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Brexit latest VAT Paid Status on Recreational Craft in the event of a 'no deal' Brexit

Published on: 07 March 2019


British Marine has welcomed guidance from HMRC regarding the VAT Paid Status (VPS) of recreational craft in the event of a 'no deal' Brexit.

In the statement, HMRC has confirmed that the future customs rules for goods moving between the UK and the EU, including for arrangements relating to pleasure craft, will of course depend on the outcome of negotiations with the EU.

However, in the event of the UK not being able to secure a customs partnership deal, third country customs controls will apply to all pleasure craft moving within UK waters. Although a variety of reliefs may apply, such as Return Goods Relief.

When the UK leaves the EU, customs declarations may be required for pleasure craft which are being imported to the UK from other EU countries and export declarations will be required for pleasure craft sold to other EU countries.

Where goods are entering or leaving the UK temporarily, there will be a requirement for private owners and businesses to use either special customs procedures, such as Temporary Admission or the Carnet system. These procedures will require personal owners or traders to provide financial security to cover any potential liability for import duty. It will be for importers and exporters to decide which process will be most suitable.

British Marine’s VAT specialist, Simon Anslow of PKF Francis-Clark, has provided additional analysis of the HMRC guidance:
  • UK brokers bringing non-UK VPS vessels into the UK for sale will either have to arrange for UK import VAT and potentially duty where under 12m
  • UK VAT registered businesses bringing vessels into the UK for business use (either for resale or for own-use operation) will have to pay VAT/duty on entry BUT HMRC have confirmed that (for the foreseeable future) postponed accounting for imports will apply. This means that businesses do not pay the VAT upfront but deal with it through their VAT return, declaring the VAT on the value, but also simultaneously reclaiming that same VAT either in full (or proportionally depending on their taxable use)
  • Ex-pat UK owners that can demonstrate previous UK VPS on returning to the UK can have import VAT relieved under Returned Goods Relief (RGR) subject to the following conditions:

o Imported normally within three years of its export (although HMRC are very flexible on this – we have seen one allowed RGR after seven years)
o Imported by the same person who exported it
o The vessel has undergone no more than normal running repairs, maintenance etc (i.e. not works to increase the value)

  • Vessels brought to the UK from the EU to undergo work will be subject to Customs procedures. They would then be dealt with as current ex-EU vessels are, in that zero-rating will apply to the works provided the vessel exits the UK after the work is done but would be subject to Inward Processing Relief (IPR) procedures. Although following the changes two years ago, authorisation has become extremely onerous and lengthy, HMRC has indicated that post-Brexit and to assist businesses, it will expedite applications and reduce or even waive guarantees
  • Private vessels visiting the UK from the EU will have to observe the same rules as current ex-EU vessels – i.e. under TA. This is reasonably informal but there will be the requirement to contact the National Yacht line, file a C1331 and fly the Q flag

In response to the HMRC guidance, British Marine, with support from British Marine has compiled a list of additional scenarios which HMRC is currently reviewing.

British Marine will provide further information to members when it is available. British Marine members seeking advice on VPS can contact Brian Clark on