# importing a yacht into UK



## lagos36 (Nov 10, 2004)

I would like advice please,I am planning to buy a yacht in Florida sail it to the UK and sell it ,does anyone have any idea about VAT or import duties that have to be paid,your help would be much appreciated


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## jack_patricia (May 20, 2001)

Oh, my...

Let''s start with the basics: In which country will you register your boat when you purchase it? What nationality(ies) will the owners be? And how long ago, if ever, was the boat physically located in and registered in an EU country.

Without knowing those details, it''s difficult to answer your question.

Jack


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## lagos36 (Nov 10, 2004)

Thank you for your reply,I am planning to buy a second hand boat in Florida,so I am assuming I will have to register it there, the owner will be a British citizen and it is more than likely that the boat has never been located or registered in the EU.I hope this can help you to give me some information.John.


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## jack_patricia (May 20, 2001)

Hi, John...

To restate the question, you want to know what UK/EU tax liabilities exist should you purchase a boat not previously registered inside the EU and then sail it into the EU (most likely, the UK) with the idea of selling it.

There are several layers to the answer. First, the EU has nicely sewn up access to their brokerage marketplace from outside by establishing a Recreational Craft Directive (RCD), grandfathering every EU boat from world cruiser to derelict rowboat into the RCD scheme, and then requiring any non-EU boat being sold in the EU to become compliant with the RCD. This is a complicated issue and you would be wise to read the October (I think) issue of Yachting Monthly, wherein a British national discusses sailing his Baba 30 down the NA Pacific Coast, thru the Caribbean, and across the Atlantic to his place of birth in England, only to have HM Customs impound the boat (and threaten him with jail) because he wasn''t RCD compliant but had registered the boat in Britain at the time of purchase when back in Canada. Ian (the author) gives a nice summary of the RCD as it applies to his (and your) circumstances. In his case, he concluded he would apply for Category D RCD classification (the equivalent of lake sailing vessel) because it was the only application he could do himself, without ''experts'' that are RCD-authorized and very costly. (This is an illustration of the EU at its finest...and most typical, I''m afraid).

So...taking a boat there to sell will present you with an RCD compliance issue.

Insofar as boat ownership is concerned, if you are ''established'' outside the EU (as determined by HM Customs) and then purchased, registered, *paid tax on the purchase* and subsequently used the boat for 6+ months - and all owners have been outside the EU for 12+ months - then you might be eligible for permanent Transfer of Residence Relief (TOR) issued by HM Customs, should you subsequently enter the EU with the boat. For an explanation of this, you might want to download the C104 Application at:

http://www.hmce.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_Forms&propertyType=document&id=HMCE_CL_000306

and also read the booklet on this subject which you can download at:

http://www.hmce.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageHome_ShowContent&id=HMCE_CL_000289&propertyType=document
www.eurunion.org/legislat/VATweb.htm

Note in particular pgs. 11 and 12, which address Temporary Importantion.

This is a tedious topic to discuss. I wrote up an article on this VAT topic that you can find at http://www.svsarah.com/Whoosh/Whoosh%20Main%20Page.htm - select the Cruising in Europe choice and then the VAT article.

It is very, very easy when looking at boat prices in Europe - and most especially Britain, which sells boats at the most inflated of prices - to believe that purchasing a boat in the U.S. makes for a convincing economic argument. But if you want to take the boat back into the EU - and sell it - the tax collectors and Brussels bureaucrafts have made it very difficult for you.

Jack


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## lagos36 (Nov 10, 2004)

Hello Jack ,thank you very much for the information I really appreciate it,I had a feeling it would not be easy.John.


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## santeana (Nov 26, 2004)

Jack''s typically summed it up very well. I''d only add that there are one or two US builders who already comply with RCD Cat requirements so that might be an option you could consider - though maybe more problematic buying second hand in US. e.g. I think Island Packet and Hunter can and do build to RCD. Note that most reputable non EU builders COULD meet RCD but unless they sell directly to EU are unlikely to. Even when they sell into EU and RCD is met you need to check out each individual vessel as they may SELECTIVELY comply subject to original customer order. 

BTW RCD was launched as a method for tightening up manufacturing specs to ensure each new vessel is "fit for purpose". (Jack - just read Hal Roth''s book, thanks, and back in the 70s he was advocating the exact same independent standards authority on yacht builds). Lagos, the problem with RCD''s, let''s be charitable and say well meaning intent, is that it''s implementation has become what amounts to a restraint on trade to any boatbuilder outside the EU, (and any other product with the similar CE mandate). It also works the other way, as Jack''s YM (Oct issue) account illustrated. 

