase price of boat+costs of transporting (sailing) boat to Oz. Below is part of e-mail I recently received from Australian Customs along with their web site. Good luck with your plans. Joe

Dear Joe

Based on the information you have supplied your calculations are correct. GST is payable on all goods, new or second hand, that are being imported into Australia. Under the Free Trade Agreement between the US and Australia, if you obtain a certificate of origin stating the vessel is 100% US made, then this will remove the 5% Customs Duty that is applicable. If you can not obtain this certificate, then the 5% Duty will be applied. The Free Trade Agreement does not effect the GST. It will need to be paid regardless. Customs collects the GST on behalf of the ATO. The Duty and GST is paid at the time the goods are cleared into Australia, usually at the port of entry.

Thankyou

Craig Eakin

Senior Information Officer

Customs Information and Support Centre

Australian Customs Service

Ph: 1300 363 263

Fax: (02) 8339 6714

For more information on Customs go to our website www.customs.gov.au.