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VAT Exempt - Collingwood Sailaway


clbrof

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Hello

I have come across a few Collingwood sailaways that I am interested in. The prices all state VAT ex. Having read lots of old threads on this forum and few others as well as HMRC sources of information on the subject; VTRANS110560, VAT Notice 744C and some past cases (won and lost by others), I feel I am still non the wiser to understanding VAT exempt.

1. How are Collingwood building their boats to increase the 'deck' height? By the same claim Aqualine uses, by making the gunwales impossibly small?

2. The residential aspect of what is required to be compliant with VAT Notice 744C I don't fully understand, the boat must be designed for living on, not pleasure/leisure etc etc. but whether or not it must be put on a residential mooring is not clear? (I remember one guy in a marina I was in specifically changing to a residential mooring to attempt to reclaim VAT on the new widebeam, I can't see where this is required by law? any one clarify or point out what I have missed?) Basically my second question is, can one 'live' on the boat or make it one's 'home' if you are continuously cruising, or must it have a residential mooring?

Thanks for any advice/information.

Edited by clbrof
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As has been said many times  before here and elsewhere if this is a narrowboat then it is impossible for it to be built to the volume and dimensions for being VAT exempt for residential use - whatever the builders may claim. If its a broad beam then it may be.

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There was a thread recently where one of the 'big widebeam manufacturers' had been found to be making false claims, and, in fact their boats did not comply (they were using the wrong calculations & did meet the tonnage) and a payment of VAT was to be required.

 

A word of warning:
It is vital as a 'Purchaser' you read all the contractual documentation regarding the purchase of any vessels and in particular VAT free vessels. There's been a case highlighted to us where a boat had been sold as 'VAT free' unfortunately on incorrect grounds which post sale lead to the HMRC correctly chasing the seller for the VAT which should have been charged. In this particular case the contract of sale placed the responsibility to satisfy any such VAT claim on the purchaser so they had to stump up.

The boat (apparently) does not even have to be 'lived on'.

http://www.thefitoutpontoon.co.uk/buying-building-canal-narrowboat-vat-free-tax-exemption-regulations-liveaboard-qualifying-vessel-widebeam.html

 

So here's the bottom line:
Provided  that the boat is not designed or adapted for recreation or pleasure at the time you buy it and so long as the gross tonnage (L x W x D (from the underside of the back deck, or gunwale if no back deck) x 0.16) works out to be not less than 15 tons the supply of the boat is zero-rated so no VAT. Simple!

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2 hours ago, Alan de Enfield said:

In this particular case the contract of sale placed the responsibility to satisfy any such VAT claim on the purchaser so they had to stump up.

Say what? Is that even legal?

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1 minute ago, Jambo said:

Well I'd certainly run a mile if I saw a clause like that but just because they added a clause in a bill of sale, doesn't make it legal.

The bill of sale is really just a 'receipt'. I think you misread it, it states the 'contract of sale'.

 

From Gov.Uk (legislation) Sale of Goods Act 1979

 

Contract of sale.

(1) A contract of sale of goods is a contract by which the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration, called the price.

(2) There may be a contract of sale between one part owner and another.

(3) A contract of sale may be absolute or conditional.

(4) Where under a contract of sale the property in the goods is transferred from the seller to the buyer the contract is called a sale.

(5) Where under a contract of sale the transfer of the property in the goods is to take place at a future time or subject to some condition later to be fulfilled the contract is called an agreement to sell.

(6) An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods is to be transferred.

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2 hours ago, junior said:

I can't tell you anything about VAT, but i cantell you that the gunnels are ridiculously narrow on Collingwood WB's and only a sparrow could walk along them.

Which is why Collingwoods claim that the deck is the roof, not the gunwales, making it much easier to achieve the required volume.

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3 minutes ago, BruceinSanity said:

Which is why Collingwoods claim that the deck is the roof, not the gunwales, making it much easier to achieve the required volume.

But HMRC specifically define the gunwhale for a canal boat - so, 'any' gunwhale at all must become the point of measurement.

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21 minutes ago, BruceinSanity said:

Which is why Collingwoods claim that the deck is the roof, not the gunwales, making it much easier to achieve the required volume.

Surely on a canal boat the "deck" is where the helmsman stands.  Only if you have an entirely enclosed boat where there is no well deck or cockpit could you argue the deck is the roof.  

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The Zero rated vat rate for. Boats is quite clear and the roof could never be accepted as the measurement point for the formula required to achieve the 15 tone measurement. My barge is 22 x 4.05 x 1.5 under the  gunwhale and by filling in a 744c form I can get certain things article at zero rate. 

When we ran big Northwich and Woolwich boats they just made the old 15 ton rule but only just due to their high sides and we got repair work done vat zero. 

David

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  • 3 years later...

Im digging into this and it does seem that a number of boat makers have liasised with HMRC to get the shell VAT exempt. The next question i have is what else becomes VAT exempt on the same vessel. One school of thought is that is the buillder is VAT registered then most of whats fitted can be VAT exempt? If the builder/fit out person isnt VAT exempt, can you submit it yourelf?

