Controversial widebeam continuous cruiser

[MtB]

On 02/07/2017 at 10:53, bargemast said:

That's why I wrote in post 116 (how nice we can quote post numbers again) :  "unless HMRC is willing to supply you with a paper proof that they're happy for this boat to be VAT zero-rated".

Peter.

 

Form my own experiences with HMRC they are highly unlikely to supply such an undertaking. They will say it is for the VAT registered supplier to apply the rules and determine if the vessel qualifies. 

Then if HMRC disagree at a later date, they will go after the VAT registered supplier for the money, who in turn is entitled to go to their customer to collect the VAT.

I agree it's worth asking HMRC, but the risk is the question might set a hare running and lead to stamping out of the scam (if it is one, that is) and the OP having to pay 20% after all, and with no doubt. Perhaps he would be kind enough to update us on the result, should he decide to ask.

[bargemast]

1 minute ago, Mike the Boilerman said:

 

Form my own experiences with HMRC they are highly unlikely to supply such an undertaking. They will say it is for the VAT registered supplier to apply the rules and determine if the vessel qualifies. 

Then if HMRC disagree at a later date, they will go after the VAT registered supplier for the money, who in turn is entitled to go to their customer to collect the VAT.

I agree it's worth asking HMRC, but the risk is the question might set a hare running and lead to stamping out of the scam (if it is one, that is) and the OP having to pay 20% after all, and with no doubt. Perhaps he would be kind enough to update us on the result, should he decide to ask.

It would indeed be interesting to know if they are allowed to calculate to the top of the boat (roof-height) instead of gunnel height.

 

Peter.

[Alan de Enfield]

19 minutes ago, Matt&Jo said:

 

Ive read on another forum what some builders are doing is fitting the boat with very narrow gunwhales in order to allow the internal measurements to be measured to the roof.....not like they are already narrow enough anyhow.....

Could this potentialy loophole the situation....the company i have shown has had 80 boat orders in for the pioneer already. Hope those people are lucky enough to read this forum.

Invaluable info and as rusty had pointed out very nice of you to give me your time .

I cannot read it any other way :

If there is any 'deck' at the side of the hull .............

2.11 What about calculating the gross tonnage of multi-hulls or narrowboats?

For multi-hull vessels, each hull must be measured separately for overall length, beam and depth and the vessel as a whole must be measured.

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.

[WotEver]

36 minutes ago, Mike the Boilerman said:

Second point is check with solicitor if hmrc are entitled to collect the vat directly from you if the company goes under, and they assess vat at 20% is payable on your boat. 

Yes, a solicitor who is a specialist in tax matters could answer this, and possibly within their free initial consultation. Just because the supplier has agreed to indemnify the customer that doesn't absolve the customer from the debt to HMRC.  

4 minutes ago, Alan de Enfield said:

I cannot read it any other way :

If there is any 'deck' at the side of the hull .............

2.11 What about calculating the gross tonnage of multi-hulls or narrowboats?

For multi-hull vessels, each hull must be measured separately for overall length, beam and depth and the vessel as a whole must be measured.

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.

What constitutes a deck? A 1" gunwale, a 2" gunwale? When does it stop being a design feature and become a deck?

Maybe if the gunwale is 4" wide but sloped?

Lots of pin head dancing going on here with tens of thousands of pounds at risk. 

[Matt&Jo]

So would VAT apply if i buy it used from a broker or private seller as ive seen used ones for sale already. Perhaps they have heard of this and jumping ship quick........If HMRC go after reclaiming the debt surely the can not hunt the next owner.

[WotEver]

58 minutes ago, Matt&Jo said:

So would VAT apply if i buy it used from a broker or private seller as ive seen used ones for sale already. Perhaps they have heard of this and jumping ship quick........If HMRC go after reclaiming the debt surely the can not hunt the next owner.

If you buy it privately from an owner (as opposed to buying from a VAT registered business) then any future liability for VAT on the initial purchase would, I would have thought, rest with the original purchaser.

