When a newly manufactured yacht is exported, it is quite common that larger vessels will be sold with additional watercraft as part of a single supply…
Import VAT is paid at the point of entry into the UK, from non-EU countries, and is recoverable when the owner of the goods provides their EORI number (essentially the VAT number plus 3 extra digits). A certificate evidencing the payment is then issued (form C79) and this is required to reclaim the import VAT on the UK VAT return, in line with normal VAT recovery rules.
HMRC has noted that the ‘importer of record’ is not always the person who holds legal title to the goods at the time of importation. For example, an agent may act to bring goods into the UK and distribute them, but never actually takes ownership of the goods. However, they may manage the importation and provide their agent VAT number for the import documentation.
From 15 July 2019, HMRC will no longer allow any claims for import VAT from anyone other than the owner of the goods at the time that they enter the UK. This may cause problems for agent and toll operators who import and process goods before distributing them on behalf of their customer, without ever taking ownership. It is also an important factor for supply chains in which goods change hands during transit or immediately before arrival.
Commercial and representative bodies have made urgent contact with HMRC to raise concerns that the impact of this clarification of the previously unclear guidance has not been fully considered.
HMRC has stated that they will not pursue VAT previously claimed by a person other than the owner of the goods, but only in cases of genuine error or through misinterpretation of the legislation or published guidance. The claimant would have to demonstrate that the VAT would otherwise have been recoverable in full by the owner of the goods at the time of importation and that there is no risk of duplicated claims.
If you believe that this issue is likely to affect you or your business, please contact a member of the VAT team who will be happy to help [email protected].