On importation you need to claim *Outward Processing Relief ("OPR"). *The
following extract from an HMRC VAT booklet may be of assistance - basically
you pay VAT at the point of importation into the EU on the cost of services
provided outside the EU by way of modification of the kit that you
previously exported and on which VAT was originally paid. I would expect
you to have to produce the original invoices with VAT paid on them for the
purchase of the Kit from Europa and for the cost of construction services,
if any, paid for in Kenya.
For the avoidance of doubt, there is a relief called "Returned Goods
Relief". Without going into detail which you can easily find on HMRC's
VAT pages, I do not think you qualify for this and I think you should only
be looking to obtain OPR to which I will now refer in detail.
If you bought no additional parts and if you did all the assembly work
yourself without payments being made to anyone else then you should be able
to re-import it VAT-free, by claiming OPR subject only to a possible VAT
charge on transportation costs into and out of Kenya. I doubt whether the
latter would apply if you flew the aircraft yourself from Kenya, but there
might be a VAT charge on the freight costs of any parts into Kenya. This
assumes you are returning it to the UK as a permanent importation and that
you will resume permanent residency in the UK.
Two requirements you will see in the extract below may or may not apply,
but I would suggest that it would be difficult at this point of time
to prove your intentions at the time of departure from the UK, namely: *"**
the
goods were temporarily exported from the EU"* and *"at the time of
exportation the goods were intended to be reimported **after completion of
the treatment or process outside the EU". *
You may need to get legal advice on the definition or interpretation of
"temporarily exported from the EU". I would hope that it means exported
with the intention to return, but HMRC may well argue that temporary means
for a short time. Your defence to that would be that most Europa kits take
several years to be completed by amateur builders, but they may have an
argument to deny relief by saying that you completed the build and then
used it possibly for several years in Kenya under a Kenya Registration,
indicating no intention to return to the UK immediately after
"processing". If the original export was in 1995 then we are talking about
claiming that 18 years was a temporary exportation! However, circumstances
change, possibly you left the UK to take up employment in Kenya and the
employment lasted longer than originally intended. You may be able to find
a good reason for the extension of the original temporary exportation or
the delay in completing the process of building the aircraft.
It might also be suggested that your registration of the Aircraft when
completed onto the Kenya Register was indicative of an intention to
permanently keep it in Kenya. In my opinion that can be denied by reason
of the fact that your intention to return to the UK was always there, only
the exact date of your return was not known and at that point of time, as
you were residing in Kenya, even though a British Citizen, I assume you had
no alternative but to register it on the Kenyan Register.
There is an anomaly, namely that the value of a fully-built Europa is these
days often significantly less than the original cost of the parts, even
ignoring the value of the time spent by the owner/builder, so there is
probably no enhancement in value over the amount on which VAT was
originally paid and therefore logically there should be no VAT on
re-importation. However, I have no experience on this point except that
taxation is rarely logical! Subject to that comment, it does seem that if
you paid for any construction work to be done for you in Kenya or if you
imported any parts into Kenya without payment of UK VAT, i.e. as zero-rated
exports from the UK/EU, or if you purchased any parts or materials such as
instruments from outside the EU and imported them into Kenya, then VAT is
payable on the cost of those goods at the time of importation into the UK
or EU.
The HMRC VAT booklet extract is as follows:
*
6. Goods re imported after process/ repair or replacement (OPR)
*
Under Outward Processing Relief it may be possible to obtain relief from
customs duties when re-importing Community goods that have previously been
exported from the EU for processing or for repair.
*
6.1 General
*
Import VAT is normally due on the full value of re-imported goods unless
relief is available under Regulation 124,125 or 126 of the VAT Regulations
1995.
*
6.2 Goods re-imported after process or repair
*
You may reduce the amount of import VAT chargeable on goods you import from
outside the EU if the goods have been previously exported for process or
repair from the UK or any other Member State providing you meet the
following conditions:
-
the goods were temporarily exported from the EU
-
at the time of exportation the goods were intended to be reimported after
completion of the treatment or process outside the EU
-
the goods are re imported after having undergone repair, process or
adaptation outside the EU or having been made up or re-worked outside the E
U
-
ownership of the goods was not transferred to any other person at
exportation or during the time they were outside the EU, and
-
a declaration is made at the time of re-importation that the above conditio
ns
have been fulfilled.
