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Returned Goods Relief policy changes refused by Government

Published on: 20 December 2022

Sailing in The Solent

Disappointing outcome felt by the Royal Yachting Association, British Marine, Association of Brokers and Yacht Agents, and the Cruising Association.

At a recent meeting with HMRC (14 December 2022), the Royal Yachting Association (RYA), British Marine, Association of Brokers and Yacht Agents, and the Cruising Association were informed of the Government’s decision to reject a proposal by the RYA allowing recreational boat owners, established in the UK, who lawfully purchased and kept their boat in the EU at the time the UK was an EU member, to be eligible for Returned Goods Relief (RGR).

On 25 April 2019, the Government confirmed: “The intended UK policy is that a UK vessel will not lose its status as VAT paid in the UK because it is outside UK territorial waters on EU Exit Day. When the vessel returns to the UK the person responsible for the vessel can claim Returned Goods Relief.”

On 03 November 2020, the Government reaffirmed: “If a vessel was re-imported during 2021, it would be sufficient to show that any sale or transfer or ownership had been made in compliance with [EU] VAT legislation.”

It was not until 17 December 2020 that HMRC stated that the advice it gave on 03 November 2020 was incorrect and that it would be unable to apply an easement for returning vessels after the UK left the EU. This gave boat owners just 14 days to rebase their boats to the UK to avoid a second VAT charge. Given the distance, winter weather conditions and above all Covid travel restrictions, this was not only unrealistic, but for most it was simply impossible.

Mel Hide, RYA Director of External Affairs, said: “This proposal has been with the Government since January 2022 following the successful case we made for an easement of the 3-year RGR condition. It is therefore a deeply disappointing outcome and falls well short of resolving the issue for those who have been caught out by incorrect advice provided by the Government. It would also seem to fall short of the Government commitment to assist UK industry as we forge our future outside of the EU. We must now consider what action we can collectively take to seek a better outcome.

Lesley Robinson, CEO, British Marine, commented: “This is obviously very disappointing news in light of the previous commitments from Government to support UK boat owners bringing their vessels back to the UK.  We will continue to work with our strategic partners to challenge this decision and press for a change in policy.”