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8 hours ago, TonyL_UK said:

Im digging into this and it does seem that a number of boat makers have liasised with HMRC to get the shell VAT exempt. The next question i have is what else becomes VAT exempt on the same vessel. One school of thought is that is the buillder is VAT registered then most of whats fitted can be VAT exempt? If the builder/fit out person isnt VAT exempt, can you submit it yourelf?

Maybe you could post links to your research showing that a group of builders have HMRC agreement to VAT Exemption and what the build criteria are.

 

It is not possible to make a NB that meets the requirements, although by building a 'distorted' WB with very high gunwales it is possible.

 

If buying an alleged VAT 'exempt' hull / boat read the small print very carefully.

 

If the builder is found to have falsely claimed it is Zero rated (they are not exempt) then the builder is legally required to repay HMRC the unpaid VAT content if found to be non-compliant.

There have been a number of examples where a builder has happily said "no problem I can build you a zero rated boat" and on investigation the HMRC have found they don't comply, on demanding the VAT payment, the builder has shown them the contract signed by the purchaser agreeing that if the boat is subsequently found to be non-compliant that they will pay the VAT & absolving the builder of all responsibility.

 

The criteria for Zero Vat are readily available and you can work out for your self if the boat is truly likely to be Zero-rated.

 

From "The fitout pontoon"

 

This is how it works:

  • 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.

The HMRC formula for calculating gross tonnage for vessels of less than 24m in length is as follows.

L (m) x B (m) x D (m) x 0.16 (see below for HMRC definitions of L,B & D)

HMRC then go on to specifically define the D measurement for canal boats and this is measured from under the top of what we know as the gunwale to the base plate.

As an interesting example, take ‘Panache’ the widebeam boat featured on our build diary of a huge 69’ long (L) x 11″ beam (B) with a height of 46” (D).

Let’s work out the calculation by first converting the imperial measurements to metric so we have:

21.03m x 3.35m x 1.16m = 81.35 x 0.16 = 13.01 gross tons… Not a qualifying vessel.

So here’s the interesting part in order to get a boat even of this size to qualify the standard (D) measurement would need another 190mm adding giving a (D) measurement of 1.35m. See the revised calculation below:

(21.03m x 3.35m x 1.35) = 95.10 multiplied by 0.16 = 15.21 gross tons, a qualifying ship.

Calculations used by HMRC to establish if a canal boat can be sold VAT free

So here’s the bottom line…

Provided  that the boat is not designed or adapted for recreation or pleasure at the time you buy it and so long as the gross tonnage (L x W x D (from the underside of the back deck, or gunwale if no back deck) x 0.16) works out to be not less than 15 tons the supply of the boat is zero-rated so no VAT. Simple!

Many canal boat builders are now offering specially designed wide beam craft with higher gunwales that give live-aboard boaters the opportunity for VAT savings.

Misconceptions regarding VAT exempt vessels & residential usage…

There is no legal requirement that a VAT-free vessel be designed as or even used as a residence. Any conditions in HMRC’s Notice 744C (‘Ships, aircraft and associated supplies’) which go further than the statutory provisions are of no legal force. There is no legal justification for imposing an additional condition of permanent residential use.

Edited by Alan de Enfield
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7 minutes ago, Athy said:

Most of them would surely be too wide, wouldn't they?

Over a dozen have made it up to Onley and a number (unknown to me) have made it to Barby. I am wondering if the higher gunwales will make that impossible ...or possible with damaged bridges?

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A "qualifying ship" is not VAT exempt, it attracts a VAT rate of 0%. There is a huge difference.

Maintenance, docking and bits to make the ship work (as in pumps, heaters, engine etc) carry a rate of 0%, fridges, furniture, carpets etc don't.

Edited by Loddon
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8 minutes ago, Loddon said:

A "qualifying ship" is not VAT exempt, it attracts a VAT rate of 0%. There is a huge difference

Indeed as I said earlier :

 

 

57 minutes ago, Alan de Enfield said:

If the builder is found to have falsely claimed it is Zero rated (they are not exempt) then the builder is legally required to repay HMRC the unpaid VAT content if found to be non-compliant.

 

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23 minutes ago, Dr Bob said:

Over a dozen have made it up to Onley and a number (unknown to me) have made it to Barby. I am wondering if the higher gunwales will make that impossible ...or possible with damaged bridges?

I remember seeing a few last time we were up that way (last year, though it seems a lot longer ago), but assumed that they had been craned or slipped in at the marinas.

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18 minutes ago, Athy said:

I remember seeing a few last time we were up that way (last year, though it seems a lot longer ago), but assumed that they had been craned or slipped in at the marinas.

Nope, I think all but one at Onley were sailed up here....slowly.

  • Greenie 1
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17 minutes ago, Dr Bob said:

Nope, I think all but one at Onley were sailed up here....slowly.

Is "Onley" the marina which was first known as "Dunchurch Pools", or vice versa?

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