BTW VAT is likely to be ''requested'' at your first port of call in an EU country (or satellite). It''s worth studying as VAT rates vary a lot. Not up to date but not long ago for e.g. Madeira was 10% whilst UK is 17.5%. Others countries maybe, and some are, higher still.

Cheers, Ron.


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## jack_patricia (May 20, 2001)

Ron makes some good points but let me clarify a couple of them.

If the vessel is registered outside the EU, the date the vessel clears into the EU (e.g. on arrival into the Azores) is when the 18-month Temporary Importation period begins. No Customs official will be expecting to collect VAT at that point, on any non-EU boat. It''s where the boat is located when the 18-month window is exceeded that can, potentially, determine the VAT rate to be applied.

Second, the whole issue of RCD compliance among certain American-built boats is full of vapor and fog, IMO. E.g. Hunter builds boats in the UK and those boats are RCD compliant. But what about the boats built up in Alachua, up in the Florida boonies? (No offense meant to UF Gator fans...). But lets follow the concept to its natural conclusion: If Lagos could find a used boat that was affordable, built by a mfgr. who has qualified that design for RCD acceptance, was the boat sold to the original owner as RCD compliant and with the RCD paperwork? I think there''s actually some real opportunity here for a well-heeled yachtsman who wants to sail to Europe, cruise Europe and then ''turn the boat''. Buying a fully RCD-compliant boat in the States and then reselling it at a later date in the UK after a C104A is awarded might just produce a small profit. BUT the first step in such a plan is to discuss the RCD compliance process with the builder as it relates to their U.S.-built boats...and the next step is to confirm with the EU country where the resale would take place that what you receive from the U.S. builder will satisfy that country''s officials.

As an example of how the administration of the RCD rules gets in the way of the (claimed) purpose of the RCD (and how Rule Enforcement is its own industry in Europe), I met a Spanish sailor in Horta who wanted to buy an Island Packet 40, in part because it offered RCD compliance. The waiting list from European dealers was 2 years, but he could buy one in the States immediately and so he did. When I spoke to him, he had been fighting with Spanish officials for two solid years after delivery, while modifying the boat endlessly (or so he made it sound...) and still lacked final RCD compliance and therefore permission to leave his coastal waters. On the strength of a promised end date, he''d sailed to the Azores for the summer season, with the hope he wouldn''t be fined on his return.

My own view is that Hal Roth spoke in favor of universal manufacturing standards out of idealism but with some ignorance of boat manufacturing. Also, let''s remember this was at a time when GRP construction methods were pretty basic and uniform. It''s easy to be supportive of the goal he was articulating, but the devil''s in the details.

Jack


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## santeana (Nov 26, 2004)

Thanks Jack for reinforcing and qualifying from a non EU perspective.

I may have misunderstood but Lagos seemed to be purchasing on behalf of a prospective UK owner. I think he needs to careful. If handover is made on arrival in UK, VAT and RCD would become effective.

There should be no confusion with a US build meeting RCD standards. The US builder will have had to meet process standards leading to the finished vessel being given the approriate RCD Category Plate. Simply, if the boat doesn''t carry a plate then it doesn''t comply. Note the award goes to the individual vessel not carte blanche to the builder.

Interestingly, I know PSC built a one off 34 for an EU purchaser to RCD Cat A. They''ll also do likewise for other vessels, as I guess will most builders. Also, there are a number of organiations in UK, inc RYA, who will undertake retro RCD surveying (ballpark 3K GBP). But then the actual mods will need to be undertaken costing..... Ron.


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## jack_patricia (May 20, 2001)

Ron, I think we just disagree on this point:

''There should be no confusion with a US build meeting RCD standards. The US builder will have had to meet process standards leading to the finished vessel being given the approriate RCD Category Plate."

Of course, there is ALWAYS opportunities for confusion among 26 EU countries and their thousands of officials (only a portion of which will have good English reading/speaking skills). We wouldn''t want to underestimate the power of the local official and the Brussels bureaucraft.<g>

More specifically, if it''s a used boat located in North America, which is what John (Lagos) was asking about, it may not hold any RCD paperwork AND it might not even be RCD compliant. If it''s a new boat, it may/may not be RCD compliant; the builder would need to know that was a requirement at the time the boat was built.