Further details can be found in
*Notice 235*.
*
6.3 Calculation of import VAT on goods re-imported after process or repair
*
Provided the re-imported goods meet the conditions of paragraph 6.2 above
you
should calculate import VAT on the following value:
Notice 702/9 VAT: Imports Customs procedures with economic impact and
end-use relief
October 2012
-
the price charged for the process, repair or service, including any charge
made for parts and materials,
*plus*
* *
-
any freight and other charges (excluding insurance) paid for the transport
of the goods to and from the processor=92s premises,
*
plus
*
-
any customs or excise duties or other import charges payable in the UK.
*You must pay import VAT on the full VAT value of the compensating products
unless the conditions for claiming VAT relief are satisfied*.
You may recover the import VAT as input tax, subject to the normal rules
(see paragraph 2.12). However, if you are unable to reclaim input tax, for
example because you are not registered for VAT, you should contact Customs
at the point of importation as soon as you know the goods are to be
replaced. If you are not aware of the details until after the goods have
been imported you should contact our VAT Helpline on
*0845 010 9000 *and ask for *Notice 266 *and Form C&E 1179.
*
6.4 Zero-rated supplies and processes carried out free of charge
*
If the process is carried out free of charge, for example because the goods
are covered by a warranty, guarantee or service agreement, or where the
compensating products are zero-rated in the UK no import VAT will be due on
re-importation of the compensating products ......
More information can be found on the following link:
http://www.hmrc.gov.uk/vat/managing/international/imports/opr.htm
May I stress the importance of the need to meet all of the requirements for
Outward Processing Relief in order to avoid a VAT charge on the whole
aircraft at importation. Obviously, if you have the invoices for the
purchase of the original kit then that will smooth the processing of your
claim.
Sorry it is a rather lengthy reply, but as you will see it is not
straightforward, although at the end of the day I doubt that you will have
a problem, although it might be sensible to plan to stay a few days in your
arrival port or airport whilst the VAT is sorted out! I think you will
find it much easier arriving by air if you can and obviously at an airport
with a good Customs facility based on the airport. It also helps if
everything is arranged with Customs there in advance, so you are expected
and you may be able to agree with them in advance the amount of the VAT
payable, if any.
I also wonder whether in practice life will be made a bit easier at
importation if you are able to change the Registration to a G Reg. before
departure from Kenya and have the new Registration letters painted onto the
aircraft in Kenya. I suggest you get advice on that from the CAA or LAA.
Regards,
*Philip*
*
*
*Philip J. Levi, FCA, CTA(Fellow), TEP, MRIN, ARAeS*
*Chartered Accountant, Chartered Tax Advisor.*
G-BWWB, Europa Monowheel Classic, Rotax 912-UL, Airmaster AP332
**
*E-mail:* *pjlevi@gmail.com** *
On 20 April 2013 10:08, Richard Lamprey <lamprey.richard@gmail.com> wrote:
> lamprey.richard@gmail.com>
>
> In 1995 I exported from UK to Kenya a box of bits kit (Number 168), that
> eventually became a flying Europa (classic).
>
> In order to register it properly in Kenya, the Kenya CAA required a lette
r
> from UK CAA that this box of bits had never actually been a flying Europa
> in UK; the UK CAA kindly provided this letter, which I still have.
>
> I have bring this Europa back to UK, for registration in UK, will UK Valu
e
> Added Tax be payable on it? Perhaps someone has a similar experience. O
f
> course the issue of LAA certification would need to be addressed, but les
t
> talk about the VAT first.
>
> Many thanks
> Best
> Richard
> Kenya, Europa classic 168,
>
>
> Read this topic online here:
>
> http://forums.matronics.com/viewtopic.php?p=398998#398998
>
>
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