Paul Sylvan

The time limit for VAT refunds has been increased from 3 years under the transitional arrangements below. This would suggest to me that any ‘qualifying ship’ used residentially as outlined in HMRC Brief 38/09 and purchased since the end of the accounting period ending on 30th April 2006 should be able to benefit from retrospective Zero Rating. As I understand it the accounting periods for VAT are usually quarterly and therefore it may be possible to retrospectively Zero Rate a vessel purchased as early as 31/01/06 (i.e. the beginning of the VAT accounting period) Paul Transitional arrangements for the increase in time limits from three years to four years The time limit for adjusting returns and correcting errors, including making claims, was increased with effect from 1 April 2009 from three years to four. However, in order to ensure that accounting periods that were out-of-time on 31 March 2009 are not brought back in-time by the change, transitional arrangements have been put in place. Because of these arrangements, between 1 April 2009 and 31 March 2010 you can't correct an error made in an accounting period ending before 1 April 2006 - either by adjusting your return, or by notifying HMRC separately in writing. • For instance, on 31 March 2009 the earliest accounting period for which you can make a return adjustment correction or error correction report or claim, whether for an understatement of tax paid or a refund of overdeclared output tax, is the accounting period ending on 31 March 2006 (the old three year rule). • On 30 April 2009, the earliest accounting period for which you can make such an adjustment or claim would be that ending on 30 April 2006. • Similarly, on 31 October 2009 the earliest accounting period for which you can make such an adjustment or claim would also be that ending on 30 April 2006. • However, by 30 April 2010, the four-year time limit will have come fully into effect so that such an adjustment or claim made on that date can still go back to the accounting period ending 30 April 2006. For non-standard tax periods, you can make adjustments on your return and notify HMRC about errors in writing between 1 April 2009 and 1 April 2010 for any accounting period ending on or after 1 April 2006, subject to this transition from three years to a four year limit.

