HMRC VAT notice 744C and zero-rating moorings and licences.

[Poppin]

I am wondering about the possibility of zero-rating the cost of the licence and mooring fees on our new zero-rated widebeam. 

 

I so far am unable to find a clear answer online, but I have found several accounts of people doing this with moorings at least. 

 

If it applies to moorings, even leisure ones, and services like safety inspections, I don't see why the licence can't be zero rated. 

 

Does anyone have experience with this?

[GUMPY]

You will be treading on very dangerous ground as a 70ftx14ft widebeam is marginal in qualifying unless it has no gunwales or is exceedingly deep drafted as it depends on the definition of where the deck is.

You will have to find a moorings and licence supplier who is prepared to supply you at a 0% rate as its not possible to claim it back. Somehow I don't see cart agreeing to supply you at 0%vat

 

[BEngo]

Some years back BW decided that they would ( "voluntarily")  charge output VAT on licences.  In return this meant that they could claim back as input VAT the tax charged on the bills for contractor works and a shed load of other things which together were more money than they would be sending to ) then)  HM Customs  as output VAT.

 

When they implemented this the licence cost was reduced by whatever the VAT rate was at the time so that there was nil cost to boaters then.

 

I suspect that, while you could get HMRC and CRT to agree that a  licence could be VAT exempt ( but not zero rated), the corresponding licence will be 20% dearer than a VAT rated one.

 

N

[Sea Dog]

2 hours ago, Poppin said:

I am wondering about the possibility of zero-rating the cost of the licence and mooring fees on our new zero-rated widebeam. 

Sounds like stiffing the vat man any further is a no-no from the replies so far. Perhaps you should consider non-dom status, but you may need to be quick...  

[Alan de Enfield]

29 minutes ago, Sea Dog said:

Sounds like stiffing the vat man any further is a no-no from the replies so far. Perhaps you should consider non-dom status, but you may need to be quick...  

 

They are already operating on a knife edge of legality, and, it has been known that an unscrupulous (mainstream) widebeam builder sold his boats as 'VAT Free', but when HMRC checked his books they found he had not been charging VAT and he should have. He received a huge bill from the 'VAT Man' but refused to pay as his sales T&Cs put the responsibility of paying any VAT should the boat be found to be not compliant with the VAT Regs.

 

The individual owners were contacted by 'the VAT Man' and were given 14 days to pay the outstanding VAT (around £30,000 each) but I understand that due to the circumstances they were not charged interest or 'charges' for late payment.

 

2 hours ago, Poppin said:

I am wondering about the possibility of zero-rating the cost of the licence and mooring fees on our new zero-rated widebeam. 

 

 

Read your T&Cs very very carefully, particularly any 'weaselly' clauses about VAT

[David Mack]

2 hours ago, Alan de Enfield said:

 

They are already operating on a knife edge of legality, and, it has been known that an unscrupulous (mainstream) widebeam builder sold his boats as 'VAT Free', but when HMRC checked his books they found he had not been charging VAT and he should have. He received a huge bill from the 'VAT Man' but refused to pay as his sales T&Cs put the responsibility of paying any VAT should the boat be found to be not compliant with the VAT Regs.

 

The individual owners were contacted by 'the VAT Man' and were given 14 days to pay the outstanding VAT (around £30,000 each) but I understand that due to the circumstances they were not charged interest or 'charges' for late payment.

I find that hard to believe. If the boatbuilder was legally required to charge VAT, HMRC will have said that his sale price is deemed to be VAT inclusive, and they will have sought the relevant sum in VAT from him. They are not interested in his Ts & Cs with his customers. It would then be up to the boatbuilder to pursue each of those customers to reimburse him for the VAT he had to pay over to HMRC. And if any of those customers had refused to pay, the boatbuilder would have to persuade a court that those Ts & Cs were legal and enforceable, which must be open to question.

[blackrose]

6 hours ago, Poppin said:

I am wondering about the possibility of zero-rating the cost of the licence and mooring fees on our new zero-rated widebeam. 

 

I'm wondering how you got away without paying vat on your widebeam in the first place? I read through the vat rules on qualifying vessels many years ago and did the HMRC calculation for my own boat to see if it was possible to claim the vat back, but soon realised there was no way. I notice Julian has mentioned dimensions of 70ft X 14ft so perhaps yours does qualify, however I'd make very sure it does before claiming vat back on a licence in case it potentially alerts HMRC to the possibility that your boat doesn't qualify!

[Alan de Enfield]

8 hours ago, David Mack said:

I find that hard to believe. If the boatbuilder was legally required to charge VAT, HMRC will have said that his sale price is deemed to be VAT inclusive, and they will have sought the relevant sum in VAT from him. They are not interested in his Ts & Cs with his customers. It would then be up to the boatbuilder to pursue each of those customers to reimburse him for the VAT he had to pay over to HMRC. And if any of those customers had refused to pay, the boatbuilder would have to persuade a court that those Ts & Cs were legal and enforceable, which must be open to question.

 

I'd have thought something similar, but that is not what actually happened.

[pearley]

Thought better of comment

Edited October 21, 2023 by pearley

[Alan de Enfield]

[Dav and Pen]

When we had our commercial NBs the 15 ton calculation for zero vat was very close for joshers but the big Northwich and woolwich made it with a bit over. When we had work done some yards accepted them ok but others we had to give a they had trouble with the vat man. My Dutch barge was well inside the rules but I had to send all details to the maker of a new prop so they could check. My advice is do

not let the vat man know by raising this question.

[Allan(nb Albert)]

On 21/10/2023 at 00:33, David Mack said:

I find that hard to believe. If the boatbuilder was legally required to charge VAT, HMRC will have said that his sale price is deemed to be VAT inclusive, and they will have sought the relevant sum in VAT from him. They are not interested in his Ts & Cs with his customers. It would then be up to the boatbuilder to pursue each of those customers to reimburse him for the VAT he had to pay over to HMRC. And if any of those customers had refused to pay, the boatbuilder would have to persuade a court that those Ts & Cs were legal and enforceable, which must be open to question.

If HMRC deem the sale to be VAT inclusive, then the customer has already paid the VAT ...

 

[David Mack]

14 minutes ago, Allan(nb Albert) said:

If HMRC deem the sale to be VAT inclusive, then the customer has already paid the VAT ...

 

Exactly my point. Which is why HMRC would go after the boatbuilder, not the customer.

[Tony Brooks]

I suspect it was the builders solicitors who sent out the demands, in such a way they implied they came from HMRC

[Sea Dog]

4 hours ago, David Mack said:

Exactly my point. Which is why HMRC would go after the boatbuilder, not the customer.

When I had a vat registered business, I found the vat man nothing but helpful. Having just helped someone who failed to register a property let with HMRC going back some 15 years (none of this "he can only go back 6 years" nonsense), I'd be more than inclined to talk to the tax man about any potential issues at the earliest indication that all may not be quite correct.  Hoping that any sweepings under the carpet will stay there is a risky business.