Sailaway boats supplied for export outside the EU

HMRC Reference:Notice 703/2 (January 2012) View Change History
 

Contents

Foreword

1.Sailaway boats supplied for export outside the European Union

1.1 What is this notice about?

1.2 What is the scheme?

1.3 What is the definition of a 'sailaway' boat?

1.4 Who can use the scheme?

1.5 Are all boat purchases eligible under the scheme?

1.6 Can direct exports be included in this scheme?

1.7 Does the scheme include boats that are taken to other Member States of the EU?

1.8 Does the scheme cover parts and accessories?

2.Information for sellers

2.1 What do I have to do prior to the boat being supplied?

2.2 What should I do at the time of sale?

2.3 What forms have to be used?

2.4 What will happen if the order is cancelled?

2.5 How do I account for VAT?

2.6 Should I take a deposit of VAT?

2.7 What do I do when I receive the certified evidence of export?

2.8 What if I receive evidence of export after I have accounted for VAT?

2.9 Can I use the scheme for supplies destined for the Channel Islands?

3.Information for buyers

3.1 How do I use the scheme?

3.2 Can I use the boat before it is exported?

3.3 What must I do if I am leaving the UK directly for a destination outside the EU?

3.4 What must I do if I am calling into another Member State before finally exporting the boat from the EU?

3.5 How do I get the deposit for VAT back?

3.6 What should I do if I do not receive the deposit back?

3.7 What if I want to re-import a VAT-free boat into the EU?

Your rights and obligations

Putting things right

How we use your information

 

Foreword

This notice cancels and replaces Notices 703/2 (January 2011). Details of any changes to those notices can be found in paragraph 1.1.

1.Sailaway boats supplied for export outside the European Union

1.1 What is this notice about?

This notice explains the procedures for zero-rating the supply of a 'sailaway' boat. It includes information that was previously contained in Notice 703/3 Sailaway boat scheme which is cancelled. The notice has been changed because UK residents can no longer purchase a boat using the scheme

1.2 What is the scheme?

It is a way for an entitled person to buy a boat for export from the European Union (EU) without paying VAT. Paragraphs 1.3 and 1.4 explain which boat purchases are eligible and who is an entitled person respectively.

1.3 What is the definition of a 'sailaway' boat?

A ‘sailaway’ boat is defined as one which is to be:

  • delivered to the buyer or their authorised skipper within the EU, and
  • exported under its own power to a destination outside the VAT territory of the EU.

1.4 Who can use the scheme?

The scheme can only be used for the private purchase of a boat for private purposes by:

  • An overseas visitor who intends to export the boat under its own power to a destination outside the EU within six months of the date of delivery. This is normally the date the boat leaves the manufacturer or supplier.

This scheme must not be used to purchase boats used for commercial purchases.

Before 1 January 2012 UK residents who intended to export the boat to a destination outside the EU could also use the scheme, but they are no longer eligible. However, UK residents may be able to purchase a boat VAT-free provided that the seller arranges the direct export of the boat to a destination outside the EU. See paragraph 1.6 and Notice 703 Exports and removals of goods from the United Kingdom for conditions.

1.5 Are all boat purchases eligible under the scheme?

No. The scheme cannot be used for:

  • Boats exported on a trailer or for exporting parts or accessories.
  • Commercial supplies. Commercial sales may still be zero-rated for VAT purposes but under different arrangements - see Notice 703 Exports and removals of goods from the UK.
  • A new boat to be taken to another EU Member State. See Notice 728 New means of transport.
  • Or boats whose final destination is one of the EU Member States listed below:

Austria, Belgium, Bulgaria, Cyprus*, The Czech Republic, Denmark, Estonia, Finland, France including Monaco, Germany, Greece, Hungary, Republic of Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, The Netherlands, Poland, Portugal including the Azores and Madeira, Romania, The Slovak Republic, Slovenia, Spain and the Balearic Islands, Sweden, and the United Kingdom including the Isle of Man.

*The European Commission in December 2003 advised that the application of the 6th VAT Directive (Directive 77/388/EEC of 17 May 1977) shall be suspended in those areas of Cyprus in which the Government of the Republic of Cyprus does not exercise effective control. From 1 May 2004 goods to these destinations continue to be eligible for zero-rating as exports.

1.6 Can direct exports be included in this scheme?

If the seller arranges delivery of a boat either on a trailer or by using a skipper employed by them to a destination outside the EU, then they must not use this scheme. If the boat is not to be used in the EU before it is exported, the seller can arrange for the boat to be delivered direct to a destination outside the EU free of VAT. For further information about direct exports see Notice 703 Exports and removals of goods from the United Kingdom.

