British yacht house owners with boats moored within the Mediterranean have been thrown a short lived lifeline after the UK authorities delayed plans to power them to pay a double tax invoice on their vessels after Brexit.
Complex customs guidelines meant house owners of boats moored within the EU for not less than three years must return to UK waters earlier than New Year’s Day — or pay the VAT twice.
However, after the Financial Times contacted HM Revenue & Customs, the federal government publicly introduced it had pushed again the date by which boats would want to return to the UK to keep away from paying VAT once more to December 31 2021.
British leisure boats can journey freely in EU and UK waters with out paying customs duties if VAT has already been paid on the boat within the EU. But this may finish after the transition interval on the finish of this yr.
The quantity of VAT yacht house owners may face runs into 1000’s of kilos, relying available on the market worth of the vessel when it returned to the UK.
Ruth Corkin, VAT director at accountants Hillier Hopkins, mentioned for instance that house owners of a yacht price £250,000 — which had already paid £50,000 VAT previously — could be confronted with one other tax invoice of £40,000 on their return to the UK with the boat if it was now price £200,000.
The Royal Yachting Association, the nationwide physique for leisure and aggressive boating, has been lobbying the tax workplace for a three-year extension to the reduction.
Howard Pridding, director of exterior affairs on the affiliation, welcomed the choice however mentioned the extension was not “long enough” as coronavirus journey restrictions and winter climate would make it troublesome for individuals to convey again boats in time.
Boats returning to the UK had been on account of lose a customs reduction referred to as the “returned goods relief”. This is on the market on non permanent exports — together with leisure boats — returned to their origin nation inside a interval of three years.
The authorities mentioned: “We fully recognise that some individuals will have possessions in the EU that were exported more than three years ago. That’s why we’ve made the returned goods relief available for these possessions for a year from 1 January 2021, subject to the other conditions for relief being met.”
Ms Corkin warned that leaving a vessel in EU waters after 31 December may additionally trigger EU tax liabilities for British boat house owners.
This is as a result of the “VAT-paid” standing presently loved by British yachts within the EU solely applies to EU-flagged craft. And after the UK leaves the EU and customs union, EU authorities could search to cost VAT and obligation on the worth of the yacht.
“There may be a double whammy at the EU end if the yachts stay in EU waters,” she mentioned. “With Covid, each of the member states is going to want to fill its tax gaps and will be hunting for areas that are a quick win. And there’s the feeling that people who have a lot of money should be taxed more.”