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Hippoclides

VAT and liveaboard boats

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I notice a recent addition on the New and Used Boats site (Linky) is a brand new Collingwood, on sale for £91,200 but only £76,000 "when declared as a liveaboard", i.e. the 20% VAT is not charged.

 

This set me thinking about a few things:

 

1) I thought under the "gross tonnage" calculations used by HMRC that a 60x10' wasn't quite large enough to qualify for zero VAT? Have the rules changed recently?

 

2) There are quite a few used boats of a similar size (and the same builder) on sale for much more than £76k (a random example). On the face of it, this makes them pretty unlikely to sell unless the asking prices are cut significantly: unless it comes with a good mooring, why would anyone pay higher than brand new prices for a boat that's years old?

 

3) For older boats, given that the original purchaser presumably paid VAT when they bought the boat, is it possible for it to be reclaimed retrospectively if they, or someone buying it off them at a later date, was to declare themselves a liveaboard?

 

Any insights gratefully received!

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I notice a recent addition on the New and Used Boats site (Linky) is a brand new Collingwood, on sale for £91,200 but only £76,000 "when declared as a liveaboard", i.e. the 20% VAT is not charged.

 

This set me thinking about a few things:

 

1) I thought under the "gross tonnage" calculations used by HMRC that a 60x10' wasn't quite large enough to qualify for zero VAT? Have the rules changed recently?

 

2) There are quite a few used boats of a similar size (and the same builder) on sale for much more than £76k (a random example). On the face of it, this makes them pretty unlikely to sell unless the asking prices are cut significantly: unless it comes with a good mooring, why would anyone pay higher than brand new prices for a boat that's years old?

 

3) For older boats, given that the original purchaser presumably paid VAT when they bought the boat, is it possible for it to be reclaimed retrospectively if they, or someone buying it off them at a later date, was to declare themselves a liveaboard?

 

Any insights gratefully received!

 

Gross tonnage for HMRC purposes is calculated as in:

http://tinyurl.com/4ccftox

If it doesn't meet these dimensional requirements then it isn't a qualifying ship. Narrowboats are unlikely to meet the QS gross tonnage requirements dimensionally, wide beams may do. No the rules haven't changed recently. You also have to show that it is a commercial vessel with hold or isn't designed for recreation and pleasure and make a legal declaration that you intend to be a liveaboard.

 

People can buy what they like but it may be cheaper to buy new rather than second-hand depending whether they qualify under HMRC rules for zero VAT (see above).

 

As far as I am aware the original buyer can only go back 3 years to reclaim VAT if the boat complies with the new interpretation of the rules. I'm not sure that a second-hand buyer would be able to but, perhaps, a tax specialist would be able to clarify. Also HMRC will try to get you to reclaim via the builder. If that builder is unwilling to get involved or has gone out of business then there is a mechanism for an individual to get it back from HMRC but, if what friends of mine have told me is correct, it is a complicated and lengthy process.

Roger

 

Edited to add that you might find this of use:

http://www.hmrc.gov.uk/briefs/vat/brief3809.htm

Edited by Albion

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I notice a recent addition on the New and Used Boats site (Linky) is a brand new Collingwood, on sale for £91,200 but only £76,000 "when declared as a liveaboard", i.e. the 20% VAT is not charged.

 

This set me thinking about a few things:

 

1) I thought under the "gross tonnage" calculations used by HMRC that a 60x10' wasn't quite large enough to qualify for zero VAT? Have the rules changed recently?

 

2) There are quite a few used boats of a similar size (and the same builder) on sale for much more than £76k (a random example). On the face of it, this makes them pretty unlikely to sell unless the asking prices are cut significantly: unless it comes with a good mooring, why would anyone pay higher than brand new prices for a boat that's years old?

 

3) For older boats, given that the original purchaser presumably paid VAT when they bought the boat, is it possible for it to be reclaimed retrospectively if they, or someone buying it off them at a later date, was to declare themselves a liveaboard?

 

Any insights gratefully received!

 

:D

Hi

The only observation I may be able to help with is as to the price of new boats against older boats. When I purchased my boat at 4 years of age it cost about the same as many new builds at the time. Its all a matter of which school of thought you are in. I personally would far rather drive about in a second hand Bently than a new Ford focus.

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Thanks, Albion.

 

Based on the HMRC rules, my calculation is that the first boat I linked to would need to be 1.68m/5'6"(ish) from deck to baseplate, to qualify as 15 gross tons, which seems to be unlikely. A 60x12' would only need to be 1.4m/4', which seems more probable (and I have seen widebeams of this dimension advertised as VAT free before). Anybody happen to know the depth of their widebeam?

