UK boat owners left stranded in Europe due to Government inaction

UK boat owners left stranded in Europe due to Government inaction

UK boaters face a choice between being hit with potentially thousands of pounds in extra costs or their boat being stranded in the EU after the end of the Brexit transition period unless the Government acts quickly, the Royal Yachting Association (RYA) and British Marine are warning today.

Following discussions with HM Revenue and Customs (HMRC) that were initiated over three years ago, the two organisations now understand that the Returned Goods Relief (RGR) will only be available for goods returning to the UK provided that RGR conditions are met and that the goods must have been exported from the UK and return within three years of export. This will mean that, after the transition period, all boat owners established in the UK whose boats have not been in the UK in the last three years will pay VAT for a second time if they want to bring their boats back to the UK.

Failure to resolve issues relating to the post-Brexit implementation of RGR into UK law before 31 December would also deliver a significant hit to the second-hand boat market and marine industry in the UK, which is already fighting to recover from COVID-19.

Despite clear indications from HMRC in April 2019 that RGR would be incorporated into UK law, HMRC confirmed on 14 September 2020 that this would not in fact be universally available, generating significant uncertainty for UK boaters as the end of the transition period approaches. This followed an unacceptable delay in HMRC clarifying their position on this issue despite monthly dialogue.

RYA and British Marine are calling on the Government to commit to a transitional provision so that a recreational craft is eligible for relief from VAT and import duty on arrival in the customs territory of the UK if it returns to the UK by 23:00 Coordinated Universal Time (UTC) on 31 December 2023. This would allow UK boat owners with boats currently located in the EU27 to adjust accordingly and avoid unnecessary cost and disruption to their cruising plans.

Commenting on the 14 September meeting with HMRC, RYA’s Director of External Affairs, Howard Pridding, said: “Having waited over a year for HMRC to agree to a meeting, we assumed that HMRC officials would be in a position to definitively tell us what the UK legislation will be from the end of the transition period on 31 December. Regrettably, the meeting gave the RYA and British Marine no confidence that there is an understanding of the recreational boating market and that any of the issues we have raised are being given appropriate consideration by HMRC.

“What we were told at this meeting contradicts what HMRC indicated in April last year. Had this change of policy been provided when we first requested guidance over a year ago, boat owners with boats in the EU27 would have had the opportunity to visit the UK to establish a ‘date of export’ to qualify for RGR before the end of the transition period. We therefore requested written clarification on the granting of a transitional period. This did not materialise and after further pursuing the matter, we finally received HMRC’s written response on the 30 September saying they are continuing to consider this issue.”

Lesley Robinson, CEO of British Marine, commented: “This is now a serious situation and it will create turmoil in the second-hand boat market. For UK brokers and distributors in the marine industry there remains doubt and confusion as to where they stand. There is a high probability that current VAT paid boats (that will no longer have EU27 VAT Paid Status after Brexit) will be devalued and become less attractive to buyers, which will impact businesses and ultimately jobs in the industry. It is desperately disappointing that after having worked jointly with the RYA and having strived to engage constructively with HMRC officials that we are in a situation that is going to be very difficult to manage. On behalf of British Marine members, we will continue to make strong representations to HMRC, Ministers and MPs seeking to ensure that the implications are properly understood and the need for workable transitional arrangements are accepted.”

The RYA and British Marine have briefed politicians on this situation. Boat owners who will be affected are encouraged to write to their constituency MP explaining their own circumstances and seeking support for a three year transition provision in RGR legislation. On the basis of this latest information from HMRC, if a boat has not been in the UK recently and the boat owner wishes to avoid the risk of paying VAT and import duty again, then the RYA and British Marine advise that the boat visits or is returned to the UK by 23:00 on 31 December in order to record a date of export.

Background
Since the 2016 EU Referendum the Royal Yachting Association (RYA) has consistently worked to quantify the issues arising out of Brexit for recreational boaters and liaised with Departments across Government to represent member’s interests. British Marine has performed a similar role representing the leisure marine industry and providing a professional information service for member companies and talking to Government on key industry issues.

Having initially approached Government three years ago, over the last 18 months both organisations have steadfastly worked in partnership to endeavour to address Brexit customs and VAT issues related to recreational boats with Her Majesty’s Revenue & Customs (HMRC), in order to provide accurate and timely advice to their respective members.

The two organisations came together having individually repeatedly asked HMRC to answer questions concerning VAT, import duty, Returned Good Relief (RGR) and temporary admission. Having quantified the issues and catalogued the questions, a joint approach was made to HMRC in September 2019 seeking a meeting to clarify issues in order to respond with definitive advice to the increasing amount of enquiries from concerned boat owners and the trade.

Both the RYA and British Marine have issued advice to their members based on a previous HMRC response received in April 2019, whereby officials indicated that RGR would be replicated in UK law which would allow boats that were outside the UK to return to UK waters without paying VAT and import duty. In order to qualify for RGR the boat has to return within three years of export. Since the UK left the EU on 31 January 2020, the RYA has repeatedly sought confirmation that the outline information provided by HMRC and published in April last year still applies.

Following repeated requests to HMRC for a meeting to understand what UK legislation will come into force after the transition period ends at 23:00 UTC on 31 December 2020, the RYA and British Marine finally met with policy officials on 14 September 2020.

During the meeting HMRC officials outlined their thinking on post-Brexit arrangements for the RGR scheme and indicated that conditions will be strictly applied to any recreational craft arriving in the UK after the end of the transition period. HMRC officials were also clear that a vessel would have to have been in the UK in the three years prior to the date of import and that the ‘date of export’ would be the date the vessel last left the UK, therefore RGR would not be available to a UK owned boat that had never been in the UK.

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