1.7 Does the scheme include boats that are taken to other Member States of the EU?

No. Boats supplied for private use that are removed from the UK to another EU country cannot be supplied under the scheme described in this notice. For details of how they can be supplied free of VAT see Notice 728 New means of transport.

1.8 Does the scheme cover parts and accessories?

No. But parts and accessories may be supplied under the Retail Export Scheme. Notice 704 Retail Exports explains how to deal with sales made under the Retail Export Scheme.

2.Information for sellers

2.1 What do I have to do prior to the boat being supplied?

Before a boat is supplied you must:

  • ensure that the buyer is entitled to use the scheme (see paragraph 1.4)
  • ensure that the buyer intends to export the boat from the EU within the permitted six month time limit as outlined in paragraph 1.4
  • give the buyer a copy of this notice and an application form VAT 436, and
  • ensure the form VAT 436 is fully completed by you and the buyer, and Part 2 is submitted to the Personal Transport Unit (PTU) at least two weeks before the boat is delivered to the customer.

All notifications should be serially numbered in the top right hand corner and submitted to the PTU at the following address:

HM Revenue & Customs
Personal Transport Unit
Priory Court
St John's Road
Dover
CT17 9SH

Phone: 01304 664171
Fax: 01304 664179

Please ensure that notifications are correct and complete before you accept them. An incorrect or incomplete notification will be returned for correction, and this may delay the delivery of the boat.

The PTU will be pleased to provide any help or advice on the purchase of a sailaway boat.

2.2 What should I do at the time of sale?

At the time of sale you must:

  • ensure that the buyer knows that he/she must not dispose, or attempt to dispose of the boat in the EU by hire, pledge as security*, sale, gift or any other means:
    keep a separate record of the sale, and
    agree how any refund of the deposited VAT will be paid (see paragraph 2.6).

*The boat’s documents may only be used as security that is required by the finance house for the purchase of the boat. The boat must not be pledged as security for a separate purchase, for example a car, flat or house.

2.3 What forms have to be used?

You will need to prove that the boat has been removed from the EU before you can zero-rate the sale. The uses of the forms vary according to whether a boat departs to a destination outside the EU directly from the UK or via another Member State, see paragraphs 3.3 and 3.4.

The forms needed are:

Form VAT 436 Notification of VAT-free purchase of a Sailaway boat and buyer’s declaration.

Original copy 1 - copy for certification by a Customs officer
Copy 2 - Customs copy
Copy 3 - buyer’s copy
Copy 4 - seller’s copy.

Form C88 Single Administrative Document - copies 1 to 3

Copy 1 - Community transit copy where applicable (seller to take a copy for their own records)
Copy 2 - for UK Customs
Copy 3 - for certification when the boat finally leaves the EU

Form C1331 Notice of intended departure - to advise departure from the UK.

2.4 What will happen if the order is cancelled?

If, after the notification is processed, the order for the boat is cancelled by the buyer before delivery, you should immediately notify the PTU of:

  • the name of the buyer
  • details of the boat, and
  • the reference number shown on the form VAT 436.

2.5 How do I account for VAT?

You must keep a separate record of all boats sold under the scheme. The sales invoice must clearly show that the supply of the boat was made under the Sailaway boat scheme.

If you do not obtain and hold evidence to show that the boat was exported within the six month time limit (see paragraph 1.4), you must account for VAT accordingly:

  • if you have taken a deposit of the VAT due, then it should be brought to account, or
  • if you have not taken a deposit you must amend your VAT records and account for VAT on the taxable proportion of the invoiced amount of consideration you have received, for a VAT rate of 20 per cent the VAT element is calculated at 1/6.

When you amend your VAT records you must make an entry equal to the tax on the supplies concerned on the 'VAT payable' side of your account. You include this amount in box 1 of your VAT return for the period in which the time limit expires.

2.6 Should I take a deposit of VAT?

The boat is not eligible for zero-rated VAT status until you receive form VAT 436 certified by the Customs office at the place of final departure from the EU. You are, therefore, strongly advised to treat any sale of a boat under the scheme as liable to VAT until you have received the certified form VAT 436. You may wish to ask the buyer for a deposit equal to the amount of VAT, to be returned when the required evidence of export is received.

If you do not receive the necessary evidence of export you will have to account for the VAT due - even if you did not charge it at the point of sale.

2.7 What do I do when I receive the certified evidence of export?

When you receive the Customs certified evidence of export, you should refund any deposit to the buyer by the method agreed, and account for the sale in your VAT records as explained in paragraph 2.5.

