Brexit: RYA update on status of vessels lying in the EU27 at the time of Brexit in the event of ‘no deal’

HMRC responds to question on its treatment of boats returning to the UK from EU27 waters.

This has been the week where the House of Commons has arguably ‘taken back control’ of Brexit, with MPs forcing a series of indicative votes on eight Brexit options, ranging from no deal to a second referendum; all were rejected.

However, whilst MPs may have taken control of the process, they are yet to reach a conclusion on where it should lead to. Meanwhile, the Government still hopes to bring back its own deal for a third ‘meaningful vote’, buoyed by the recently announced support of some Eurosceptics who are wary of Parliament imposing a ‘softer’ Brexit on the Government and hopeful that the PM’s pledge to quit once the deal is secured will persuade more waverers to come onside.

Under the terms of the Article 50 extension agreed between the UK and EU leaders on 21 March, the UK has until tomorrow [29 March] to pass a meaningful vote on the Government’s Brexit deal if it is to secure a longer extension to 22 May. If not, the default will be departure on 12 April.

Whilst agreement on a longer extension at that point would be the most likely outcome, even the small prospect of a ‘cliff-edge’ departure is causing businesses and other organisations to continue to prepare accordingly.

As you will know from previous updates, RYA is no different in this regard, and we have been working with government since the referendum to find out more about how exactly a no deal departure would affect our members.

Key concern

A key concern which many members have raised with us is the issue of the treatment of boats returning to the UK from EU27 waters in the event of a no deal Brexit. RYA has been in constant dialogue with HMRC in order to obtain definitive answers to the many questions surrounding this and the issue of customs status for recreational craft in the event of no deal.

Previously, the EU Commission has indicated that, in the event of a no deal Brexit, boats lying in the EU27 at the time of Brexit would retain Union status and boats lying in the UK at the time of a no deal Brexit would lose Union status and have the status of UK goods.

The Commission has also indicated that, in this case, there would have been no export and therefore a boat lying in the UK at the time of a no deal Brexit would not be entitled to relief from VAT and import duty at the time of reimport to the EU and therefore VAT and, if applicable, import duty would be payable unless the boat qualifies for temporary admission. As UK legislation is based on the Union Customs Code and the EU VAT Directive, we have expressed our concern about the future status of boats lying in the EU27 if we have a no deal Brexit.

Government response

In response to RYA, HMRC has said that it has made plans to replicate Returned Goods Relief (RGR) into domestic law in the event of a no deal Brexit. RGR allows those resident in the UK to return with their belongings (including pleasure boats) to the UK without paying customs duty or VAT as long as the items have not been changed since their departure and follow the guidance given in Notice 236: Returned Goods Relief.

The UK Government has undertaken that RGR will be available in respect of UK pleasure craft not moored in the UK on EU exit day. They may return to the UK after exit and be subject to Returned Goods Relief as long as the person responsible has evidence that the VAT was paid on the purchase of the boat in either the UK or the EU. The types of proof needed are shown in Notice 8. VAT accounted for in the UK would need to be shown in respect of vessels purchased after the date of EU exit.

• Vessel owners not established in the UK can temporarily import their vessels using the rules set out in www.gov.uk/government/publications/notice-8-sailing-your-pleasure-craft-to-and-from-the-uk/notice-8-sailing-your-pleasure-craft-to-and-from-the-uk#section5

• There is no need to have every UK boat back in the UK on EU exit day

Next steps

HMRC has committed to meeting with the RYA to work through the many questions that we have, in order to provide definitive and validated advice to our members. We will provide further updates on this and the other Brexit-related issues we have been working on with government as soon as we can.

In addition, RYA’s Brexit Q&A considers a number of boating-related scenarios in the event of a no deal scenario, based on the RYA’s knowledge of the legislation as it currently stands.

Article published 28 March 2019.