VAT and sailaways

[Chris J]

Sorry if this has come up before in the last few years but seeing as the search function just doesn't work anymore I'm going to have to ask again.

Looking for some clarification on zero rate VAT. I'm about to embark on a sailaway project (the OH wants a widebeam for us and the little one when it comes) Currently looking at boat builders to make us 57x11. I'm amazed by the variation in builders that can and can't offer this size as zero rate VAT. I've read up on what HMRC deems are the requirements for a boat to qualify zero rate VAT, and have also read how some builders have managed to cheat this. What I've decided is that surely there is not really a legitimate way to achieve the minimum gross tonnage without either having no gunwales or weirdly high gunwales (something I've not seen out on the cut).. So I want to hear the buyers opinions. Seeing as HMRC is basically saying 60x12ft is basically the smallest craft that could be considered zero rate VAT, who has a bought a sailaway smaller than this and and still been VAT free? How did you upon purchase make sure that liability (should the tax man come knocking) not fall on you but on the supplier. 

Does anyone have any nightmare stories about buying a boat that you believe to be zero rate VAT then have been stung further down the line?
On a slightly different note if anyone want to share their experiences of buying sailaways, would love to hear your thoughts on boat builders, who has been great who hasn't. although maybe keep any naming and shaming to a private message! 

 

Look forward to hearing about your experiences.

 

TIA   

[Alan de Enfield]

50 minutes ago, Chris J said:

Look forward to hearing about your experiences.

Not my experience but from a website discussing VAT as applied to Liveaboard "narrowboats"

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.

[Chris J]

Well yes, this is I suppose what I'm getting at. Experience of contractual obligations, how they may have been written etc. Anything to look out for. I just want to know that if a company says its zero rate that it actually is and I'm not gonna get stitched up.

I guess the simple solution is to word my own contract (perhaps checked by a solicitor) that would make the supplier responsible. If they refuse I guess it isn't legit. 

Did I just answer my own question?

 

[mrsmelly]

7 minutes ago, Chris J said:

Well yes, this is I suppose what I'm getting at. Experience of contractual obligations, how they may have been written etc. Anything to look out for. I just want to know that if a company says its zero rate that it actually is and I'm not gonna get stitched up.

I guess the simple solution is to word my own contract (perhaps checked by a solicitor) that would make the supplier responsible. If they refuse I guess it isn't legit. 

Did I just answer my own question?

 

Hopefuly you already know that living on a boat is expensive and I would just put VAT down as one of the many expenses incured.

[Dr Bob]

5 minutes ago, Chris J said:

. If they refuse I guess it isn't legit.

 

No, not necessarily. Anything to do with HMRC is open to debate and you have already said it is a grey area. A supplier may feel they can supply VAT free but it is just a step too far to accept liability if HMRC decide an unfavourable solution. Do it within the rules so it is not a grey area.

[Chris J]

1 minute ago, mrsmelly said:

living on a boat is expensive and I would just put VAT down as one of the many expenses incured.

Fully versed in the acronym B.O.A.T yes. But when your trying to budget for something at this cost a 20% difference is very substantial. 

I'm not looking to pull a fast one on anyone, I just want to know I'm not having one pulled on me.

[mrsmelly]

1 minute ago, Chris J said:

Fully versed in the acronym B.O.A.T yes. But when your trying to budget for something at this cost a 20% difference is very substantial. 

I'm not looking to pull a fast one on anyone, I just want to know I'm not having one pulled on me.

To be honest Chris the question I would ask myself is why would HMRC not make a charge if at all possible? Any so called gray area might come back and bite you on the arse when you least expect it.

[MtB]

There is a thread on here about this where the builder gave a watertight guarantee to the buyer that if HMRC came after them for VAT on a borderline VAT-free boat the builder would pay it. About one or two years ago. Some serious searching to find that thread might save you that 20%

[Alan de Enfield]

47 minutes ago, Mike the Boilerman said:

There is a thread on here about this where the builder gave a watertight guarantee to the buyer that if HMRC came after them for VAT on a borderline VAT-free boat the builder would pay it. About one or two years ago. Some serious searching to find that thread might save you that 20%

Was that the one where that particular manufacturers boast were 20% higher priced than similar boats from other manufacturers ?

[Boaty Jo]

There is information about VAT on barges (and widebeams I think) within the DBA site ( http://barges.org/ ). You'll have to join up to see it though! (was £35)

Alternatively this may be helpful?? https://www.thefitoutpontoon.co.uk/finance-costs/vat-free-exempt/

[Chris J]

Roger that. I guess it's why 60x12 is the most popular widebeam size... It's cheaper to go big than small (not that 57x11 is by any means small)!

 

9 hours ago, Mike the Boilerman said:

 Some serious searching to find that thread might save you that 20%

I'm not looking to "save" that 20% I'm just trying to make sure that if I am buying something zero rate I don't get caught out. 

Edited February 27, 2018 by Chris J

[David Mack]

9 hours ago, Mike the Boilerman said:

There is a thread on here about this where the builder gave a watertight guarantee to the buyer that if HMRC came after them for VAT on a borderline VAT-free boat the builder would pay it. 

Assuming the boatbuilder is still in business when the VATman comes calling.

[WotEver]

19 minutes ago, Chris J said:

I'm not looking to "save" that 20% I'm just trying to make sure that if I am buying something zero rate I don't get caught out. 

My take from previous threads about this is that you can’t. Not with any cast iron certainty. 

[Tacet]

In the world of commercial property, where the VAT status is even more of a mystery than with widebeams, a purchaser will sometimes arrange for the contract to say that the price is inclusive of any VAT.  Even when there is every appearance of exemption.

[Neil Smith]

I think the builder that said there boats were zero rated built them with very narrow gunwales.

Neil

[rusty69]

There's a bit on vat on this thread (not read it, so not sure how relevant to your situation) 

 

[WotEver]

27 minutes ago, Neil Smith said:

I think the builder that said there boats were zero rated built them with very narrow gunwales.

I think, no, I know that I’d prefer to pay 20% extra and have a safe passage along the outrside of the boat. 

[Tam & Di]

8 hours ago, Tacet said:

In the world of commercial property, where the VAT status is even more of a mystery than with widebeams, a purchaser will sometimes arrange for the contract to say that the price is inclusive of any VAT.  Even when there is every appearance of exemption.

Careful you don't get the two terms "zero rated" and "VAT exempt" mixed up. Boats which are large enough to be a "qualifying ship" by the specific formula supplied by HMRC can be zero rated. They means they are sold inclusive of VAT, but the VAT amount is zero. Other items (but not boats) might be "tax exempt" - these will sold exclusive of VAT as they are not liable for it. From the point of view of the buyer they seem the same as he pays nothing in respect of VAT, but in Tax terms they are fundamentally different.

 

Tam