Reclaiming VAT?

[Julysea]

I have been googling about the topic of reclaiming VAT on newbuild boats for living aboard full-time, but the information I can find seems totally contradictory. One boat-builder I spoke to said it was standard practice for his company to help their live-aboard customers to reclaim the VAT after the build and another said it might be possible but it was very difficult, whereas other people online seem to think it isn't possible at all. Does anyone here have any experience either way on the possibility of reclaimng VAT after building?

 

Thanks!

[by'eck]

Well a little

 

I regularly re-claimed VAT over a 10 year period under the HM R&C personal export scheme when living aboard my boat in non-EU countries. UK VAT purchases were accompanied by the dealer supplied VAT 407 form itemising the VAT paid. This was was submitted & stamped by UK customs on departure from the UK airport. They were always satisfied providing my boats location address & ticket concurred. Sometimes they did require proof of boats location so I would show them the current marina contract.

 

The form was then immediately posted back to the dealer before the flight & within a month I had a credit card refund of VAT - sometimes less a small handling charge.

 

I mention this as few people in similar situations to myself at that time seemed to be aware of it.

[blackrose]

I have been googling about the topic of reclaiming VAT on newbuild boats for living aboard full-time, but the information I can find seems totally contradictory. One boat-builder I spoke to said it was standard practice for his company to help their live-aboard customers to reclaim the VAT after the build and another said it might be possible but it was very difficult, whereas other people online seem to think it isn't possible at all. Does anyone here have any experience either way on the possibility of reclaimng VAT after building?

 

Thanks!

 

What kind of boat is it? The HMRC rules are very specific in terms of which boats are VAT exempt. If it's a narrowboat forget it.

 

It's all about gross tonnage, but it's not as simple as it seems. Despite the 15 tonne HMRC criterion, my own 33 tonne boat came out at about 12 tonnes when calculated by the HMRC method. Other NB style widebeams might qualify but they would need to have a fairly deep draught or high freeboard to gunwhale height (or combination of the two). I think most Dutch style barges could qualify for VAT zero rating.

 

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

 

The method of calculating gross tonnage is on this page.

http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_ShowContent&id=HMCE_CL_000169&propertyType=document#P48_3143

 

Edit: Am I correct in thinking that for calculating the depth of the boat HMRC will not accept the coachroof of a NB or NB style WB as the deck, and that gunwhales must be used? I know we've been through this before but it was some time ago and I've forgotten.

 

Sorry, just read this bit: For narrowboats, the measurement must be taken from the underside of the deck at the side of the vessel, rather than from the roof of the cabin. But would that also apply to NB style widebeams?

Edited October 29, 2011 by blackrose

[Tam & Di]

I have been googling about the topic of reclaiming VAT on newbuild boats for living aboard full-time, but the information I can find seems totally contradictory. One boat-builder I spoke to said it was standard practice for his company to help their live-aboard customers to reclaim the VAT after the build and another said it might be possible but it was very difficult, whereas other people online seem to think it isn't possible at all. Does anyone here have any experience either way on the possibility of reclaimng VAT after building?

 

Thanks!

 

You need to read HMRC Notice 744C very carefully. The basic requirement is that you have a qualifying ship, which must be in excess of 15 gross registered tonnes (GRT). This measurement is a measure of volume, NOT of weight as such, and is found by the formula Length x Beam x Depth x k = gross tonnage.

 

L = Length overall in metres but not including appendages not contributing to the volume of the vessel e.g. bowsprit or stern hung rudder.

 

B = Breadth in metres at widest point but not including rubbing strake (or lee-boards in a sailing barge)

 

D = Depth in metres from the underside of the deck on the middle line or at the side of the vessel to the top of the plating at the side of the keelson. This does NOT include the cabintop "conversion" on a narrowboat, i.e. in simple terms it is from the chine to the gunnels.

 

The "constant" k in the formula = 0.16 for vessels up to 24m and 0.235 for vessels 24m or greater.