You buy from owner A who, as a private individual, isn't VAT registered. He sells it to you for £x. That's it, the end, you've paid him £x for his boat. If it then transpires that he should have paid VAT on the original purchase then that's between him, the builder, and HMRC. I don't see how you are involved at all. 

But... I'm not an expert, and you should speak to a tax specialist to confirm. 

[Alan de Enfield]

2 minutes ago, WotEver said:

If you buy it privately from an owner (as opposed to buying from a VAT registered business) then any future liability for VAT on the initial purchase would, I would have thought, rest with the original purchaser.

You buy from owner A who, as a private individual, isn't VAT registered. He sells it to you for £x. That's it, the end, you've paid him £x for his boat. If it then transpires that he should have paid VAT on the original purchase then that's between him, the builder, and HMRC. I don't see how you are involved at all. 

But... I'm not an expert, and you should speak to a tax specialist to confirm. 

The advice to speak to a tax advisor is the most relevant part of the post.

 

Last year I purchased a boat (privately) that did not have a 'VAT Paid' certificate - had I bought the boat into the country I would have been liable for VAT on the value of the boat AND any freight costs.

The boat was originally registered in Delaware (a boat tax haven) to a Gibralter based company, it was sold privately to an individual in Slovakia - Slovakia (at the time) had a VAT amnesty and allowed boats to pay a reduced rate of 5% VAT - apparently this was paid.

This person became seriously ill and the boat was sold by the family to a Croatian resident, but it had no paperwork.

I purchased it from the Croatian guy and when sorting out the necessary paperwork realised the RCD & VAT certificates were missing, a copy RCD was obtained from the manufacturer and a substitute VAT certificate (EU Form 'T2L') was obtained from the Croatian Customs for a 'contribution to the office coffee fund'.

Without a VAT certificate VAT must be paid at the 1st port of call in the UK by the current owner (be it new, 2nd hand or 10th hand).

I would guess (and that is all it would be) is that the VAT liability follows the boat until HMRC catch up with it - and the current owner.

[WotEver]

31 minutes ago, Alan de Enfield said:

I would guess (and that is all it would be) is that the VAT liability follows the boat until HMRC catch up with it - and the current owner

That makes as much sense as my guess so I guess all we armchair warriors can say is... go ask a specialist

[Tam & Di]

4 hours ago, Alan de Enfield said:

Without a VAT certificate VAT must be paid at the 1st port of call in the UK by the current owner (be it new, 2nd hand or 10th hand).

I would guess (and that is all it would be) is that the VAT liability follows the boat until HMRC catch up with it - and the current owner.

I think the first statement is correct - the current owner in that event would be the importer, and it would be the importer who has the Tax liability. I don't think the liability would pass to any subsequent owner though, but that is then my guess.

I'm sure I recall an early Tax case where a narrowboat owner tried to claim the roof was effectively the deck level for calculation purposes as his gunwale was almost non-existant, but it was held that in that event his steering deck (counter) was the level to be used. I can't find the reference for it though, and maybe in retrospect I made it up 

I certainly can't imagine HMRC letting this present craft get away with it for long though.

Tam

[MtB]

The barge named "Honey Street" which has been for sale on the K&A since the dawn of time looks to me like a classic example of a boat designed to be VAT 0%. A very odd looking boat.

Now, I can't find an advert or a photo anywhere. Presumably it has finally sold.

[Matt&Jo]

Ok called the company today with my man pants on and i was informed that collingwood boats were taken to court over this design in 2009 by HMRC and collingwood won the case due to........you guessed it.....or didnt lol the gunwales not being gunwales ie not safe enough to walk around the boat so by definition not a walk way. They have allowance given by HMRC to design the boat measured to the roof.

Apparantly this ruling is a public one......

[Alan de Enfield]

4 minutes ago, Matt&Jo said:

Ok called the company today with my man pants on and i was informed that collingwood boats were taken to court over this design in 2009 by HMRC and collingwood won the case due to........you guessed it.....or didnt lol the gunwales not being gunwales ie not safe enough to walk around the boat so by definition not a walk way. They have allowance given by HMRC to design the boat measured to the roof.

