Easing of restrictions for EU VAT paid yachts delayed

Currently, VAT has to be paid again on all EU-VAT paid yachts, based in the EU, which were purchased before 31 December 2020 and are brought into the UK

UK owners who bought EU VAT paid boats and kept them in the EU will still have to pay VAT again if they want to return their boats to the UK. Credit: Getty

UK owners who bought EU VAT paid boats and based them in the EU will still have to pay VAT again if they want to return their boats to the UK. Credit: Getty

Plans to scrap second VAT payments for EU-VAT paid boats returning to the UK are facing delays.

The Association of Brokers & Yacht Agents (ABYA) has been lobbying the British Government for changes which would allow UK owners of vessels, bought UK or EU VAT paid pre 31st December 2020 and based in the EU, to return the boat to the UK under the Return Goods Relief scheme without having to pay VAT again.

ABYA members were due to attend a presentation by Her Majesty’s Revenue and Customs (HMRC) in relation to the proposed changes to Returned Goods Relief for EU-VAT paid boats, but it was cancelled at the last minute.

A small white boat sailing into a harbour

Boat owners can only claim Returned Goods Relief if they can provide evidence that they were the person that originally exported the vessel out of the UK. Credit: Richard Langdon/Ocean Images

A spokesman for HMRC told ABYA that Ministers were ‘still considering the issue’, and that brokers and boat owners ‘should plan any journeys during the current sailing season on the basis that the current [Returned Goods Relief] rules will apply on arrival in the UK’: effectively, this means that UK citizens who bought an UK/EU VAT paid boat before the end of the Brexit transition period and based it in Europe will have to pay VAT for a second time to bring their boat to the UK.

The current Returned Goods Relief scheme only allows someone to bring their vessel back without paying VAT if they can provide evidence that they were the person that originally exported the vessel out of the UK. Originally, owners had until July 2022 to bring their boats back, but the three year condition was waived by the Government last year.

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The chairman of ABYA, Peter Norris, said the ongoing delay by Ministers was disappointing, especially as the resignation of British Prime Minister, Boris Johnson meant the issue was unlikely to be reviewed again until mid-September 2022, too late for boat owners planning to return their vessel to the UK in 2022.

He said owners who paid UK or EU VAT on boats before 31 December 2020 ‘should be entitled to bring that vessel back to the UK and not have to pay VAT on it again’, effectively double charging owners.

‘All the communications from HMRC were positive; HMRC understood that it was an issue and they were looking at it and they were hoping to be able to make an announcement at the beginning of June, but then the meeting was pulled and we are now being told ministers are still considering the issue,’ said Norris.

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‘We keep hearing about how we need to boost the UK economy and promote growth but they are sitting on a decision that is preventing that from happening because if more people brought their boats back to the UK, they’re going to generate more income as owners have to pay for berthing and annual maintenance or if they sell the boat, that will mean more money coming through the UK brokerage market,’ added Norris.

ABYA said it would be putting further pressure on ministers, once they have been appointed.

A spokesperson for HMRC said the Government had introduced a number of changes to the Returned Goods Relief (RGR) rules following representations by the marine sector about the treatment of pleasure craft returning to the UK from the EU after the Transition Period (TP).

‘HMRC has engaged with the sector on the import VAT treatment of boats purchased in the EU by UK citizens before the end of the TP and is actively considering the issues raised. HMRC will provide an update as soon as possible,’ added the spokesperson.

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