 

If a ship is a qualifying ship then it is liable to VAT at zero rate. The Notice 744C tells you what sort of items may or may not come into the definition. You give the supplier a letter in a format set out by HMRC that your ship is a qualifying ship, and are (or should be) charged VAT at 0%. It should really be the supplier who does this rather than you having to try to get tax back subsequently.

 

It is effectively impossible for a narrowboat to comply with the GRT requirement. A wideboat/barge of about 70' x 10' x 4'6" (22m x 3m x 1.5m) does, if I've got my sums right. After that it also has to be your sole/principal place of residence.

 

Colin Stone of the DBA and who sometimes posts on here took HMRC to a tribunal to establish that zero rating was applicable to a residential craft, whereas it had previously been applicable to commercial vessels.

Edited October 29, 2011 by Tam & Di

[blackrose]

It is effectively impossible for a narrowboat to comply with the GRT requirement. A wideboat/barge of about 70' x 10' x 4'6" (22m x 3m x 1.5m) does, if I've got my sums right.

 

 

So the depth of Dutch style barges and widebeams are also measured up to gunwhale height (not roof) - the same as narrowboats? I can't find where it says that - is it a possible loophole?

Edited October 29, 2011 by blackrose

[Tam & Di]

So the depth of Dutch style barges and widebeams are also measured up to gunwhale height (not roof) - the same as narrowboats? I can't find where it says that - is it a possible loophole?

 

The HMRC Notice that you link to says: Depth measured vertically from the midpoint overall.

 

The upper calculation point will be:

 

* for a decked vessel - the underside of the deck on the middle line, or (if there is no deck on the middle line) the underside of the deck at the side of the vessel

* for an open decked vessel – the top of the upper strake or gunwale

 

I suppose if you had a boat built with steel sheets extending in one piece from the baseplate to the roof, with no break for any gunwale of any kind, you might be able to try it on. I'm sure though that even then, if you had some sort of steering platform equating to a counter at a lower level they would argue that to be the effective "Deck" point. The only sort of vessel that comes immediately to mind where you step out of the hull directly onto the "roof" with no form of gunwale at all is a submarine

[Albion]

So the depth of Dutch style barges and widebeams are also measured up to gunwhale height (not roof) - the same as narrowboats? I can't find where it says that - is it a possible loophole?

 

I think it might have been a loophole that boat builders used at one time to frig the calculation so that long narrow boats could 'theoretically' comply with HMRC's tonnage calcs but HMRC soon cottoned on to the abuses and IIRC it caused them to stop any allowance for 'cruising' boats in about 2005/6 ish as they considered that any boat that was used for 'cruising' was used for 'recreation and pleasure' (not allowable). They continued to push this distortion of the law, preventing any boat that wasn't strictly commercial from having the VAT zero rating.

It was Colin Stone's successful appeal to the VAT Tribunal (supported by the DBA IIRC) that opened the first crack. Subsequently HMRC still tried to resist the correct interpretation of the law until notice of Tribunal appeals appeared on the horizon from Sagar (quite a few Sagar customers contributed to a fighting fund and we <under the Sagar banner> employed a solicitor and took advice from the barrister that had fought the Stone tribunal). I think Piper Boats were also starting an appeal, but I may be wrong; I know that one of their customers was. When HMRC realised that the dam was cracked and that they would lose any further tribunals they backed off to some extent and now, as Tam has already indicated, if you have a qualifying ship which is equipped to be lived on permanently and you sign a declaration about your intention to live full time on it, you get a zero rate VAT applied.

That's the best of my recollection anyway.

Roger

[Tam & Di]

So the depth of Dutch style barges and widebeams are also measured up to gunwhale height (not roof) - the same as narrowboats? I can't find where it says that - is it a possible loophole?

 

I don't think you'd get far with that argument, as I said above. However I've just noticed that in clause 2.9 a hovercraft is not subject to GRT limits, so a residential hovercraft would be a qualifying ship, without regard to size. Can you modify your wideboat in any way? You could fit some sort of skirt around it and a couple of kitchen fans pointing downwards and claim it is a (unsuccessful) prototype.

[Julysea]

Thanks everyone, that's very helpful. I;'ll do the calculations to see if our 69ft x 11ft widebeam qualifies. Our boat-builder definitely said it was something which had to be claimed back afterwards using some kind of paperwork which they would endorse for us. We'll definitely give this a try now!

