Sailaway boats supplied for export outside the UK (VAT Notice 703/2)

Find out the procedures you'll need to follow to zero rate VAT for the supply of a sailaway boat.


This notice cancels and replaces Notices 703/2 (December 2011). It applies to supplies made after 1 January 2021.

It applies to supplies made in Great Britain (England, Wales and Scotland) exported out of the UK and to supplies made in Northern Ireland exported out of the UK to non-EU destinations. References to UK should construed accordingly.

Sales of boats between Northern Ireland and the EU are covered in Notice 728 New Means of Transport.

Find out what you need to do if you are making sales of goods between Great Britain and Northern Ireland or from Northern Ireland to the EU.

1. Overview

1.1 What this notice is about

This notice explains the procedures for zero rating the supply of a ‘sailaway’ boat that is removed from the UK under its own power. It explains which boat purchases are eligible and who is entitled to use the scheme.

1.2 Changes to this notice

This notice has been updated to reflect changes to the VAT treatment of supplies of goods and services following the UK’s departure from the EU and the end of the transition period.

1.3 Who should read this notice

You should read this notice if you are:

  • a VAT registered person supplying a boat to an overseas person who will export the boat under its own power
  • an overseas purchaser of such boats

1.4 The UK law relating to the export of sailaway boats

Section 30(8) of the VAT Act 1994, Regulation 129 and Regulation 133B of the VAT Regulations (Statutory Instrument 1995/2518).

Some or all of paragraphs 2.4 and 4.2, have force of law.

2. The scheme

2.1 The definition of a ‘sailaway’ boat

A ‘sailaway’ boat is defined as one which is to be:

  • delivered to an overseas visitor or their authorised skipper within the UK
  • exported under its own power to a destination outside the UK

The boat can be new or second hand.

2.2 Who can make a purchase under the scheme

The scheme can only be used for the private purchase of a boat for private use by an overseas visitor. They must intend to export the boat under its own power to a destination outside the UK within the time limit set out in paragraph 2.4.

2.3 Which boat purchases are not eligible under the scheme

The scheme cannot be used for:

  • boats exported on a trailer or for exporting parts or accessories
  • supplies for commercial purposes

These sales may still be zero-rated under different export arrangements – see VAT on goods exported from the UK (VAT Notice 703).

2.4 Time limit for removal

This paragraph has force of law.

The boat must be removed within 6 months of the date of delivery. The date of delivery is the date the boat leaves the manufacturer or supplier.

2.5 Direct exports

This is where the supplier arranges and is responsible for the boat to be exported to the customer.

The supplier must not use the scheme if they arrange such a delivery of a boat whether on a trailer or by using a skipper employed by them to sail to a destination outside the UK.

UK residents, as well as overseas customers, may be able to buy a boat VAT-free as long as the seller arranges the direct export of the boat to a destination outside the UK.

VAT on goods exported from the UK (VAT Notice 703) gives further details of how to account for a direct export.

2.6 Indirect exports

This is where the overseas customer, who is not eligible to use this scheme, arranges for the boat to be removed from the UK. The non-eligibility might, for example, be because the boat is not being removed under its own power or because it is supplied for commercial purposes.

VAT on goods exported from the UK (VAT Notice 703) gives further details of the zero-rating conditions and how to account for an indirect export.

2.7 Parts and accessories

Parts and accessories are not covered by the scheme unless supplied as an initial normal complement of on-board spares as part of the supply of the boat. Northern Ireland suppliers may be able to make the supply under the Retail Export Scheme, Notice 704.

