- Get your boat back to the UK by 31 December 2020 to avoid import duty, advise RYA and British Marine
- Owners bringing boats back to the UK from the EU next year may pay VAT twice
- Used boat market will be thrown into turmoil if the Government doesn’t act now
- Customs bosses do not understand the sailing market and are failing to properly consider any of the issues raised, RYA and British Marine warn
The two organisations warn that UK leisure boaters face a choice between being hit with potentially thousands of pounds in extra costs, or their boat being stranded in the EU after the end of the Brexit transition period, unless the Government acts quickly.
The RYA and British Marine have been meeting with HM Revenue and Customs (HMRC) for more than three years to ensure that leisure boaters are not left out of the the Returned Goods Relief (RGR) initiative. However they now understand that the Returned Goods Relief will be available only for goods that return to the UK within three years of export.
So after the transition period, all boat owners whose boats have not been in the UK in the last three years, will pay VAT for a second time if they want to bring their boats back to the UK.
The shock news would affect thousands of boat owners resident in the UK who keep their boats in EU27 countries.
A recent survey carried out by the RYA showed that 917,479 recreational boaters cruise in EU27 waters.
Many of those are liveaboards operating on a shoestring, while many have their boats in EU marinas and will have had no intention of bringing their boats home for many years.
It also applies to UK-owned boats that have never been in the UK, as HMRC officials have said that a vessel needs to have been in the UK in the three years prior to the date of import. The ‘date of export’ would be the date the vessel last left the UK.
It would not affect the following:
- Boat owners who are established outside the UK, who should be eligible to visit the UK under Temporary Admission;
- UK-based boats visiting the EU for up to 18 months, as it should still be possible to take a boat to the EU without paying VAT and import duty under EU Temporary Admission;
- Boats kept in the EU27 whose owners have no intention of bringing the boat back to the UK;
- Boats lying elsewhere in the world, as these vessels have always been subject to RGR and needed to re-enter the EU or the UK within three years, to avoid being required to pay VAT and import duty.
The RYA and British Marine warn that failure to resolve issues relating to the post-Brexit implementation of RGR into UK law before 31 December would also deliver a significant hit to the second-hand boat market and marine industry in the UK, which is already fighting to recover from COVID-19.
A joint statement from the RYA and British says that “despite clear indications from HMRC in April 2019 that RGR would be incorporated into UK law, HMRC confirmed on 14 September 2020 that this would not in fact be universally available, generating significant uncertainty for UK boaters as the end of the transition period approaches”.
“This followed an unacceptable delay in HMRC clarifying their position on this issue despite monthly dialogue,” the statement said.
The RYA and British Marine are calling on the Government to commit to a transitional provision, so that a recreational craft is eligible for relief from VAT and import duty, if it returns to the UK by 2300hrs UTC on 31 December 2023.
This would give time for UK-based owners of boats currently located in the EU27 to “adjust accordingly and avoid unnecessary cost and disruption to their cruising plans”.
Commenting on the 14 September meeting with HMRC, RYA’s Director of External Affairs Howard Pridding said: “Having waited over a year for HMRC to agree to a meeting, we assumed that HMRC officials would be in a position to definitively tell us what the UK legislation will be from the end of the transition period on 31 December.
“Regrettably, the meeting gave the RYA and British Marine no confidence that there is an understanding of the recreational boating market and that any of the issues we have raised are being given appropriate consideration by HMRC.
“What we were told at this meeting contradicts what HMRC indicated in April last year.
“Had this change of policy been provided when we first requested guidance over a year ago, boat owners with boats in the EU27 would have had the opportunity to visit the UK to establish a ‘date of export’ to qualify for RGR before the end of the transition period.
“We therefore requested written clarification on the granting of a transitional period. This did not materialise and after further pursuing the matter, we finally received HMRC’s written response on the 30 September saying they are continuing to consider this issue.”
Lesley Robinson, CEO of British Marine, commented: “This is now a serious situation and it will create turmoil in the second-hand boat market.
“For UK brokers and distributors in the marine industry there remains doubt and confusion as to where they stand.
“There is a high probability that current VAT-paid boats (that will no longer have EU27 VAT Paid Status after Brexit) will be devalued and become less attractive to buyers, which will impact businesses and ultimately jobs in the industry.
“It is desperately disappointing that after having worked jointly with the RYA and having strived to engage constructively with HMRC officials that we are in a situation that is going to be very difficult to manage.
“On behalf of British Marine members, we will continue to make strong representations to HMRC, Ministers and MPs seeking to ensure that the implications are properly understood and the need for workable transitional arrangements are accepted.”
The RYA and British Marine have briefed politicians on the situation and encourage boat owners who will be affected to write to their constituency MP, explaining their own circumstances and seeking support for a three-year transition provision in RGR legislation.
The RYA and British Marine joint statement says: “On the basis of this latest information from HMRC, if a boat has not been in the UK recently and the boat owner wishes to avoid the risk of paying VAT and import duty again, then the RYA and British Marine advise that the boat visits or is returned to the UK by 23:00 on 31 December in order to record a date of export.”
Both the RYA and British Marine have issued advice to their members based on a previous HMRC response received in April 2019, whereby officials indicated that RGR would be replicated in UK law, which would allow boats that were outside the UK to return to UK waters without paying VAT and import duty.
“Until HMRC provides further information, it remains impossible to provide reliable guidance to boat owners on where best to locate their boat when the transition period ends at 23:00 UTC on 31 December 2020 to facilitate their future cruising plans,” said both the RYA and British Marine.
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