|HMRC Reference:Notice 703/2 (January 2012)||View Change History|
This notice cancels and replaces Notices 703/2 (January 2011). Details of any changes to those notices can be found in paragraph 1.1.
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
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.
A ‘sailaway’ boat is defined as one which is to be:
The scheme can only be used for the private purchase of a boat for private purposes by:
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.
No. The scheme cannot be used for:
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.
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.
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.
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.
Before a boat is supplied you must:
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
St John's Road
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.
At the time of sale you must:
*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.
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.
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:
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:
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.
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.
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.
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.
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.
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.
Yes, but you must not:
If the boat is re-imported or returns to the EU at any time, you must inform the nearest Customs office of its arrival.
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.
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.
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.
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.
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