3. Information for sellers

3.1 What to do prior to the boat being supplied

Before a boat is supplied you must:

  • make sure that the buyer is entitled to use the scheme, see paragraph 2.2
  • make sure that the buyer intends to export the boat from the UK within the permitted 6 month time limit, see paragraph 2.4
  • advise the buyer to read this notice and complete form VAT 436
  • make sure the form VAT 436 is fully completed by you and the buyer
  • part 2 of form VAT 436 must be submitted to the Personal Transport Unit (PTU) at least 2 weeks before the boat is delivered to the customer

VAT 436 notifications should be serially numbered in the top right hand corner and submitted to the PTU at the following address:

HM Revenue and Customs
Personal Transport Unit
Erskine House
Floor 3
20 - 32 Chichester Street

Telephone: 0300 3227071 (Option 1)

Make sure that notifications are correct and complete before you accept them. An incorrect or incomplete notification will be returned for correction, and this may delay the delivery of the boat.

The PTU will provide any help or advice on the purchase of a sailaway boat.

3.2 What you should do at the time of sale

At the time of sale you should:

  • account for the sale in your records as a zero-rated supply
  • keep a separate record of any security deposit, and agree how the refund will be made, see paragraph 3.6
  • make sure that the buyer knows that they must not dispose, or attempt to dispose of the boat in the UK by hire, pledge as security, sale, gift or any other means

The boat’s documents may only be used as security that’s required by the finance house for the purchase of the boat. The boat must not be pledged as security for a separate purchase, for example a car, flat or house.

3.3 Forms to use

You’ll need to prove that the boat has been removed from the UK.

The forms needed are:

Form VAT 436:

  • copy 1 – Customs copy, to be sent to the HMRC PTU when the boat is exported
  • copy 2 – HMRC copy previously submitted, see paragraph 3.1
  • copy 3 – Customer’s copy
  • copy 4 – Your copy to keep in your records

And either:

  • form C88 Single Administrative Document – copies 1 to 3 if the sale is from Northern Ireland and the customer intends to visit an EU member state before exporting the boat

  • copy 1 – transit copy where available (seller to take a copy for their own records)
  • copy 2 – for UK Customs
  • copy 3 – for certification when the boat finally leaves the UK


3.4 What happens if the order is cancelled

If, after the VAT 436 (copy 2) notification has been sent to HMRC, the order for the boat is cancelled by the buyer before delivery, you should immediately notify the PTU of:

  • the name of the buyer
  • details of the boat
  • the reference number shown on the form VAT 436

3.5 How to account for VAT

You must keep a separate record of all boats sold under the scheme. The sales invoice must clearly show that the supply of the boat was made under the Sailaway Boat Scheme.

If you do not obtain and hold evidence to show that the boat was exported within the 6 month time limit you must account for VAT accordingly in the period the time limit expires, if you’ve:

  • taken a security deposit of the VAT due, then it should be brought to account
  • not taken a security deposit you must amend your VAT records and account for VAT on the taxable proportion of the invoiced amount of consideration you have received, for a VAT rate of 20% the VAT element is calculated at 1/6
  • if you later receive payment of the ‘VAT’ in whole or in part that is further tax-inclusive consideration for the supply, 1/6th of which should be brought to account as VAT

When you amend your VAT records you must make an entry equal to the tax on the supplies concerned on the ‘VAT payable’ side of your account. You include this amount in box 1 of your VAT return.

3.6 Taking security deposits of VAT

Although you can treat the supply as zero-rated at the time of supply the boat remains liable to VAT until you receive back form VAT 436 certified by HMRC or the Customs office on final departure from the UK.

If you do not get the necessary evidence of export you’ll have to account for the VAT due, even if you did not charge it at the point of sale. You may wish to ask the buyer for a security deposit equal to the amount of VAT, to be returned when you get the evidence of export.

3.7 What to do when you get the certified evidence of export

When you receive the certified VAT 436, you should refund any security deposit to the buyer by the method agreed, and update your VAT records.

3.8 If you get evidence of export after you’ve accounted for VAT

If you later get evidence that the boat was exported from the UK within the permitted time limits, you can zero rate the supply and refund any deposit and adjust your VAT account for the period in which you got the evidence. You should treat the transaction as a credit in your VAT records. See Notice 700 the VAT Guide.

