Hard Brexit and boat VAT – Treasury response

The Treasury has finally decided that if a yacht is in the European Union on Brexit day, it will not be liable for VAT if it is brought back to the UK later.

As reported before, the Commission said recently that British yachts would lose their EU VAT-paid status unless they were in the EU on the day of a hard Brexit.

If they were in the UK they would no longer have the status of union goods and would be liable for VAT on visiting the EU, so the best they could do would be to apply for temporary importation for up to 18 months.

But the UK Treasury stonewalled requests to say the reverse was not true ie that return to the UK after being in the EU on Brexit day could lead to a 20% VAT charge on the value of the boat, leading to anxiety among owners already in the EU. It made us go cool on the idea of going over to France to establish EU VAT-paid status (though only possible if there’s a big hard Brexit delay, because the engine’s still out!)

This is what the Treasury told the RYA:

“HMRC has said that it has made plans to replicate Returned Goods Relief (RGR) into domestic law in the event of a no deal Brexit. RGR allows those resident in the UK to return with their belongings (including pleasure boats) to the UK without paying customs duty or VAT as long as the items have not been changed since their departure and follow the guidance given in Notice 236: Returned Goods Relief.

The UK Government has undertaken that RGR will be available in respect of UK pleasure craft not moored in the UK on EU exit day. They may return to the UK after exit and be subject to Returned Goods Relief as long as the person responsible has evidence that the VAT was paid on the purchase of the boat in either the UK or the EU. The types of proof needed are shown in Notice 8. VAT accounted for in the UK would need to be shown in respect of vessels purchased after the date of EU exit”.

There are still loose ends. Do we have to pretend once back in the UK eg that we haven’t claimed EU-VAT status while we have been away?

Brexit petition.

Yacht owners are a tiny and unimportant issue in the big Brexit scheme of things and I certainly did not sign the petition to Parliament – link below – because of irritations over the treatment of boats and sailors.

Signatures were over a million last time I looked, and still rising so rapidly that the website kept stalling. Persevere! [6 million was the final tally].

https://petition.parliament.uk/petitions/241584

Boat in a window

Thanks to Martin Walker for these pictures of the very last example of a large Lake Geneva trading barge, which must surely be much the same type as the one in the stained glass window in London (see this recent post). They have very similar hull shape, the two masts are both well forward, and they both carry lug sails. The one shown on the window at 2 Temple Place does not seem to have a bowsprit, but that’s a detail that can be easily modified.

The stained glass window is called A Swiss Summer Landscape and was from the studios of Clayton and Bell in 1895. It is one of a pair of very large stained glass windows on Swiss themes at 2 Temple Place (formerly Astor House) on the Embankment in London. They are unusual in being close to floor level so every detail can be studied. The barge is just one of those details.

The firm was founded by John Richard Clayton and Alfred Bell in 1855 and was a prolific English producer of the revived and – for decades in the 19th and early 20th centuries – very popular art of stained glass.

2 Temple Place is open occasionally to the public for free exhibitions and for the rest of the time it is available as an up market venue for hire. This is its website. I recommend the current John Ruskin exhibition, which is on until the 22nd April 2019.

Philosopher of sailing

The letter below was published in Cruising magazine this month:

If it does not prompt a few cross letters from traditionalists in the next edition, I’ll be surprised, especially after the recent finish of the Golden Globe round-the-world race using sextants and traditional navigation – just as they did on the first race 50 years ago, which was won by Sir Robin Knox Johnston in Suhaili. It was also the race in which the sad figure of Donald Crowhurst cheated in desperation and then disappeared from his yacht.

A victorious Knox-Johnston 50 years ago

Electronics were banned in the anniversary race, though I did read somewhere that they all had to sneak in a satellite phone just in case.

If the old guard don’t complain about my letter, then things have changed more than I expected….

 

PS I know I’m more than old enough to be part of the Old Guard, but I think modern electronic navigation is wonderful, and it leaves more time for actually handling the boat.

PS – sting in the Brexit tail

Both the Royal Yachting Association and the Cruising Association now think that there is a real risk that a British boat will lose UK VAT-paid status if it is in the European Union on Brexit day, and so VAT would be payable on return to the UK.

If that happens, rushing over to France by 29 March (or whenever Brexit happens if there is a delay) to keep EU VAT-paid status is not necessarily such a good idea, unless you want to stay there permanently. Better to stay here and just apply for temporary importation whenever you visit the continent or Ireland in future.

This policy would be the mirror image of the one confirmed by the EU, that a British boat loses its EU VAT-paid status if it is in Britain on Brexit day.

The latest RYA newsletter says “We are actively seeking clarification from HMRC on the re-admission into the UK of boats lying in the EU at the time of Brexit”.

No point in us rushing over the channel until it’s sorted. We could only do it if Brexit is delayed, anyway, because the engine is out and the boat is awaiting a new one shortly.

I don’t expect a microgram of sympathy for yacht owners affected by Brexit. But it does demonstrate one small example of the kind of chaos Brexit must be creating in all sorts of different ways for thousands of activities, and especially for businesses, up and down the UK.