Apparantly this ruling is a public one......

Thanks for coming back with that - your next challenge is to find the transcript (or case number) of the court case.

[mrsmelly]

1 minute ago, Alan de Enfield said:

Thanks for coming back with that - your next challenge is to find the transcript (or case number) of the court case.

And I would expect the boat builder to have it chapter and verse and many copies printed off if you request one 

[MtB]

36 minutes ago, Matt&Jo said:

Ok called the company today with my man pants on and i was informed that collingwood boats were taken to court over this design in 2009 by HMRC and collingwood won the case due to........you guessed it.....or didnt lol the gunwales not being gunwales ie not safe enough to walk around the boat so by definition not a walk way. They have allowance given by HMRC to design the boat measured to the roof.

Apparantly this ruling is a public one......

 

In which case given the sheer amount of airtime this issue has had on this and other boating forums, you would think at least one person would have heard about this and said so, wouldn't you?

I too would be pressing them for the details. 

[Matt&Jo]

I was told to call back wednesday when the gentleman who knows all about this and where i can find the case info is back off holiday.

They seemed confident on the phone and would not confirm how they have acheived it but did say i was close with my gunwale comment.

 

They also said they will put it in writt8ng they would be liable in the event the tax man ever come hunting for the VAT....im confident they will not go under as they have just built a large 200+ space marina.

Edited July 3, 2017 by Matt&Jo

[WotEver]

Here's what the VAT man has to say...

https://www.gov.uk/hmrc-internal-manuals/vat-transport/vtrans110560

"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."

They then bitch about the decision and state:

"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."

Narrowboat World include this info in brief in a box out on page 5 of this PDF:

http://www.waterwaysworld.com/downloads/widebeam_guide.pdf

Of course, none of this addresses the 'narrow gunwales' scenario and I've singularly failed to find any reference to a court case between HMRC and Collingwood. 

[WotEver]

Hmmm... an interesting document here, claiming that a narrowboat can (just) scrape into the 15T MGW category too, but I don't know how old the article is and whether or not HMRC have since changed their stance. The appeal basically took the same approach as Collingwood regarding the gunwales not being the deck, even though they clearly link the front and rear decks. 

http://www.luxe-motor-kei.co.uk/vat.htm#VAT TRIBUNAL NARROW BOAT 15 TON

[bargemast]

I think that this VAT at zero rate is a fiddle anyway, why would people that easily can afford to have a big boat (barge) built, be exempt of having to pay their VAT.

 

While many people that are a lot less well-off have to pay this VAT, even if their boat is their only residence, it doesn't sound fair to me.

 

There was also some talking about the Dutch Barges and the VAT at zero rate, that as long as the owner had intention to live on the boat in the future, they could be bought at the zero rate, all pretty confusing.

 

Peter.

Edited July 4, 2017 by bargemast

[WotEver]

2 hours ago, bargemast said:

There was also some talking about the Dutch Barges and the VAT at zero rate, that as long as the owner had intention to live on the boat in the future, they could be bought at the zero rate, all pretty confusing.

That's what the above two links are all about. IF the boat is going to be used as a 'sole residence' and IF the calculations come out to >15T MGW then you don't have to pay the VAT. But the boat must fulfill BOTH conditions as I understand it. 

In exactly the same way as you don't pay VAT on labour or materials on a new house. 

[Alan de Enfield]

16 minutes ago, WotEver said:

That's what the above two links are all about. IF the boat is going to be used as a 'sole residence' and IF the calculations come out to >15T MGW then you don't have to pay the VAT. But the boat must fulfill BOTH conditions as I understand it. 

In exactly the same way as you don't pay VAT on labour or materials on a new house. 

The actual legislation behind the Zero VAT rating makes no mention of the vessel being used as a residence (Fishing Boats, Container ships, bulk carriers etc are all Zero VAT rated but are not someone's 'main / sole residence')

HMRC 'did a C&RT' and 'added bits into their T&Cs' that were not in the legislation.

