After years of trying to work out what Brexit means for yachts, there are still some annoying issues yet to be cleared up, a month into the new regime.
The most vexed question is still VAT. Most of us do have an answer, though not the one we wanted: our boats lost their EU VAT status if they were not moored in a continental port when the transition period ended. That means that in future they can only be temporarily taken to EU countries.
But a minority is still in a potentially expensive limbo. These are the owners who have been away from the UK for more than three years, who may have to pay VAT for a second time if they return with a boat they bought and paid VAT on here.
The government has given them an extra year’s grace to get back, to 31 December, but some may not be able to manage that in time. Others have already been away, for example in the Mediterranean, for more than 3 years, so the year’s grace does not help.
[Update, February: this has now been clarified and the VAT will not apply on return from the EU no matter how long the yacht has been away from the UK, provided it was previously in the UK and VAT was paid here. However, there’s now a different sting in the tail: for some time HMRC assured UK residents that if they had bought a yacht in the EU and paid VAT in the EU before Brexit they could bring it back after Brexit and still take advantage of the year’s grace – ie not pay UK VAT. HMRC have suddenly changed their minds and VAT will now be charged immediately on return. This will catch those who bought an EU boat believing the assurance – and at least one well-known yacht owner has.]
Yachts arriving from elsewhere were also nodded through without VAT if they had been away more than three years on – say – a world cruise, but this custom and practice seems to have been withdrawn.
[Update February: it has not now been fully withdrawn but the government says it will be applied more rigorously from now on, though exactly what that means is unclear. Yachts in this situation seem to have lost out as a result of a fresh look at the rules as a result of Brexit].
In Northern Ireland, it is known that the VAT rules are going to be completely different, but the detail is as clear as the mud in Belfast docks at the moment. We have heard that NI registered yachts will be treated as EU yachts, so will have the same freedom as mainland yachts used to have to visit the Republic and the continent.
But there is no formal publication of this yet, and lots of loose ends. For example, what happens when NI yachts visit the UK? Are they liable for UK VAT if they are sold here? Or will the tax situation be a bit like the automatic dual citizenship of NI-born people, who are entitled to passports in the UK and the Republic (and through that right, citizenship of the EU)? Other questions to be resolved include the status of UK yachts visiting or moving to Northern Ireland.
Elsewhere, there are lots of bureaucratic details yet to be announced. There is talk of France, among other countries, restricting UK yachts to a limited number of ports of entry a long way apart, such as Roscoff and Brest for Brittany. That would make it difficult to plan for a cruise from the South Coast
We do now know that from January 1 the UK has reverted temporarily to the old paper and telephone reporting system. When visiting the EU and Channel Islands, we are to fill out form C1331 and post it to the Customs before leaving, setting out details of the voyage.
On return we have to fly the yellow Q flag after sailing into the 12 mile limit and then on arrival call National Yachtline, declare non-UK nationals on board and goods or animals brought back, and not disembark or lower the flag until permission is given. This is familiar stuff for anyone sailing to the Channel Islands – it has been the procedure for many years – but annoying to have to start doing it again for cruises to France, Belgium and the Netherlands. I remember years ago being anchored for hours in the River Stour near Harwich, waiting for the call to say we could go ashore in our dinghy.
Border Force is trying to put this all online but has been making a mess of it. A mini trial among 30 cruising yacht owners last year showed complete misunderstanding of how small boats have to be sailed by asking, for example, for a single precise arrival lat and long to about one second accuracy, ignoring the fact that we often have to change our minds by full degrees because of the weather. There may be a larger trial this year and a possible launch in 2022, but very little is being said at the moment.
There’s another loose end that bothers a minority of us with dual UK and EU passports but UK boats. What paperwork do we need to prove that we are resident outside the EU? If an EU resident takes a UK yacht into the EU, VAT is from this month due on arrival. A temporary import licence to cruise in EU waters is not allowed in these cases, which among other objectives stops EU residents keeping their yachts in tax havens but using them at home. (The super-rich have ways of getting round that, but not the average yacht owner.)
Arriving in a French port with an Irish passport, there are two issues that occur to me: firstly, does the harbour office know that, where VAT is concerned, nationality and passport are irrelevant, and only country of residence matters? I will be taking a printout of the French customs’ official document stating that the VAT charge on yachts does not apply to persons ‘établis hors de l’Union Européenne,’ so I can show it if necessary.
And secondly, I will take a folder of income tax, social security and council tax documents with me, as well as my driving licence. I can all too easily imagine a wrangle over the issue late at night with a French port official, so the more evidence the better.
The easy way out is to use my UK passport. But I do not want to do that because my visits anywhere in the EU would then be limited to 90 days out of a rolling 180 days and my arrivals and departures would be recorded.