HMRC have recently sent me the updated brief below. This may be of interest to owners of qualifying craft who use their vessel residentially. Paul Revenue & Customs Brief 38/09 VAT - 'Dutch barges' and similar vessels designed for and used as permanent residential accommodation by owners Who needs to read this? Businesses making supplies of: vessels to be used for permanent residential living by the owner certain goods and services to the owners of vessels used for permanent residential living by the owner This brief also withdraws Section 4 of Business Brief 35/04 VAT - clarification of the VAT liability of ships supplied to customers who intend to use them as residential accommodation. Background 'Qualifying ships' - are zero-rated for VAT purposes. A 'qualifying ship' is defined as a ship which is not less than 15 gross tons and is neither designed nor adapted for use for recreation or pleasure. The law is set out in the Value Added Tax Act 1995, Schedule 8, Group 8, Item 1 and legal note A1(a). 'Houseboats' - are covered by a separate zero-rate. For VAT purposes, 'houseboats' are boats designed as living accommodation that do not have, and cannot be fitted with, a means of propulsion. If a boat can be fitted with a means of propulsion, it is not a 'houseboat'. The law is set out in the Value Added Tax Act 1995, Schedule 8, Group 9, Item 2. H M Revenue & Customs (HMRC) policy In the light of the High Court decision in the case of Lt Cmdr Colin Stone [2008] EWHC 1249 (Ch), HMRC are changing their long-standing policy on the liability of vessels used as residential accommodation, excluding houseboats, for VAT purposes. This case concerned the VAT liability of the supply of 'Dutch barges' acquired for the purpose of being used as a permanent residence. The High Court decided that the supply of the vessel was entitled to zero-rating under the terms of UK law, because it was designed to be lived in as a permanent home and, therefore, not designed for use as recreation or pleasure. HMRC consider that many of these and similar vessels, although designed for use as a permanent residence, can also be designed for use as recreation or pleasure and are perfectly capable of being so used. It was never the intention that UK legislation should provide for the supply of such vessels to benefit from zero-rating but, following Tribunal and Court decisions over time, HMRC have found it increasingly difficult to apply a consistent and coherent policy around the borderlines in this area. HMRC do not rule out a wider review of policy and legislation in this area. However, in the meantime, we have decided to treat Dutch barges and similar vessels that are designed and supplied for use as the permanent residence of the customer as qualifying ships and eligible for zero-rating. As vessels of less than 15 gross tons can never be zero-rated regardless of their design, the majority of narrow boats designed for permanent residential use will not meet this requirement and their supply will continue to be standard-rated. As a result of this policy change some supplies of goods and services to the owners of such vessels may also be zero-rated by suppliers. These include: repairs and maintenance of the vessel itself; this does not extend to the domestic equipment and fittings on board modification or conversion of the vessel itself provided that it remains a qualifying ship after modification or conversion; this does not extend to domestic equipment and fittings parts and equipment ordinarily installed or incorporated in the propulsion, navigation, communications or structure of a ship; this does not extend to domestic equipment and fittings Further details can be found in Notice 744C. Evidence of intention In keeping with normal rules, suppliers will have to hold evidence to satisfy HMRC that the supply is entitled to zero-rating. This may be in the form of contractual or other documentary evidence. HMRC would also advise suppliers to obtain a declaration from their customers that the vessel is to be designed for use as a permanent residence and intended for such use. We would suggest that suppliers use the format set out for the Undertaking of Use in Notice 744C, adapted as necessary where the supply is one of the vessel itself. Customers should be aware that HMRC have powers to impose penalties where false documentation is used to obtain a tax advantage. Past supplies and claims Customers who have been previously charged VAT on a supply that is now covered by this policy must approach the person who made the supply to them to obtain a refund of VAT. They should not contact HMRC as we have no legal powers to refund tax direct to customers. Suppliers who wish to claim a refund of VAT charged to customers on a supply covered by this policy must submit their claims in accordance with the published rules and subject to the normal repayment, unjust enrichment and capping criteria to HMRC. Further information For further information on houseboats please see Public Notice 701/20: VAT Caravans and Houseboats. For further information on qualifying ships please read Public Notice 744C: VAT Ships, aircraft and associated services For additional information on parts and equipment please read Information Sheet 15/07 VAT: Supply of parts and equipment for qualifying ships and aircraft. Or contact our National Advice Service Helpline on Tel 0845 010 9000, or by email, or by writing to: HM Revenue & Customs National Advice Service Written Enquiries Section Alexander House Victoria Avenue Southend Essex SS99 1BD Issued 8 July 2009 In this section Accounting Schemes Appeals Avoidance Calculating VAT Complaints Deposits Evasion Input Tax International Trade Intrastat Invoices Liability Output Tax Partial Exemption Payment Penalties Registration Returns

Hi Rob, Having followed your story over the last year, I am pleased that your ‘Webasto Nightmare’ has now finally finished and that you have had the opportunity to tell your story. Given the appalling level of service that you personally received I am still aghast that you have been prevented from naming and shaming. I wonder how many other Webasto owners have also been ‘gagged’. This kind of behaviour prevents open and honest discussion and brings both Webasto and its suppliers into disrepute. I can only hope that truth will out in the fullness of time. Paul Sylvan

Thanks for that. In my case, although we will be cruising, unfortunately I still need the car in connection with my work a few times each week. Paul

