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HMRC internal manual

VAT New Means of Transport

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Intention and timings "Swedish Yacht" case

In 2011 the ECJ case of X -v- Skatteverket C84-09 “Swedish yacht case” provided some useful clarification on a number of issues relating to new means of transport.

X had sought to argue that if he purchased a new Yacht in the UK and took it to Sweden but by the time it got there it was no longer within the definition of a NMT then no acquisition tax was due in Sweden.

The ECJ said that there is no time limits by which a NMT needs to be removed from the country of supply nor that the NMT needs to still be technically a NMT (as defined) at the time of removal for it not to be considered a movement of a NMT from one country to another. That is, if at the time of supply the supply is of a NMT for removal but the removal does not take place till after the NMT definitions have expired that does not change it from being a supply of NMT for removal and taxable in another Member State.

The important point covered in the judgment is that where a NMT is to be taxed it has to be assessed at the time the person gets the “right to dispose” of a NMT and that has to be based on their intentions at that time. However, subsequent actions and facts can be used to form a view of the intention.

The ECJ confirmed that a dispatch of a NMT and an acquisition in another country takes place at the same time regardless of the timing of the physical movement.

This First Tier Tribunal applied the Swedish Yacht test in the case of Ian Feltham [2011] UKFTT 612 (TC). It looked at a car which was purchased in Germany in 2005 where it was declared as destined for the UK as a NMT. The vehicle came to the UK for a short while before being removed ostensibly to Spain where Mr Feltham had residence but was not declared to the Spanish authorities till 2010. The Tribunal concluded that the objective evidence was that the declared intention at the time of supply was to bring the car to the UK and account for the VAT here- thus HMRC were correct to assess that VAT due.