Legally - if it meets the 15t then it is ZERO VAT rated.

(I had a Tax investigation some years ago and following that experience it won't be me taking them to task - maybe Onion Bargee would like a 'project' ?)

Edited July 4, 2017 by Alan de Enfield

[WotEver]

49 minutes ago, Alan de Enfield said:

The actual legislation behind the Zero VAT rating makes no mention of the vessel being used as a residence (Fishing Boats, Container ships, bulk carriers etc are all Zero VAT rated but are not someone's 'main / sole residence')

No, but if it was a boat for 'pleasure or recreational purposes' then it didn't fit the above category. Hence the 'residence' addition. 

At least, that's my understanding. 

[bargemast]

1 hour ago, WotEver said:

That's what the above two links are all about. IF the boat is going to be used as a 'sole residence' and IF the calculations come out to >15T MGW then you don't have to pay the VAT. But the boat must fulfill BOTH conditions as I understand it. 

In exactly the same way as you don't pay VAT on labour or materials on a new house. 

I'm happy with that, as I don't think that they make a difference in the fact that it's a small or a big house, do they ?

 

Some people that have a VAT zero rated Dutch barge live in a house, so it's not even their sole residence, but supposedly when they say that at sometime it will become their sole residence it's good enough for HMRC to allow them the zero rated VAT.

 

Colin Stone is as far as I can see using his barge for 'pleasure or recreational purposes' as he's exploring the countries on this side of the Channel, that makes it pleasure and recreation for me, but I've got nothing to do with HMRC, so it's not my problem.

But as I wrote before, I think that it's unfair for people that have a boat that doesn't reach the 15 Tonnes calculations,  for which their boat is their only residence and who aren't entitled to the zero rated VAT.

 

As soon as the boat isn't a commercial entreprise it shouldn't be zero rated (that is what I think,and that's just my thoughts).

 

Peter.

 

 

Edited July 4, 2017 by bargemast

[Chewbacka]

1 hour ago, Alan de Enfield said:

The actual legislation behind the Zero VAT rating makes no mention of the vessel being used as a residence (Fishing Boats, Container ships, bulk carriers etc are all Zero VAT rated but are not someone's 'main / sole residence')

HMRC 'did a C&RT' and 'added bits into their T&Cs' that were not in the legislation.

Legally - if it meets the 15t then it is ZERO VAT rated.

(I had a Tax investigation some years ago and following that experience it won't be me taking them to task - maybe Onion Bargee would like a 'project' ?)

as did I, and my conclusion was 'Don't mess with HMRC' unless you are on rock solid ground, and even then it's best to do it politely, mine was because I did not reply to a query because I "had failed in my statutory duty to inform them of a change of address".

[WotEver]

54 minutes ago, bargemast said:

But as I wrote before, I think that it's unfair for people that have a boat that doesn't reach the 15 Tonnes calculations,  for which their boat is their only residence and who aren't entitled to the zero rated VAT.

 

As soon as the boat isn't a commercial entreprise it shouldn't be zero rated (that is what I think,and that's just my thoughts).

I agree with your first paragraph. If the boat is going to be your sole residence then it shouldn't matter if it's a >15T Dutch barge or a <2T yoghurt pot. It's your home.

I disagree with your 2nd paragraph if the boat is built to be your home. 

Otherwise, why are houses zero rated? It's because they are someone's home (even if they later get sold to a landlord). 

[Matt&Jo]

2 minutes ago, WotEver said:

I agree with your first paragraph. If the boat is going to be your sole residence then it shouldn't matter if it's a >15T Dutch barge or a <2T yoghurt pot. It's your home.

I disagree with your 2nd paragraph if the boat is built to be your home. 

Otherwise, why are houses zero rated? It's because they are someone's home (even if they later get sold to a landlord). 

And that WotEver sums it up a treat!!!!! I will call them tommorow to find out more about this court case.........and hopefully reference to it or even a court case number........if i find all is as described my order is going in and i will be having said boat built. Exciting times ahead i hope......stressy but exciting.