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No deal Brexit scenario

What does the ‘no deal’ Brexit* scenario look like?

What happens if the UK and the EU do not agree a deal?

If a deal is not reached on leaving the EU the UK will be treated by the remaining 27 EU Member States (EU27) as any other third country would be treated.

The UK was originally due to leave the EU on 29 March 2019. But as the withdrawal agreement reached between the EU and UK has been rejected three times by UK MPs, EU leaders agreed to an unconditional extension of the Article 50 negotiating period, until 12 April 2019. As nothing was resolved in that time, a further extension to 31 October 2019 has been negotiated; this extension is however conditional on the UK taking part in EU Parliament elections. If it chooses not to do so then the UK will still leave the EU without a deal at the end of May. If the UK takes part in the EU Parliament elections, but nevertheless fails to reach a deal then as it stands, the UK will leave on 31 October 2019. During the Article 50 extension the UK will continue to have full rights as an EU member state. If a withdrawal agreement is ratified then there will be a transition period until at least the end of 2020 for the UK to finalise its future relationship with the EU. In the event of the UK and EU completing ratification of the Withdrawal Agreement earlier than 31 October 2019, the UK will leave the EU on the first day of the month following the completion of ratification or on 1 November 2019, whichever is the earliest.

Will a ‘no deal’ Brexit mean I can no longer rely on my ICC when boating in the EU27?

The International Certificate of Competence (ICC) (or to give it its full title International Certificate for Operators of Pleasure Craft) is not an EU document. It is issued under the United Nations Economic Commission for Europe (UNECE) Inland Transport Committee Working Party on Inland Water Transport Resolution 40. It is this resolution which details how and to whom the ICC may be issued, the syllabus requirements, the layout of the certificate and it also lists the countries which have notified the UNECE Secretariat that they have accepted the resolution. The UK Government has accepted Resolution 40 and has authorised the RYA to issue the ICC on its behalf. 

Evidence of Competence for recreational boating is generally a matter for domestic/national legislation. If the EU were to develop a skipper licensing for private pleasure craft directive or regulation at some point in the future, acceptance of the ICC in EU countries might change. But at this stage we have no reason to suspect that acceptance of the ICC might change as a direct consequence of Brexit.

Will I be able to continue to keep my boat in an EU27 country after a ‘no deal’ Brexit?

If your boat has the customs status of Union goods (Union status) and is in a port or the internal or territorial waters of the EU27 at the point in time where the UK leaves the EU, our understanding is that it should retain its Union status and should continue to be entitled to free movement.

It will retain that status while it remains in the EU27 and if it is exported and returns to the customs territory of the Union, assuming the conditions of re-import (in accordance with both the Union Customs Code and the VAT Directive) are met, relief from import duty would be granted and an exemption on the payment of VAT should be applicable.

Means of proving Union status are detailed in the Union Customs Code Implementing Regulations. Of the documents listed, an invoice or a paper T2L are the most suitable for recreational boats. 

In the event of a no-deal Brexit it may be beneficial for owners of boats lying in the EU at the time of Brexit to have obtained a T2L from HMRC. It may also be prudent to retain evidence that the boat was in the EU at the time of Brexit.  

Note: HMRC will only issue a T2L with a UK address.

What happens if a boat which currently has Union Status is in the UK at the time of a ‘no deal’ Brexit?

We have information provided by the European Commission which indicates that in the event of a ‘no deal’ Brexit, if a boat is in the UK (or UK territorial waters) at the point in time where the UK leaves the EU, it will assume UK status and will lose its Union status. We believe that would mean that the boat would no longer be entitled to relief from VAT and import duty if the owner wanted to import it into the EU at a later date; any evidence the owner previously had (such as an invoice or T2L) would therefore no longer demonstrate Union status.

What happens if I take a boat with UK status to the EU27 after a ‘no deal’ Brexit?

In the event of ‘no deal’ a UK registered boat which does not have Union Status entering the EU27 may be able to claim Temporary Admission. Boats without the status of Union goods which are registered outside the EU and which are owned by someone who is established outside the EU are entitled to 18 months Temporary Admission. After 18 months they must either be imported or leave the EU. If they leave the EU they can return almost immediately and start a further 18 months Temporary Admission. If the boat is imported into the EU (paying VAT and import duty) it gains Union status and the 18 month restriction no longer applies.

If my boat is lying in the EU27 at the time of a ‘no deal’ Brexit, will I be able to claim relief from VAT and import duty if I bring it back to the UK after Brexit?

HMRC has advised the RYA that plans have been made to replicate Returned Goods Relief (RGR) into domestic law in the event of a no deal. 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 the Notice 236 Returned Good 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 the 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 the EU exit.

  • Vessel owners not established in the UK can temporarily import their vessels using the rules set out in Notice 8.
  • There is no need to have every UK boat back in the UK on the 29/03/2019 or EU exit day.

Do I need to change my country of registration in order to keep my boat in an EU 27 country after a ‘no deal’ Brexit?

Registration of a privately owned recreational boat is generally a matter for domestic/national legislation. Free movement for the vessel is linked to the vessel having Union status. As long as it is lying in the EU27 on the day that the UK leaves the EU, based on the Union Customs Code its status should not change as a result of Brexit alone. For that reason, if an EU member state is happy that you keep your UK registered vessel on its territorial or internal waters now there is no reason that we can see why that should not be the case after Brexit.

At the moment the RYA does not believe there will be any advantage to registering your boat in another EU country. If you decide to register your boat in another country you will then have to comply with that country’s legislation. That could entail having that country’s evidence of competence (which might involve a test in the country’s language), compulsory equipment etc.

After a ‘no deal’ Brexit will I still be able to spend the whole summer on my boat in the EU27?

The immigration situation in the event of a ‘no deal’ Brexit could be a hindrance. We assume that UK Citizens who are normally resident in an EU27 country will be able to stay, without penalty, although there may be caveats. Owners that are not resident in an EU27 country may be able spend significantly less time in the Schengen area than the boat can spend in the EU as the duration of stay for a third country national visiting the Schengen area is usually limited to 90 days in any 180 days period.

Information has been published on the country specific travel advice pages on gov.uk which indicates that, “The European Commission has proposed that in a no deal situation, if you are a British Citizen, you would not need a visa for short stays in the Schengen area or elsewhere in the EU. You would be able to stay for up to 90 days in any 180-day period. Visits to the Schengen area within the previous 180 days before your date of travel will count against the 90-day limit.”

The RYA has been lobbying hard to ensure that the inadequacy of the Schengen visa time frames for UK residents who keep their boats in the EU and who wish to cruise in excess of 90 days on Community waters is understood.

 

* If a deal between the UK and the EU is agreed, this will lead to a transition period from the date of exit until the end of the transition period (31 December 2020 unless otherwise agreed), during which the UK's current terms of EU membership continue, though without formal UK representation in the EU institutions and with the agreement that the UK will be able to sign (though not implement) trade deals with non-EU countries. This Q & A considers the situation in the event that ‘no deal’ is agreed. We cannot be sure that this is what will transpire as these are of course just assumptions, based on knowledge of the legislation as it currently stands.

If you wish to contact the RYA regarding Brexit please email brexit@rya.org.uk 

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