 

I wondered if the rule had changed because I think I saw someone (probably on CWDF) mention that the roof was now being counted as the "deck" on NBs and similar boats. Unfortunately I can't remember which thread this was. However the HMRC page states pretty unambiguously that it isn't, so I think I'll go with their view!

 

Your second link was also very interesting: qualifying vessels would have rather lower running costs as well, as it seems blacking, engine maintenance (or replacement!) and other repairs would also be zero-rated.

 

:D

Hi

The only observation I may be able to help with is as to the price of new boats against older boats. When I purchased my boat at 4 years of age it cost about the same as many new builds at the time. Its all a matter of which school of thought you are in. I personally would far rather drive about in a second hand Bently than a new Ford focus.

 

That's a fair point, which is why I was querying a second-hand Liverpool Boat being more than a new Collingwood... they are the same manufacturer, aren't they?

 

I think I'd go for the Bently as well but, if forced to chose between a second-hand Ford Focus and a new Ford Focus, I'd prefer the new one! :)

 

(Edited to correct gibberish)

Edited by Hippoclides

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Thanks, Albion.

 

Based on the HMRC rules, my calculation is that the first boat I linked to would need to be 1.68m/5'6"(ish) from deck to baseplate, to qualify as 15 gross tons, which seems to be unlikely. A 60x12' would only need to be 1.4m/4', which seems more probable (and I have seen widebeams of this dimension advertised as VAT free before). Anybody happen to know the depth of their widebeam?

 

I wondered if the rule had changed because I think I saw someone (probably on CWDF) mention that the roof was now being counted as the "deck" on NBs and similar boats. Unfortunately I can't remember which thread this was. However the HMRC page is be pretty unambiguous that it isn't, so I think I'll go with their view!

 

Your second link was also very interesting: qualifying vessels would have rather lower running costs as well, as it seems blacking, engine maintenance (or replacement!) and other repairs would also be zero-rated.

 

Some boat builders were trying to include the height up to the roof but, as far as I am aware, this isn't a correct interpretation. It is to the centre of a line projected in an arc from the gunwale shape to gunwale, I believe.

 

Yes, you can try to get parts for qualifying ships supplied at zero VAT but you have to convince the supplier to do so as the supplier is the one who will carry the can if HMRC decide that they have allowed zero with insufficient evidence. Some DBA (Barge Association) suppliers will do so.

 

HMRC were only reluctantly dragged to this position (which still isn't the fully accurate definition in law I believe) by cases like Commander Stone's VAT Tribunal ruling and the fact that Sagar Marine (and possibly Pipers) started down the road to taking HMRC to a Tribunal on behalf of about 9 buyers (including myself) plus Sagar themselves . We all contributed to a fighting fund of several thousand pounds each (depending on the cost of our boats) and were prepared to lose all going to a VAT Tribunal when HMRC backed down (having lost once). We got most of our money back as HMRC eventually agreed to refund the majority of our solicitor's costs.

Roger

 

Edited to add that HMRC had some unusual interpretations of what was allowed during the build IIRC. We had two fridges fitted, one was allowed, one wasn't. An auto TV satellite dish wasn't allowed. A washing machine wasn't allowed etc. To be honest I think they make it up as they go along. You literally drag them to a conclusion with their heels dug in the ground. It is HARD work and, of course, they like it that way as it discourages all but the most determined from fighting them.

Edited by Albion

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I personally would far rather drive about in a second hand Bently than a new Ford focus.

 

In a past life, having worked on the bl00dy things, I would much rather drive around in my 1.6TDCi Focus...always starts first time, just before Xmas it got me out of the frozen hell-hole known as Ollerton, 30 quid tax and over 50mpg.

ps, I also prefer sitting on a nice ceramic bog, with the smell locked away, in a holding tank in the engine room, instead of sitting on a bit of sweaty plastic, filled with bluestinkypoo ;)

pps I do think Beta engines are good

 

Back on topic...that WBNB must have bl00dy high gunnels!

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In a past life, having worked on the bl00dy things, I would much rather drive around in my 1.6TDCi Focus...always starts first time, just before Xmas it got me out of the frozen hell-hole known as Ollerton, 30 quid tax and over 50mpg.

ps, I also prefer sitting on a nice ceramic bog, with the smell locked away, in a holding tank in the engine room, instead of sitting on a bit of sweaty plastic, filled with bluestinkypoo ;)

pps I do think Beta engines are good

 

Back on topic...that WBNB must have bl00dy high gunnels!