2.8 What if I receive evidence of export after I have accounted for VAT?

If you later obtain evidence that the boat was exported from the EU within the permitted time limits, you can zero-rate the supply and refund any deposit and adjust your VAT account for the period in which you obtained the evidence. You should treat the transaction as a credit in your VAT records. See Notice 700 The VAT Guide.

2.9 Can I use the scheme for supplies destined for the Channel Islands?

The Channel Islands are outside the EU VAT area and therefore qualify as a final destination for boats supplied VAT-free for export. EU residents who register VAT-free boats in the Channel Islands cannot claim VAT-free temporary importation of such boats into an EU Member State. VAT is payable on these importations. However subject to their meeting the conditions for temporary importation, private persons resident in the Channel Islands may be entitled to import their own boats for their own personal use for up to 18 months, without payment of import VAT.

3.Information for buyers

3.1 How do I use the scheme?

Before purchasing the boat you should make sure that the seller operates the scheme. The seller will check that you are entitled to use the scheme and ask you to complete form VAT 436.

3.2 Can I use the boat before it is exported?

Yes, but you must not:

  • hire the boat
  • give it away
  • offer it for sale
  • use it as security, except as part of any financial arrangement for the purchase of the boat, or
  • dispose of it in any other way while in the EU.

If the boat is re-imported or returns to the EU at any time, you must inform the nearest Customs office of its arrival.

3.3 What must I do if I am leaving the UK directly for a destination outside the EU?

You must:

  • Ensure that the boat is exported within six months of the date of delivery (see paragraph 1.4).
  • Complete form C1331 Notice of intended departure.
  • Make the boat available for inspection by Customs at exportation. Where possible this should be arranged in advance with the Customs at the port of exportation. Contact details can be found in Notice 8 Sailing your pleasure craft to and from the United Kingdom.
  • Take the completed form VAT 436 and C1331 to the Customs office nearest the place of departure. Customs will retain the form C1331 and sign and stamp form VAT 436 to show that the boat has been declared for exportation. The certified form will be returned to you.
  • Return the certified form VAT 436 to the seller. If the seller has given you a stamped addressed envelope, Customs may agree to return the form on your behalf.

3.4 What must I do if I am calling into another Member State before finally exporting the boat from the EU?

You must:

  • Ensure that the boat is exported within six months of the date of delivery (see paragraph 1.4).
  • Take the completed forms C88 (copies 2 and 3) and VAT 436 to the UK Customs office nearest the place of departure from the UK. Customs will keep copy 2 of the form C88 and return copy 3, together with form VAT 436, to you.
  • Take copy 3 of the form C88 and the form VAT 436 to the Customs office at the place of final departure from the EU for certification.
  • Return the certified form C88 and form VAT 436 to the seller.

The seller should ensure that you understand that they cannot zero-rate the supply of the boat and make the refund of VAT until they have received the Customs certified documents.

3.5 How do I get the deposit for VAT back?

The seller will refund any deposit of VAT by the method that they have agreed with you. They will be able to do this as soon as they have received the certified forms VAT 436 and C88.

3.6 What should I do if I do not receive the deposit back?

If you do not receive the refund within a reasonable period of time, you should contact the seller. HM Revenue & Customs (HMRC) is not responsible for refunding the deposit for VAT.

3.7 What if I want to re-import a VAT-free boat into the EU?

If a boat that was supplied tax free at purchase is brought back to the EU it must be declared to Customs in the Member State of importation. The seller should ensure that you are fully aware of the need to make an import declaration. VAT will be payable unless some other relief is available.

Your rights and obligations

Your Charter explains what you can expect from us and what we expect from you. For more information go to Your Charter

Putting things right

If you are unhappy with our service, please contact the person or office you have been dealing with. They will try to put things right. If you are still unhappy, they will tell you how to complain.

If you want to know more about making a complaint go to www.hmrc.gov.uk and under quick links, select Complaints.

How we use your information

HMRC is a Data Controller under the Data Protection Act 1998. We hold information for the purposes specified in our notification to the Information Commissioner, including the assessment and collection of tax and duties, the payment of benefits and the prevention and detection of crime, and may use this information for any of them.

We may get information about you from others, or we may give information to them. If we do, it will only be as the law permits to:

  • check the accuracy of information
  • prevent or detect crime
  • protect public funds.

We may check information we receive about you with what is already in our records. This can include information provided by you, as well as by others, such as other government departments or agencies and overseas tax and customs authorities. We will not give information to anyone outside HMRC unless the law permits us to do so. For more information go to www.hmrc.gov.uk and look for Data Protection Act within the Search facility.

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