VSWB3040 - Operation of the scheme: Accounting arrangements

A supplier is entitled to zero-rate the supply when it is made. However, it remains liable for the VAT until it holds the required evidence that the boat has left the UK (or EU in the case of Northern Ireland).

The supplier has 6 months from the time of supply to receive the evidence. If evidence of export is not received by the end of that time the supplier must bring the VAT on the supply to account on the next VAT return.

Suppliers may take a deposit equivalent to the VAT due when the vessel is supplied. This is not VAT and is not required to be declared unless and until the supplier becomes liable for the VAT.

If the supplier becomes liable to account for VAT on the supply the VAT is due on the full consideration paid including any deposit taken and forfeited.

If a deposit of the VAT has not been taken, or not taken in full, VAT should be brought to account on the taxable proportion of the invoiced amount together with the amount held on deposit, for example, at the rate of 20% this would be one-sixth of the total.

If the evidence of export is obtained at a later date, the VAT account may be adjusted in the period in which the evidence was obtained.