 

Ah well, you can't be right all the time when it comes to narrowboats in this country :lol:

Roger

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HMRC had some unusual interpretations of what was allowed during the build IIRC. We had two fridges fitted, one was allowed, one wasn't. An auto TV satellite dish wasn't allowed. A washing machine wasn't allowed etc. To be honest I think they make it up as they go along. You literally drag them to a conclusion with their heels dug in the ground. It is HARD work and, of course, they like it that way as it discourages all but the most determined from fighting them.

 

From memory its only things that are part of the boat and contribute to the "navigation" side.

So heating for the wheelhouse is OK but not for the hold

A fridge in the WH is ok but not one in the hold

if you understand their logic.

 

OH and blacking / dock fees / engine repairs are all at 0%

Edited by idleness

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so how do you actually 'register'for VAT free status? Is it simply a question of 'convincing' the retailer? you are VAT free status ? what proof would you need ? Or as I amentioned is it a question of registering (if so how) .

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Based on the HMRC rules, my calculation is that the first boat I linked to would need to be 1.68m/5'6"(ish) from deck to baseplate, to qualify as 15 gross tons, which seems to be unlikely. A 60x12' would only need to be 1.4m/4', which seems more probable (and I have seen widebeams of this dimension advertised as VAT free before). Anybody happen to know the depth of their widebeam?

 

Mine is 57' x 12' x 2'2" draught below waterline, about 20" from waterline to gunwhales and 4' from gunwhales to cabin top. I calculated the gross tonnage a couple of times (last time about a year ago), according to HMRC guidelines and it only came out at about 12 gross tonnes so didn't qualify.

Edited by blackrose

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The Piper wide-beam "Zoe", is supposed to be an example of a boat deliberately built to qualify.....

 

Canal Boat Article (PDF Document)

 

The only problem I can see with it, is that I have never yet spotted it more than 3 locks away from where the pictures in that article were taken.

 

It appears to "continuously cruise" in the Apsley area, possibly, (just possibly), making it as far as Kings Langley.

 

It also seems to have a need to run an engine or internal generator almost continuously, so I assume there are some real power gobblers on board.

 

EDITED TO ADD:

 

The salient bit about it qualifying is....

 

Narrowboats don’t qualify, and a few design changes have been made to widebeams such as Zoe, to ensure compliance: for example, the depth is measured up to the deck height, and Piper has raised the gunwales by a few inches to increase the capacity.
Edited by alan_fincher

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Mine is 57' x 12' x 2'2" draught below waterline, about 20" from waterline to gunwhales and 4' from gunwhales to cabin top. I calculated the gross tonnage a couple of times (last time about a year ago), according to HMRC guidelines and it only came out at about 12 gross tonnes so didn't qualify.

 

Even with 15m barge Maurice A, Nick Branson had to raise the decks a bit more than I would have liked to just get over 15 tonnes gross.

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The Piper wide-beam "Zoe", is supposed to be an example of a boat deliberately built to qualify.....

 

Canal Boat Article (PDF Document)

 

The only problem I can see with it, is that I have never yet spotted it more than 3 locks away from where the pictures in that article were taken.

 

It appears to "continuously cruise" in the Apsley area, possibly, (just possibly), making it as far as Kings Langley.

 

I saw it on the long Nash Mills stretch last summer. Nice looking boat, but the fitout is far too much "luxury flat" for my liking. That huge TV seems ridiculous on a boat.

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I’m looking at buying a engine for our residential zero vat  barge.

is there a form or a certificate that I need to send to the engine suppliers

that is a declaration for nil vat please?

where do I find one to print off and sign?

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3 minutes ago, bigcol said:

I’m looking at buying a engine for our residential zero vat  barge.

is there a form or a certificate that I need to send to the engine suppliers

that is a declaration for nil vat please?

where do I find one to print off and sign?

What size of engine are you buying Col? I have the 50 hp Barrus Shire out of my boat for sale, its complete with gearbox controls, twin alternators, exhaust and is low hours

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3 hours ago, bigcol said:

I’m looking at buying a engine for our residential zero vat  barge.

is there a form or a certificate that I need to send to the engine suppliers

that is a declaration for nil vat please?

where do I find one to print off and sign?