[Tam & Di]

Thanks everyone, that's very helpful. I;'ll do the calculations to see if our 69ft x 11ft widebeam qualifies. Our boat-builder definitely said it was something which had to be claimed back afterwards using some kind of paperwork which they would endorse for us. We'll definitely give this a try now!

 

 

Do the calculations, as you say. From the figures you give it will be close and will depend upon the depth of the hull from the lowest point of the inside of the base plate to the underside of the gunwale. If it really is 69' x 11' that means the depth of side must be at least 4'5" - the saving might make it worth while jiggling the size you order to make it come at >15tonnes.

 

Assuming it comes out at over 15 GRT he is definitely WRONG. He must sell it to you at 0% VAT. It is not up to you to pay the tax and then somehow try to get it back. It makes no financial difference to him, except that if you pay it to him he has use of your money until he passes it on to HMRC. However his VAT returns to the tax man will be wrong. I'll see if I can find the wording of the declaration recommended by HMRC that you give to your supplier. Tell him to check with his VAT office if he still insists you have to pay it first.

 

Edit to add the form of declaration recommended by HMRC in their Notice 744C (Link to that Notice was in an earleir post)

13.2 Suggested format of the declaration of status of a ship or aircraft

 

We confirm that the [*ship/aircraft] being supplied is a qualifying [*ship/aircraft] within the meaning of the VAT Act 1994, Schedule 8, Group 8 and the conditions set out in HMRC’s Notice 744C are fulfilled.

 

[Details of Ship or Aircraft]

 

We undertake to advise you immediately should this change before the time of supply and to pay you the VAT properly due.

 

NOTES

 

1. *- delete which is not applicable.

 

2. The customer's name, address and VAT registration number (where appropriate) should be quoted on all declarations.

Edited October 30, 2011 by Tam & Di

[blackrose]

Thanks everyone, that's very helpful. I;'ll do the calculations to see if our 69ft x 11ft widebeam qualifies. Our boat-builder definitely said it was something which had to be claimed back afterwards using some kind of paperwork which they would endorse for us. We'll definitely give this a try now!

 

Assuming your baseplate to gunwhale depth is no more than 4ft (1.21m) I calculate your boat at 13.63 GRT.

 

21.03 x 3.35 x 1.21 x 0.16 = 13.63

 

To qualify for zero rating your baseplate to gunwhale depth would have to be at least 1.33m (about 4' 4 1/2")

 

Edit, I've assumed your boat is hard chined with a flat baseplate? If not you may be in luck as it will have a deeper draught.

 

Double edit: It's all bollocks though isn't it? What on earth does the draught of a boat have to do with value added tax? If you live on a boat of any dimensions why should you pay VAT on it? House buyers may pay other taxes, but they don't pay VAT (or not) depending on the size of the house they buy do they? I only earn about £12k/year and I've had to pay about £10k in VAT for my home from my savings because it only has a shallow draught - this country is ridiculous!

Edited October 30, 2011 by blackrose

[Julysea]

Assuming your baseplate to gunwhale depth is no more than 4ft (1.21m) I calculate your boat at 13.63 GRT.

 

21.03 x 3.35 x 1.21 x 0.16 = 13.63

 

To qualify for zero rating your baseplate to gunwhale depth would have to be at least 1.33m (about 4' 4 1/2")

 

Edit, I've assumed your boat is hard chined with a flat baseplate? If not you may be in luck as it will have a deeper draught.

 

Double edit: It's all bollocks though isn't it? What on earth does the draught of a boat have to do with value added tax? If you live on a boat of any dimensions why should you pay VAT on it? House buyers may pay other taxes, but they don't pay VAT (or not) depending on the size of the house they buy do they? I only earn about £12k/year and I've had to pay about £10k in VAT for my home from my savings because it only has a shallow draught - this country is ridiculous!

