UK boaters who have kept their boat in EU waters for over three years without returning to the UK could be forced to pay UK VAT again

UK sailors who have cruised continually in Europe for over three years without returning to the UK have until the end of 2021 to bring their vessels home or face paying VAT and import duty on their boat. This will apply even if owners have already paid UK VAT.

Originally, HM Revenue and Customs (HMRC) had suggested that boaters would have to return to the UK before the end of the Brexit transition period on 31 December 2020 to qualify for Returned Goods Relief (RGR).

This decision was met with anger from many long term UK cruisers whose boats are based in Europe. Lu Heikell, who keeps her 46ft Warwick Cardinal sloop Skylax in Greece said it showed “a wholesale lack of understanding of the nature of sailing,” given the logistics of moving a boat in the winter months and the ongoing restrictions as a result of the COVID-19 pandemic.

Both the RYA and British Marine lobbied the Government to commit to a three year transitional period on RGR rather than the one year now announced.

Ann and David Berry have kept their Moody Eclipse 33 Aderyn Glas in Greece for the last 10 years. The couple bought the yacht in Poole, paid UK VAT on the vessel before cruising her through the Mediterranean to Greece. Ann said charging UK VAT a second time felt like a tax on long term cruisers.

“By making you pay VAT a second time, it is like they (UK Government) are fining you for sailing the seas. I just don’t understand how they can charge you again when you have already paid,” she stated.

Ann also questioned how the boat would be valued in order to calculate VAT.

“What baseline will be used? Will it be the value of the boat when it was made? When it was first sold? The value at the last point of sale? Or will they ask a surveyor for an arbitrary figure?”

HMRC was unable to give details of the RGR rules, but said they would be laid out before the end of the Brexit transition period on 31 December 2020.

It did confirm that RGR rules would only apply if a boat had been exported from the UK and returned within three years of export. For VAT RGR to apply, the exporter and importer must be the same person and any VAT due must have been previously paid in the UK.

For boats that have left the UK/EU prior to 31 December 2020 and return to the UK, RGR can apply subject to the boat returning to the UK within three years of leaving providing that EU VAT has been paid.

Goods that are in free circulation in the UK on 31 December 2020 will be eligible for RGR providing that EU VAT has been paid.

Currently, non-EU sailors are able to keep their boats in the EU for 18 months continually under the EU’s Temporary Importation rules before paying EU VAT. They can leave the EU and return immediately for another period of Temporary Importation as there is no minimum period to remain outside of the EU before returning.