Brentford Marine Services have issued HMRC approved tonnage certificates (for VAT purposes only) for qualifying vessels since the Everett/London Tideway Harbour Co decision. Accompanying such certificates we always provide a set format ‘Undertaking’ to be signed by the owner, attesting that the boat will not be used for recreation or pleasure. John Everett gave us plenty of work referrals for this over the years.

 

Both the Certificate of Tonnage (for VAT purposes only) and the Undertaking of Use would have to be sent to suppliers. Absent one of our certificates, an MSA ship tonnage certificate can be tried on, even though the calculation is different (but if sufficiently large, the assessed tonnage should qualify it).

Rules HAVE been changing, as HMRC have tried to push the boundaries in their favour. Also, revisions have been made to guidance since later decisions such as the 2008 HMRC v Stone High Court judgment ( https://www.bailii.org/ew/cases/EWHC/Ch/2008/1249.html )

 

Even earlier than that decision an entirely different calculation was brought in specifically for narrowboats (quite how legally valid that was being questionable), that effectively made it impossible for even a full length narrowboat to qualify! Then too, the depth measurement is essentially from hold floor to gunwales, i.e. it relates to the volume of the ‘hold’ (so cabins do not enter into it, though any raised holds – ‘breaks’ - can be). However both of those details from the guidance (which does not have the force of law) were canvassed in the 2007 Tribunal decision in Fee v HMRC on Appeal, and – at least for the Swiftcraft design of narrowboats – the old standard factor was applied, and the height calculated to cabin top.

 

http://financeandtax.decisions.tribunals.gov.uk//Aspx/view.aspx?id=3637

 

Although the calculation results in a tonnage figure, it is based on volume; the weight comes from determining how many tea chests would fit into that space, and it is the weight of that many boxes of tea that results in the tonnage assessed.

 

The old VAT guidance booklet (sadly I have long since lost it) explained that basis of the calculation, and what was and was not qualifying for zero-rating regarding fitments: at its simplest, if it is designed to become part of the ship and its appurtenances, it qualifies, otherwise not. The quaint example given was the mounting of a machine gun on deck – the gun would qualify for zero-rating, because it was ‘permanently’ mounted to the deck, becoming part of the ship; the ammunition for it however, was designed expressly to leave the ship (via the gun), so would not qualify.

 

If it helps, this is the Undertaking of Use form we use :-

 

 

UndertakingOfUse.jpg

Edited by NigelMoore
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10 minutes ago, NigelMoore said:

Brentford Marine Services have issued HMRC approved tonnage certificates (for VAT purposes only) for qualifying vessels since the Everett/London Tideway Harbour Co decision. Accompanying such certificates we always provide a set format ‘Undertaking’ to be signed by the owner, attesting that the boat will not be used for recreation or pleasure. John Everett gave us plenty of work referrals for this over the years.

 

Both the Certificate of Tonnage (for VAT purposes only) and the Undertaking of Use would have to be sent to suppliers. Absent one of our certificates, an MSA ship tonnage certificate can be tried on, even though the calculation is different (but if sufficiently large, the assessed tonnage should qualify it).

Rules HAVE been changing, as HMRC have tried to push the boundaries in their favour. Also, revisions have been made to guidance since later decisions such as the 2008 HMRC v Stone High Court judgment ( https://www.bailii.org/ew/cases/EWHC/Ch/2008/1249.html )

 

Even earlier than that decision an entirely different calculation was brought in specifically for narrowboats (quite how legally valid that was being questionable), that effectively made it impossible for even a full length narrowboat to qualify! Then too, the depth measurement is essentially from hold floor to gunwales, i.e. it relates to the volume of the ‘hold’ (so cabins do not enter into it, though any raised holds – ‘breaks’ - can be). However both of those details from the guidance (which does not have the force of law) were canvassed in the 2007 Tribunal decision in Fee v HMRC on Appeal, and – at least for the Swiftcraft design of narrowboats – the old standard factor was applied, and the height calculated to cabin top.

 

http://financeandtax.decisions.tribunals.gov.uk//Aspx/view.aspx?id=3637

 

Although the calculation results in a tonnage figure, it is based on volume; the weight comes from determining how many tea chests would fit into that space, and it is the weight of that many boxes of tea that results in the tonnage assessed.

 

The old VAT guidance booklet (sadly I have long since lost it) explained that basis of the calculation, and what was and was not qualifying for zero-rating regarding fitments: at its simplest, if it is designed to become part of the ship and its appurtenances, it qualifies, otherwise not. The quaint example given was the mounting of a machine gun on deck – the gun would qualify for zero-rating, because it was ‘permanently’ mounted to the deck, becoming part of the ship; the ammunition for it however, was designed expressly to leave the ship (via the gun), so would not qualify.

