Customs warehousing

Many British citizens like to keep their boat outside the EU – perhaps the Channel Islands, or maybe the Caribbean! This frequently means that they are ex-VAT boats – in other words, they have not had VAT (or an EU equivalent) paid on them.

Similarly, some boats on which VAT has been paid may lose their VAT-paid status on being sold outside the EU.

When it comes to selling a boat based outside the EU, however, the owner may feel that he will achieve a better price or an easier sale if the boat is available for viewing closer to home.

Until now, it has been illegal to offer an ex-VAT boat for sale within the EU. VAT had to be paid when the boat arrived within the EU, together with a 1.7% duty fee in the case of boats under 12m. The owner is understandably reluctant to hand a sixth of the value of his boat over to the Government before any buyer even gets to see it. Sometimes the broker will pay the VAT and reclaim it, but this is hardly convenient, not least because the sale price is not known until the sale goes through.

ABYA has been working together with HM Revenue & Customs (HMRC) to devise a solution to this problem. Under what is known as the Customs Warehousing Scheme, ABYA has become an authorised HMRC Warehouse Keeper. The warehouse is not a single location, and in most cases will not even be a physical building: it is made up of a number of virtual warehouses or "designated Customs Warehouse sites". Brokers who apply to join the scheme register a CW site convenient for their business, such as a hoist in a marina and a small area around it, for instance, or an area inside the gate for road arrivals.

A Customs Warehouse is normally bonded – that is, the general public are not admitted. Patently, it’s not easy to sell a boat if no-one can go and see it. The new scheme allows the broker to bring the boat into the CW site, and then after processing and HMRC authorisation move it to a "Temporary Removal" site – again, a pre-designated storage area of the yard. Once here, the boat can be shown for sale, taken out for sea trial, or even taken to a boat show. Maintenance and remedial works are also permitted, but not refits.

Once a buyer is found, the sale proceeds towards completion in the normal way. When the time comes for hand-over, the boat is moved back into the Customs Warehouse area and, following processing and HMRC authorisation, will be released to the new owner. If the boat is to remain in the EU, VAT will be due and will be paid on completion with all other monies. If the boat is going back out of the EU, then no VAT is due. The broker will also charge a fee to cover the inclusion of the boat in the scheme and other costs such as shipping agent's fees.

To apply to become an authorised CW broker, contact Jane Gentry on 01730 710425 or email warehouse@abya.co.uk.