It isn''t just about process control and the Notified Body doing its audit every other year at the factory. A builder builds boats one at a time and I''d want John to have the builder or current boat owner to prove the boat will be compliant.

Jack


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## santeana (Nov 26, 2004)

Hello Jack, Lagos and All, Happy, Healthy and Peaceful New Year to everyone wherever you are. 

Focussing on what we agree on, Jack, not sure there''s much to fuss about. I''m more optimistic than you that a new build in US SHOULD be straightforward with an agreed contract from the start. The PSC 34 seemed a good illustration. 

I agree the bigger issue is the status over Lagos'' secondhand purchase. I suspect the most likely outcome is he''ll not find a compliant US boat. Best bet might be to find an old ex EU boat but that may defeat the object. Would for me as I''ve, too, been seeking a way around the RCD web to buy a US yacht.

Cheating here a little - Jack, are you visiting the London Boat Show? Fancy sharing a Guiness if we can get together? Ron.


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## jack_patricia (May 20, 2001)

Ron, that sounds like a great invite (a beer at the show) - perhaps you can coach me on the right beer to choose. <g>

One final (probably not) cavaet, for future readers of this thread. There is a time limit as I understand it on EU boats being out of the EU and retaining their VAT-paid status. So if searching for an ''old ex-EU boat'' that is RCD compliant or grandfathered, keep in mind that it can''t have been out of the EU for eons. WRT UK boats, I believe that time period is 3 years.

Ron, why not email me and we''ll see about that rendezvous. We fly back on the 6th, presuming our airline doesn''t go belly-up and we can successfully switch airports in New York with 8 pieces of luggage...

Jack
[email protected]


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## santeana (Nov 26, 2004)

Jack, you have great gift of touching ''raw'' issues! I wasn''t aware of the clock ticking on EU boats'' VAT status when out of EU territories. You sent me scurrying to consult references! 

With the caution that it sometimes seems to depend on which document was consulted, the best I can find with ref to your important question is as follows, from HMC&E:

Q. Can a vessel lose its VAT status?
A. "If an EU VAT paid vessel leaves the EU and whilst outside the EU is sold, the new owner will...be liable to pay VAT if the vessel is brought back into the EU."

Thinking of the general situation; evidence of VAT paid doesn''t have any obvious time expiry. Indeed for vessels built before 31 Dec 84 AND in EU 31 Dec 92 they are deemed as VAT paid - permanent.

Looking at the RCD rules again; 
"the regs do not apply to any product (vessel) which is placed on the (EU) market before 16 June 96." 

"the regs do not apply to boats built in the EEA prior to 16 June 98 even if exported and subsequently re-imported after 16 June 98"

And for boats coming to EU: "The builder, his agent or person importing is responsible for such (RCD) compliance and marking" 

RCD will apply to "boats built outside EEA which were not put into service in the EEA prior to 16 June 98"

Note: I''ve been sloppy in mixing EU with EEA (European Economic Area) - the latter is correct.

Phew! Ron.


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## jack_patricia (May 20, 2001)

Others reading this thread must think we''re nuts! They just don''t realize that one of the regional pastimes in EU countries is to bone up constantly on the regs so one can find the wiggle room and protect oneself from an official who''s a poorer reader than the taxpayer.

Yes, I too can find the reference in Notice 8 about a vessel that''s sold outside the EU losing it''s VAT paid status. But I believe there''s also another guideline that, for HM Customs purposes, a vessel loses her VAT paid status if kept outside the EU for a continuous 3-year period. I can''t point to it at the moment, but I''m pretty sure I''ve seen it on one of the docs back on the boat.

I don''t know if this is an EU guideline or just one of the many ''2nd layer'' national judgements...but I''ll bet its the former. And in fact I''ve wondered how the Brits with British-registered vessels who are currently doing Circles and taking longer than 3 years are planning on dealing with this. They will probably just make a quiet re-entry into British waters...

Jack


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## lagos36 (Nov 10, 2004)

Thanks very much Jack and Ron,I had a feeling this was not going to be easy it looks like a minefield,I am going off the idea rapidly, I had a romantic idea of buying a yacht with a couple of American friends in Florida and sailing it back home in June to Wales "I have made the trip before" and then make a profit by selling it but at the end of the day I have the feeling that it might be more trouble than its worth,I think I,ll just crew back on someone else,s yacht like I did last time ,thanks very much for your help I really appreciate it.John.


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