Here is the update - origionally put on this forum as a seperate post. Webasto Nightmare Update Paul Sylvan -vs.- The New Boat Co. As some of you may remember from my previous ‘Webasto Nightmare’ post on this forum, my wife and I were sold a Webasto Central Heating Unit as part of a larger boat purchase by The New Boat Company back in October, 2006. After four months of use the Webasto heater, for whatever reason, stopped working properly. Despite numerous attempts by The New Boat Company and /or their agents to repair the unit over a period of one year (Feb 2007 – Feb 2008) the heater did not improve. In February, 2008, having suffered from unreliable heating and hot water through a second winter we asked The New Boat Company to replace the heater with a different product. The company refused despite us offering to pay for any difference in the cost of an alternative product. In an attempt to ascertain the nature of the problem, Webasto UK visited our boat in December, 2007, and January, 2008, and carried out an experiment for a period of just over a month. As opposed to the normal red diesel that we had been using they asked us, for the duration of this experiment, to run the heater on white road diesel only. The heater appeared to work perfectly when run on this white diesel but when connected back up to red diesel began, over a period of time, to fail again in its ability to restart itself after its initial 30-40 minute cycle. On conclusion of the experiment, Webasto sent us a report on our heater which stated that … “The most probable cause for the high build up of carbon and reduced burner life is due to an excessive presence of sulphur and/or other unknown properties within the fuel and/or fuel tank, and is not in any way related to a Webasto product or installation issue”. In February, 2008, coming to the end of our second winter with an unreliable heating system and with The New Boat Co refusing to replace the product, we felt that a year was more than enough time for any supplier to sort out the problem. We made the decision to commence legal action against The New Boat Co. as the supplier of the goods. A Court Hearing was listed for 06 August, 2008. We stated in our Court Claim that the Webasto Heater had not been fit for purpose. The defence maintained “… that the heater supplied to the claimant was suitable to be run on red diesel”. They then went on to qualify this statement by stating “… that the problems experienced by the claimant are the result of the heater being filled with a lower grade of red diesel”. This raised the question ‘A lower grade than what?’ We were informed by The New Boat Co. at the time of purchase that we should use red diesel. We were never informed of any particular grade of red diesel that we should use, nor were we informed of any particular grade of red diesel that we should not use. [Even now, months down the line and after numerous direct requests to Webasto UK, we still have not received a detailed British Standard fuel specification for the running of this heater.] At the hearing which was at Reading County Court the judge found against The New Boat Co, and awarded us the full amount claimed along with our court costs. The Judge has agreed to send us the detailed wording of his judgment in due course. However, the reasons given at the hearing for his decision we believe are fairly represented by the following: 1) That our Webasto heater has not been fit for purpose with the red diesel that was available to us on the waterways. 2) That there had been a breach of contract in that the New Boat Co. had not informed us at the time of purchase that some red diesel on the waterways may not be suitable for the heater. ***** We believe that Webasto UK and their suppliers should as a matter of course, furnish their customers with precise written British Standard fuel specifications suitable for these heaters. As stated above, we have written to Webasto UK on several occasions recently requesting (again) this information. At the time of writing this post we have yet to receive it. However, when we do get it we’ll be sure to post it. We would particularly like to thank Roger Gunkel who has not only offered his support to us, but in addition his previous Eberspacher research provided a valuable platform from which we could focus our research and build our case. We feel that justice has been served now and hope that others with similar issues may find our experiences helpful in their search for justice. Paul Sylvan.

CONTINUOUS CRUISING? WHAT DO YOU DO ABOUT YOUR CAR INSURANCE? My car insurance which is currently with Esure is almost due for renewal. Esure and I presume many other car insurers require a fixed post code and overnight location on the insurance documentation. Esure have suggested to me that we call them whenever we move the boat in order to provide them with an updated postcode for the car. They also informed me that there may well be an administrative charge of up to £20 for each change (God help us). Are there any alternatives? For the most part we keep our car in private car parks but obviously cannot guarantee this will always be the case. We can obviously use a residential address but if we had to make a claim at some stage I am sure we would suddenly find that we were not covered. Any suggestions greatly appreciated. Paul Sylvan

Hi all, This request is particularly directed to both Gary and Colin, however, all advice is welcome. I am attempting to locate a VAT expert who would be familiar with the ‘ins and outs’ of ‘Qualifying Ship Status’. In your investigations and dealings to date with HMRC is there anyone who you would recommend. Many thanks Paul

Hi Denis, I noticed that yesterday, your post about 'invective flying about' was in reply to a post which has now been removed. As that post has now been removed, I presume that your 'invective post is a residue only and not a direct comment on my Webasto Nightmare Update. Paul

In reply to your post and your accusation that I, along with others, used ‘cheap slops’ full of dirt etc. in my Webasto heater, I conclude that you have not been thorough in your reading of my posts both on this thread and on the ‘Webasto Nightmare update’ on this forum. The New Boat Co., my supplier, took a sample of fuel from my tank for testing as did I. It was clean, red, and after being left to settle, showed neither dirt nor water contamination. It obviously hasn’t occurred to you that if The New Boat Co. had any evidence, however slight, regarding the type of contamination that you suggest, then they would have used it as the ‘perfect defence’ in the recent court case (P Sylvan versus The New Boat Co.) and thus exonerated themselves of any culpability. I have always taken great care to report my experiences in a factual and balanced way. Given that my contention, (i.e. that our particular Webasto heater had not been ‘fit for purpose’ and that there had been a ‘breach of contract’ with our supplier), was upheld in a British Court Of Law, would rather suggest that the legal system upon which this country has built itself agrees with me. I am glad that your experiences with your Webasto heater have been so positive, but there are clearly people around, including myself, who have had very different experiences to you. To refer to people as being muppets, just because their experiences don’t echo your own, is facile and unwarranted. In fact, it does rather suggest that the muppet boot should be on the other foot. I suspect that from the tone of your post, and the general lack of consideration for other people’s experiences, that you have an undisclosed agenda. If this is the case, no meaningful discourse of any sort can usefully take place. P Sylvan