3.9 Using the scheme for supplies destined for the Channel Islands

The Channel Islands are outside the UK VAT area and so qualify as a final destination for boats supplied VAT-free for export.

UK residents who register VAT-free boats in the Channel Islands cannot claim VAT-free temporary importation of such boats into the UK. VAT is payable on these importations.

But subject to their meeting the conditions for temporary importation, private persons resident in the Channel Islands may be entitled to import their own boats for their own personal use for up to 18 months, without payment of import VAT.

4. Information for buyers

4.1 How to use the scheme

Before buying the boat you should make sure that the seller operates the scheme. The seller will check that you’re entitled to use the scheme and ask you to complete form VAT 436. The seller will send copy 2 of the form to HMRC.

4.2 Using the boat before it is exported

This paragraph has force of law

You can use the boat before it’s exported but you must not:

  • hire the boat
  • give it away
  • offer it for sale
  • use it as security, except as part of any financial arrangement for the purchase of the boat
  • dispose of it in any other way while in the UK

If the boat is re-imported or returns to the UK at any time, you must inform the nearest Customs office of its arrival.

4.3 Paperwork

You will need the following completed documents:

  • VAT 436 copy 1 (for returning to PTU on export)
  • VAT 436 copy 3 (for your records)
  • C88 or C1331

4.4 What to do when exporting the boat

You must:

  • make sure that the boat is exported within 6 months of the date of delivery, see paragraph 2.4
  • complete a form C88 or C1331 Notice of intended departure and follow the guidance found in leaving the UK of Notice 8 sailing your pleasure craft to and from the United Kingdom
  • send Copy 1 of form VAT 436 to the PTU, see paragraph 3.1 together with evidence shown in paragraph 4.5 that you have removed the boat from the UK.

The PTU will endorse the VAT436 and return it to your supplier.

4.5 Evidence of removal

If you can present the VAT436 to a Customs Officer prior to departure and they endorse the form no additional evidence is required to be submitted.

If your Port of departure is not manned by Customs you should call HMRC’s Portsmouth office at least one working-day in advance of departure:

Telephone: 03000 516 864


They will either arrange for someone to meet you to endorse the form or advise you to submit the papers by post to the PTU.

If you post the VAT436 to the PTU you will need to enclose additional evidence that you have removed the boat in accordance with the rules in this notice.

Examples of acceptable evidence include:

  • Custom declaration paperwork in the destination country
  • mooring fees invoice
  • letter from harbourmaster confirming arrival of the vessel

4.6 How to get a security deposit for VAT back

The seller will refund any security deposit by the method that they have agreed with you. They will be able to do this as soon as they have received the certified forms VAT 436.

4.7 What to do if you do not get the deposit back

HMRC is not responsible for refunding the security deposit for VAT. If you do not receive the refund you should contact the seller.

4.8 If you want to re-import a VAT-free boat into the UK

If a boat that was supplied tax free at purchase is brought back to the UK it must be declared to Customs. The seller should make sure that you are fully aware of the need to make an import declaration. VAT will be payable unless some other relief is available. Notice 8 explains this in greater detail.

Your rights and obligations

Read Your Charter to find out what you can expect from HMRC and what we expect from you.

Help us improve this notice

If you have any feedback about this notice email:

You’ll need to include the full title of this notice. Do not include any personal or financial information like your VAT number.

If you need general help with this notice or have another VAT question contact the VAT helpline or make a VAT enquiry online.

Putting things right

If you’re unhappy with HMRC’s service, contact the person or office you’ve been dealing with and they’ll try to put things right.

If you’re still unhappy, find out how to complain to HMRC.

How HMRC uses your information

Find out how HMRC uses the information we hold about you.

Published 28 December 2011
Last updated 8 July 2021 + show all updates
  1. Links to VAT form 436 have been added to sections 3.1, 3.3 and 4.1.

  2. This page has been updated because the Brexit transition period has ended.

  3. First published.