 

Yes, that's my calculations too, unfortunately the boat is already almost finished as when I looked into this before ordering, I couldn't find this formula, so we'll have to go with what we've got and we're just checking with the builder what that hull to gunnel measurement is. I calculate that if it's over 135cm then we qualify, and if it's under we don't. Not sure how likely it is to be over as it's a flat-bottomed steel hull.

 

It is all bollocks, yes, this will be our only home and I don't see why we should pay VAT on it, it's not a luxury item to have somewhere to live!

[Tam & Di]

Yes, that's my calculations too, unfortunately the boat is already almost finished as when I looked into this before ordering, I couldn't find this formula, so we'll have to go with what we've got

 

It's a pity builders are so unaware of things like this. It would be rather sickening to discover that if you'd only gone for something say 6" wider it would have cost you less than having to pay VAT - more space for you, and the builder would make a bit more money too.

[Julysea]

Turns out that final measurement is only 113cm so we dont have enough GRT to qualify for 0% VAT

[colin stone]

The NB roof was used, but a bit of a loop hole. For the roof to be the deck, all below has to be watertight - definition of upper deck is that below is watertight and above weather tight. Not many NB windows are watertight - or possibly weather tight!!

 

There are a couple of fiddles to make it work. Have a V bottom, that will increase the moulded depth. Have a break - is a section where the hull sides continue straight up - perhaps at the stern. The volume of a break has a more generous 0.235 tonnage factor rather than 0.16.

[Paul John]

The NB roof was used, but a bit of a loop hole. For the roof to be the deck, all below has to be watertight - definition of upper deck is that below is watertight and above weather tight. Not many NB windows are watertight - or possibly weather tight!!

 

There are a couple of fiddles to make it work. Have a V bottom, that will increase the moulded depth. Have a break - is a section where the hull sides continue straight up - perhaps at the stern. The volume of a break has a more generous 0.235 tonnage factor rather than 0.16.

 

Breaks seem quite complex to design into the boat in a way that will both comply with the VAT Notice 744C (which seems to impose more restrictions on breaks than in the Merchant Shipping Acts) and be aesthatically pleasing. But the good news is that the tonnage factor is actually 0.35 - which could make a lot of difference.

 

What intrigues me is how the restrictions that the revenue are purporting to impose in the current VAT Notice 744C on measuring the deck position on a narrow boat, and excluding height to the cabin roof, fits with the Tribunal decision in Switftcraft Boats (20489, released 30 November 2007) which specifically decided this point.

 

For reference, the factor is in section 2.12 of VAT Notice 744C:

"2.12 What if my ship has a break in the line of the deck?

 

A break is a raised portion of the deck that extends from one side of the ship to the other. Cabins, wheelhouses, hatches and erections above the deck are not breaks.

 

If the ship does have a break, the mean length, breadth and depth should be multiplied together with a factor of 0.35. This resultant figure should then be added to the gross tonnage when calculated using the formula given in paragraph 2.10."

[colin1325]

Hi my wife is disabled could we claim vat back on a new boat narrow or otherwise colin

[Drayke]

If you check out http://newandusedboat.co.uk/new-boat-stock.php?boatID=146 on their web site they will sell you a 60 x 10 at (* Prices shown as 'ex VAT' are available for sale at the price shown for residential use only). Just click on a picture and underneath you will find this statement, so it must be possible to get the vat back on a 65 x 11. You will need to click on 'new boats in stock'

Edited October 29, 2016 by F DRAYKE

[LoneWolf]

Hi my wife is disabled could we claim vat back on a new boat narrow or otherwise colin

 

Possibly, if both the boat and the disability qualify

 

Heres the HMRC helpsheet:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/419414/Disabled_Helpsheet__Goods_-final_1___2_.pdf

which specifically mentions boats

 

"Boats: You won't have to pay VAT if you buy a boat which is designed or, before it’s sold to you or imported, has been substantially and permanently adapted for use by a disabled person. An eligible boat will include many features specifically for disabled people such as specialised washing and lavatory facilities, wheelchair clamps and specialist steering facilities. Your supplier’s responsible for determining whether an eligible boat’s being supplied."

 

 

heres the HMRC 'front page' on the subject

https://www.gov.uk/financial-help-disabled/vat-relief