Hi Colin, Thanks for that. In relation to the 20489 Tribunal, could it be that the ‘weathertight’ criteria outlined in the Merchant Shipping Act (between decks) was not pursued by HMRC because it has no relevance to an inland waterways craft which is surely only required to be weathertight to the extent that it meets the requirements of the environment for which it is designed and used. The relevant legislation that covers this I believe is the Boat Safety Scheme and presumably not the Merchant Shipping Act. If HMRC were to insist on the Merchant Shipping ‘weathertight’ criteria, it seems to me that a Tribunal may well decide that in the balance the HMRC argument is not reasonable. What do you think? Paul PS Congratulations on your case.

Hi Mike, I will let you know in due course once I have done a bit more research. I believe that there is a three year cut off for a VAT refund if due, so in your case it may be worth writing to HMRC and the NBC with a view to at least registering a claim. I don't know if this will help preserve the time limit, but it may do if things drag on - Something to think about. Maybe someone else on the forum knows the answer to this. Good luck Paul

Thanks for that Gary. I am awaiting a reply from HMRC and will post an update in due course. Paul

Thanks, Gary, for your reply and advice. Our boat is an Aqualine widebeam and I think it more accurately fits your description of a ‘fat’ narrowboat with the gunnel 1.11 metres above the bass plate. As the interior living space with its increased depth to the coach roof is only 44 feet in length, would it be correct to still consider the overall length of the boat to be 60 feet for calculation purposes? Or should I, as I suspect, do two separate calculations, the first to gunnel height across the entire length of the boat and the second from gunnel height to coach roof for the 44 foot section considering that part as a ‘break’ with its subsequent different multiplier? I know of a number of people who are in a similar situation to us and your suggestion seems a positive way forward. However, I think I need to be a little more convinced of our case before getting lots of other boaters too excited! Paul

Hi Gary, I’ve been following this topic carefully and want to thank you for the very informative and detailed posts concerning the recent court rulings relating to VAT on ‘qualifying vessels’. Because I suspect that my own particular vessel, a 60’ x 11’ widebeam (built 2006) which my wife and I live on, fits the relevant criteria for zero rating I have recently written (twice!) to HMRC requesting further information and guidance on our particular situation. They have been extremely slow in responding in detail to my enquiry and I hope that this is only due to the delays in implementing the new guidance since the latest court ruling. I am still not absolutely clear, however, as to which measurements should be used in determining the depth for the gross tonnage calculation. I have read that the measurement is from the bass plate to the underside of the gunnel (the steps) in the case of narrowboats and widebeams. However, in the Richard John Fee T/A Swiftcraft Boats court case the judgement relating to depth was that: ‘applying the de minimis principle (ignoring that which is too small to be considered relevant) and in our view the steps in this case with a usable horizontal surface too narrow to afford a safe footing are not part of the or any deck and the measurement should therefore be taken from the midpoint of the underside of the actual deck which is the top of the boat…’ In view of the above, is it your understanding that HMRC now accept the bottom to top of boat measurement as suitable for the calculation of gross tonnage, or, will they only accept the measurement to the gunnel? I presume that only the multiplier of 0.16 is allowable for vessels under 24m. Are there any exceptions to this that you know about? Once again thanks for a very informative thread. Paul Sylvan .

Hi Terry, Glad you received the Webasto burner pictures. I have just noticed on the Webasto UK website, http://www.webasto.co.uk/am/en/am_marine_3364.html that in relation to sulphur, Webasto UK are now saying: Note: The use of fuels containing high levels of sulphur, water or other contaminants may increase the service interval required Now, officially, as they say on the telly, ‘I’m confused .com!’ What do you think? Paul