VAT Shock on Sailaway Boats
VAT: Her Majesty’s Revenue & Customs (HMRC) issued a statement on December 14th last year (2010) telling the industry the VAT concession on sailaway boats will stop from January 2012 because it conflicts with EU law.
The HMRC statement says simply: ‘From January 1, 2012 VAT registered businesses will no longer be able to zero rate the supply of a sailaway boat to a UK resident who intends to keep it outside the EC’.
Businesses can continue to zero rate the supply of a boat to a UK resident provided they either undertake to export the boat themselves or make all the arrangements for the export.
Following a recent legal decision, HMRC says it’s reviewing its concessions. The majority are being retained but a minority, after a period of notice, will end. This is because they are outside the scope of HMRC’s administrative discretion and it has not been possible or appropriate for HMRC to legislate these extra statutory concessions (ESC’s) as they are contrary to EU law.
‘We recognise that boat manufactures may have to make adjustments and will offer a 12 month period of notice before the concessionary treatment formally comes to an end,’ said policy advisor John Bryning.
HMRC says it’s discussing the impact of these changes with the boat industry, but both the British Marine Federation (BMF) and the Association of Brokers & Yacht Agents (ABYA) told Boating Business (BB) they hadn’t heard anything from HMRC.
Jane Gentry, ABYA CEO, told BB: ‘The ABYA has not been advised that this change is to take place. As we understand it, this will man that the Sailaway Scheme will continue to exist but can only be operated if the business selling the boat also makes the export arrangements.’
Howard Pridding, executive director of the BMF, told BB: ‘We were surprised to hear yesterday’s announcement about changes to the long established HMRC Sailaway Boat Scheme. We’ve had no communication from HMRC about this to date.’
Both the ABYA and the BMF will be examining the HMRC’ statement and reporting back to the industry.
