HM Revenue and Customs Brief 38/11
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Issued on 21 November 2011
VAT Sailaway Boat Scheme - important change from 1 January
2012
Who needs to read this?
VAT-registered businesses who sell pleasure craft to private
individuals under the Sailaway Boat Scheme.
What is the change?
From 1 January 2012, the current concessionary treatment
which allows a VAT-registered business to zero rate the supply of a
sailaway boat to a UK resident who intends to keep it outside the
European Community (EC) will be withdrawn. From this date the scheme
can no longer be used for sales to UK residents.
However, a business can zero rate the supply of a boat to a
UK resident provided that it meets the conditions for zero rating a
direct export set out in paragraph 3.3 of Notice 703 VAT: Export of
goods from the United Kingdom. In particular, this means that the
business must undertake to export the boat themselves or make all the
arrangements for the export and obtain satisfactory evidence of export
within three months.
The reason for this change
The VAT Sailaway Boat Scheme allows overseas residents to
obtain VAT refunds on vessels purchased for personal export to a
destination outside the EU. Under extra-statutory concession 8.1, HM
Revenue & Customs (HMRC) has allowed UK residents to purchase
boats under the scheme. However, HMRC does not have the discretion to
allow this concessionary treatment, and it is not possible to put the
concession on a statutory basis as this would contravene EU law. The
Government announced in December 2010 that the concession would be
withdrawn on 1 January 2012 to allow businesses time to prepare for the
change.
The legal basis for the scheme
Article 146 of Directive 2006/112/EC permits zero rating of
goods which are "…dispatched or transported to a destination outside
the (European) Community by or on behalf of a purchaser not established
within their respective territory…". The Article is given effect in
Regulation 129 of the VAT Regulations 1995 (SI 1995/2518). Both the
Article and the Regulation clearly exclude supplies to UK residents
from the scope of zero rating.
Further advice
If you have any questions about this change, please contact
Sarah Bush on Tel 0151 703 8950 or email Sarah Bush.
About the Author
© Crown Copyright 2011.
A licence is needed to reproduce this article and has been republished
for educational / informational purposes only. Article reproduced by
permission of HM Revenue & Customs.
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Article Published/Sorted/Amended on Scopulus 2011-11-22 12:51:23 in Tax Articles