 

If it helps, this is the Undertaking of Use form we use :-

 

 

UndertakingOfUse.jpg

 

Many thanks Nigel, I will try and use this form, just what we needed

 

col

 

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4 hours ago, peterboat said:

What size of engine are you buying Col? I have the 50 hp Barrus Shire out of my boat for sale, its complete with gearbox controls, twin alternators, exhaust and is low hours

 

‘Hi there Peter Yes been looking for engines 80hp plus tho

ive been looking at second hand, there’s a dealer up in Yorkshire but not that keen

thens there’s one in Dorset, but can buy a midi 80hp brand new for 7000, but am and would be happy with second hand.

 

col

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32 minutes ago, bigcol said:

 

‘Hi there Peter Yes been looking for engines 80hp plus tho

ive been looking at second hand, there’s a dealer up in Yorkshire but not that keen

thens there’s one in Dorset, but can buy a midi 80hp brand new for 7000, but am and would be happy with second hand.

 

col

Shame, but I might know where there is a low hours 90 HP Beta for sale down in London, but the chap is away for just under 3 weeks and that will be the right money Col if you are interested?

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As others have already said Gross tonnage is nothing to do with weight or indeed not directly to do with weight of any cargo which can be carried. It is a measure of volume which in turn allows you to calculate how much cargo may be carried, before certain deductions are made,  and you may find this explanation from The Fit-out Pontoon  useful, especially the section which precludes vessels designed for or adapted to recreation or pleasure. 

 

  • A VAT-free boat is known as a ‘qualifying ship’. There are two specific legal criteria for a qualifying ship.
  • The first is that the boat has not been ‘designed or adapted’ for recreation or pleasure. The fact that your boat is designed as a live-aboard and not as a ‘pleasure craft’ means that it fulfills the first condition even if you are not intending to live aboard permanently or at all.
  • The second criterion relates to gross tonnage. This gross tonnage figure must be not less than 15 tons.  Gross tonnage is to be calculated as under the Merchant Shipping Acts.  Where gross tonnage has not been certified in accordance with those Acts HMRC guidance in Notice 744C (available online) sets out a modified version of that calculation for VAT purposes."

 

https://www.thefitoutpontoon.co.uk/finance-costs/vat-free-exempt/

 

 

 

Howard

Edited by howardang

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1 hour ago, NigelMoore said:

Although the calculation results in a tonnage figure, it is based on volume; the weight comes from determining how many tea chests would fit into that space, and it is the weight of that many boxes of tea that results in the tonnage assessed.

Some time ago, I was also of the opinion that it was related to 'tea-chests', however further digging back into history revealed otherwise :

 

It was actually a measurement of how many Tuns the hold could accommodate, a Tun was a barrel / flask / cask for holding wine or beer and had a capacity of 4 hogsheads.

 

A hogshead was 64 (imperial) gallons of beer (250 litres) so 4 hogsheads was pretty much equivalent to a Ton in weight.

 

The term TUN eventually evolved into 'Ton' and the volume of the ships hold evolved from Tunnage to Tonnage.

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1 hour ago, peterboat said:

Shame, but I might know where there is a low hours 90 HP Beta for sale down in London, but the chap is away for just under 3 weeks and that will be the right money Col if you are interested?

 

1 hour ago, peterboat said:

Shame, but I might know where there is a low hours 90 HP Beta for sale down in London, but the chap is away for just under 3 weeks and that will be the right money Col if you are interested?

 

Yes be very interested, I will PM You peter

you are a star!!

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2 minutes ago, bigcol said:

 

 

Yes be very interested, I will PM You peter

you are a star!!

No probs Col, James is a friend and it would be good for him as well

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I don't keep up to date with VAT notices - life's too short, but my understandings - applicable to the buildings of houses are:-

VAT exemptions are only applicable to the initial build process (which includes whatever - not just the hull) everything else additions repairs, whatever once the 'dwelling' is completed.

Regardless of the logic of the above if anyone wants to reclaim VAT the would have to register for the NEW VAT online system - and that is becoming a nightmare because HMRC now have the ability to examine each and every invoice and WILL take action (justified or not) on anything with which they are not happy. 

Getting a 'new' - first time engine is an addition and is VATable  - endof.  

The above only applies to VAT in the course of a business - so a private sale has no VAT anyway.

 

I may have understood....

Edited by OldGoat

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