PLEASURE CRAFT AND THE SINGLE MARKET

(The following piece grew in stages. First a short explanation of the new EC regulations, based partly on an RYA leaflet, caught my eye in a recent Royal Cruising Club newsletter. I would like to thank Christopher Buckley, until very recently Honorary Secretary of that Club, for permission to reprint it. A few additional thoughts were prompted by the Yachting Monthly article mentioned by him and by the Editorial in April's Practical Boat Owner. Again, many thanks).

With a few questions still unanswered I decided to go direct to the fount of all wisdom -- in this case the Dover Customs Yacht Team, whose address and telephone number appear below. The concluding part is based on their verbal replies and their leaflet PLEASURE CRAFT AND THE SINGLE MARKET.)

On 1st January 1993 the European Community became a single market. The result of this historic removal of trade barriers is that all EC residents will enjoy free movement, without internal customs barriers, for themselves and their boats provided all due taxes have been paid somewhere in the EC.

Having said that, it is not quite so simple as it sounds, particularly in the transitional period. The RYA have produced leaflets on the subject and the yachting press have had several articles (see particularly Yachting Monthly March 1993, page 30). From this it is evident that it is highly desirable, where applicable, to obtain a VAT Status Certificate as explained in the following extract from the RYA leaflet on the subject:

Applying for a VAT Status Certificate

EC tax law now treats the ending of a period of temporary importation of a boat as a VAT chargeable event. But tax shall not be charged if all due taxes had been paid on the boat in a Member State before 1st January 1993, or if the boat was first used before 1st January 1985, or if the tax due is insignificant. (See Note 1)

Owners of tax-paid boats kept abroad in the EC at the end of 1992 will therefore need some means of showing the tax status of their boat. HM Customs and Excise is willing to deal with applications for the issue of a single document confirming that it regards a boat as tax-paid in the UK, notwithstanding that the owner does not possess a clear VAT receipt.

The single document confirming tax status will be Copy 8 of the multi-part Form C88 (known as the Single Administrative Document or SAD) which is used throughout the EC in connection with the movement of goods.

Procedure for the issue of a SAD

Copies of the form and guidance notes for its completion are available from: Dover Customs Yacht Team, PO Box 1993, DOVER, Kent CT16 1AQ. Tel: 0303 850607. (See Note 2)

Application on the ground that a boat is more than eight years old

Owners claiming exemption from tax on this ground will need to produce evidence of their boat's age to the customs authorities in the Member State of temporary importation, not to HM Customs and Excise. Owners of boats registered in the traditional way, under Part 1 of the 1894 Merchant Shipping Act, can easily show the age of their boat by production of the Registration Certificate to foreign customs. (See Note 3)

Registration certificates issued by the Small Ships Registry do not show the date when first registered, and registration must be renewed every five years. Owners of SSR registered boats over eight years old will therefore need to produce other evidence of the boat's age. (See Note 4)

And a few more points not covered above

Foreign members will be glad to hear that the above VAT rules apply only to EC residents -- a non-EC resident many continue to keep a yacht within the EC for up to six months each year under the old Temporary Importation arrangement without being liable for tax. However `within the EC' means just that -- movement from one member state to another at the end of the six months will not avoid liability. Additionally (and I can do not better than quote the official wording) `If, while it is in EC waters, the yacht is in any way put at the disposal of a person who is resident in the VAT territory of the EC, the TI relief is invalidated and import VAT will become payable'.

Incidentally, the EC currently comprises Belgium; Denmark; France; Germany; Greece; Ireland; Italy; Luxembourg (an unlikely landfall!); Monaco; The Netherlands; Portugal, including the Azores and Madeira; Spain, including the Balearic Islands but NOT the Canaries; and the United Kingdom, including the Isle of Man but NOT the Channel Islands. Neither are Gibraltar and Malta part of the EC for VAT purposes.

The maximum period for Temporary Importation is clearly defined as six months in any twelve month period, but this applies only to yachts owned by non-EC residents. Temporary Importation is no longer open to EC residents, though if a yacht of dubious VAT status is already in another member state under a TI arrangement it will be allowed to stay there, VAT-free, until the six month period has finished. It therefore appears that from now on EC residents may be asked to produce evidence of tax-paid status on arrival in another member state or, presumably, on our return home.

Thus there seems much to be said for getting a SAD made out for any yacht likely to cruise abroad during the next few years. Apparently the hope is that by 1995 or so all boats will have been checked, one way or another, allowing formal documentation to be dropped. However, as one familiar with the reverence some nationalities show towards their paperwork (did I hear `Portugal' whispered?) I shall believe that when I see it.

I did uncover one loophole which could affect those currently abroad when they re-enter the EC. For some reason it is only possible to get a SAD for a yacht which was in EC waters (or presumably on EC hardstanding!) on 31st December 1992 -- if you were sunning yourself in Cape Town or Bequia on that date you cannot apply for a SAD in advance, ready to present to the officials in Horta or wherever on your return to the EC.

One final point which doesn't seem to have been stressed elsewhere -- there is NO CHARGE for getting a Single Administrative Document made out. Just the postage.

Note 1. The UK Customs and Excise will regard as `insignificant' any boat worth less than £4000, a limit which is set nationally and may vary throughout the EC. Note also that this is the current value of the craft itself, not the amount of VAT due.

Note 2. Originally the Dover Customs Yacht Team were to operate only until April 1993, but that was before officialdom realised what a hydra had been created. On 2nd April I was told that there was `no definite date set for disbanding' -- they certainly expected to be functioning until at least the end of this season.

Note 3. Two points here. Firstly, the exact wording is `has been in use as a pleasure craft since before 1st January 1985'. Secondly, contrary to the statement at the end of the first sentence, the Dover Customs Yacht Team told me that they could indeed issue a Single Administrative Document claiming exemption 25-year-old Wrestler on grounds of age. (What it seems they cannot do is issue one for a UK-owned boat already under a Temporary Importation arrangement in another member state.) I shall certainly apply -- it's so much easier to have the specific document that foreign officials want to see, rather than having to explain in Greek, Portuguese or whatever the significance of miscellaneous `evidence'.

Note 4. Eg: ship's logs, records of surveys, insurance documents, receipts for berthing or repairs etc. Even more complicated to explain, and therefore extra reason for carrying a SAD.