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Time to Dust Off the Q Flag

HM Revenue & Customs have issued guidance surrounding the movement of yachts in and out of the UK in anticipation of Brexit on 31 December 2020 under Notice 8: ‘Sailing your pleasure craft to and from the UK’. Any yachts not already in free circulation in the UK should, upon entry into UK territorial waters (12 miles offshore) fly the Q flag until such time as customs formalities have been concluded. The full text of this notice can be located HERE

The latest notice from HMRC on 18th December 2020 appears to contradict the news item on October 16th from the Financial Times in relation to the return date for yachts to the UK in order to retain the UK in free circulation status. The news item on the 16th October indicated the 31 December 2021 however the notice states 31 December 2020, only a matter of days away. Clarity from HMRC obtained on 12 January 2021 has confirmed that the date of 31 December 2021 is the correct date for yachts to be returned to the UK. 

The notice provides clarity surrounding how a yacht can be used in the UK by either UK on Non-UK residents.

 

VAT Exempt On Age

Those yachts deemed VAT exempt on age are in free circulation in the UK as UK domestic goods. Details on documentary evidence to support VAT exempt on age status can be found HERE

 

Temporary Admission

Temporary Admission for Non-UK residents

The vessel must be:

  • registered outside the UK in the name of a person established outside the UK; and
  • be used by a non-UK resident (there are limited exceptions where use can be made by a UK resident).

The vessel must also be clearly identifiable, for example by registration number/ certificate, name of the vessel or hull identification number. Private use by a non-UK resident can be for up to 18 months although the 18 month ‘clock’ can be stopped for periods of time where the owner/user is not in the UK by contacting the NTAS (National Temporary Admission Section).

UK resident use of yachts operating under Temporary Admission

There are certain circumstances when a UK resident can use a yacht that is operating in the UK under Temporary Admission and these are:

  • Use of the yacht must predominantly be by the non-UK resident registration holder
  • The Non-UK registration holder has instructed that you may use the yacht occasionally whilst they remain in the UK
  • Written permission from the Non-UK registration holder must be made available when requested

The period of 18 months can be extended in exceptional circumstances within reasonable limits. A written request to NTAS with an explanation is required in such circumstances. Yachts intended for sale cannot claim Temporary Admission. Yachts wishing to enter the UK for routine maintenance and repairs cannot utilise Temporary Admission but Inwards Processing Relief maybe available.

The use of the yacht

All yachts operating under Temporary Admission need to keep the following records:

  • proof that the vessel is registered outside the UK in the name of a non-UK person
  • if the vessel is not registered, proof that it is owned by a non-UK person
  • a passport/identity card for the person claiming relief to confirm their normal place of residence
  • if a UK resident, details to support the claim to relief referred to in the table in paragraph 5.4
  • when and where the vessel arrived in the UK
  • when and where it leaves the UK or is otherwise disposed of

These records should be kept for 4 years after discharging relief.

 

Import & Pay VAT

Those who do not qualify for the options mentioned above and who wish to use their yachts in the UK will need to give consideration to paying UK VAT upon arrival. The Q flag should be flown as mentioned above and customs contacted, ideally prior to arrival through a Customs agent who can make the necessary arrangements with the customs authorities.

 

All details are correct at the time of publishing.

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