Private purchase - advice request

[wakey_wake]

I'm looking to purchase a boat privately and at a price that promises to be attractive, but there are alarm bells

• I don't know much about the boat yet
• no broker involved
• seller of one boat is in a big hurry (with a feasible excuse)

 

I asked a random broker and "my" boatyard if they would act for me as purchaser, and they don't do that. The broker helpfully warned me to be very careful (!).

 

I would have a survey, and I know I need the Bill of Sale...  but I'm not sure I would know whether the paperwork was valid.

 

I looked at

and I see the warnings,

 

> Ask for the Bill of Sale and recent invoices before anything else. Make sure there are no glitches.

> The broker is interested in your money, first and foremost. Where money is involved, assume nothing.

 

> I would rather make a private purchase where there is paperwork (licence invoices, the mooring invoice etc etc) all in the sellers name and at his address [...] get him to take you to his house to sort out the paperwork.

> There are plenty of ways of showing 'ownership' evidence but a broker has no incentive to pursue them, [...]

 

and the link to http://www.stolenboats.org.uk/Welcome.aspx

 

and more warnings at
https://www.canalworld.net/forums/index.php?/topic/109215-sunken-narrow-boat/&do=findComment&comment=2572753

 

Also what would I need to know about VAT status? I'm guessing the RCD, to the extent it might apply, isn't going to protect me; but being an honest chap I would need to comply if one day I sell it on.

 

[mrsmelly]

3 minutes ago, wakey_wake said:

I'm looking to purchase a boat privately and at a price that promises to be attractive, but there are alarm bells

• I don't know much about the boat yet
• no broker involved
• seller of one boat is in a big hurry (with a feasible excuse)

 

I asked a random broker and "my" boatyard if they would act for me as purchaser, and they don't do that. The broker helpfully warned me to be very careful (!).

 

I would have a survey, and I know I need the Bill of Sale...  but I'm not sure I would know whether the paperwork was valid.

 

I looked at

and I see the warnings,

 

> Ask for the Bill of Sale and recent invoices before anything else. Make sure there are no glitches.

> The broker is interested in your money, first and foremost. Where money is involved, assume nothing.

 

> I would rather make a private purchase where there is paperwork (licence invoices, the mooring invoice etc etc) all in the sellers name and at his address [...] get him to take you to his house to sort out the paperwork.

> There are plenty of ways of showing 'ownership' evidence but a broker has no incentive to pursue them, [...]

 

and the link to http://www.stolenboats.org.uk/Welcome.aspx

 

and more warnings at
https://www.canalworld.net/forums/index.php?/topic/109215-sunken-narrow-boat/&do=findComment&comment=2572753

 

Also what would I need to know about VAT status? I'm guessing the RCD, to the extent it might apply, isn't going to protect me; but being an honest chap I would need to comply if one day I sell it on.

 

I kniw where there is a 68 footer soon for sale, no pressure with plenty of documented proof of ownership ?

[wakey_wake]

3 minutes ago, wakey_wake said:

and the link to http://www.stolenboats.org.uk/Welcome.aspx

What a heartwarming website! It says nothing has been stolen. ?

 

Maybe it is broken or disused. It does tell me there exist Hull Identification Numbers, so maybe I want to find that...  wouldn't be surprised if there wasn't one?

1 minute ago, mrsmelly said:

I kniw where there is a 68 footer soon for sale, no pressure with plenty of documented proof of ownership ?

Thanks...  but I'm after 55~60 ft NB.  I found one that's slightly short, sounds legit, and not in a hurry; the other is longer, cheaper and more scary.

[Hudds Lad]

3 minutes ago, mrsmelly said:

I kniw where there is a 68 footer soon for sale, no pressure with plenty of documented proof of ownership ?

 

i saw they’d got a 36’ in and wondered if it was yours, due to blokes exaggerating about size and that  

[ditchcrawler]

3 minutes ago, wakey_wake said:

 . It does tell me there exist Hull Identification Numbers, so maybe I want to find that...  wouldn't be surprised if there wasn't one? 

Depending on the age there may or may not be a HIN (Hull Identification Number) welded on somewhere.

[TheBiscuits]

1 minute ago, wakey_wake said:

It does tell me there exist Hull Identification Numbers, so maybe I want to find that...  wouldn't be surprised if there wasn't one?

 

Depends on the age of the boat.  Anything built after 1998 should have a WIN/CIN/HIN (the terminology changed over time!) and some before that could have had them anyway.

 

There's some good stuff here:

https://www.rya.org.uk/knowledge-advice/legal/buying-a-boat/Pages/hub.aspx

 

VAT status is largely ignored for UK inland boats, but is critical for boats that travel to other countries.  

[wakey_wake]

When I break down the issues, do these cover all concerns?

1. that I get legal ownership
2. I can sufficiently prove that ownership later
3. that I know about technical (mechanical, structural) problems and have some idea what they would cost to fix

> VAT status is largely ignored for UK inland boats, but is critical for boats that travel to other countries.

 

Probably not an issue for me then? But I'm very reluctant to risk crossing the tax man. If he ever comes after me for 20% then I have a serious problem...  my concern is that I don't understand the mechanism of how or where VAT could be liable, and payable by whom.

[ditchcrawler]

10 minutes ago, wakey_wake said:

When I break down the issues, do these cover all concerns?

1. that I get legal ownership
2. I can sufficiently prove that ownership later
3. that I know about technical (mechanical, structural) problems and have some idea what they would cost to fix

> VAT status is largely ignored for UK inland boats, but is critical for boats that travel to other countries.

 

Probably not an issue for me then? But I'm very reluctant to risk crossing the tax man. If he ever comes after me for 20% then I have a serious problem...  my concern is that I don't understand the mechanism of how or where VAT could be liable, and payable by whom.

Its almost impossible for the VAT not to have been paid on a narrowboat. The only way I can think of is if its owned by a VAT registered company who would be responsible for collecting the tax when they sell it. How old is this boat and what sort of money are you talking about.

 

[Alan de Enfield]

16 minutes ago, TheBiscuits said:

VAT status is largely ignored for UK inland boats, but is critical for boats that travel to other countries.  

 

 

Except in the cases where buyers of widebeams were told by the manufacturer that they were subject to VAT at zero rate, but in fact they were subject to VAT at the standard rate (20%) and HMRC told the buyers they had to find £30,000+ within a couple of weeks.

 

Never try and fiddle the VAT man !!

 

HMRC are keeping their 'eye on' sales of new boats.

1 minute ago, ditchcrawler said:

Its almost impossible for the VAT not to have been paid on a narrowboat. The only way I can think of is if its owned by a VAT registered company who would be responsible for collecting the tax when they sell it. How old is this boat and what sort of money are you talking about.

 

 

Yes, with ex-hire boats you need to ensure that the BoS shows that VAT is itemised seperately.

[TheBiscuits]

5 minutes ago, Alan de Enfield said:

 

 

Except in the cases where buyers of widebeams were told by the manufacturer that they were subject to VAT at zero rate, but in fact they were subject to VAT at the standard rate (20%) and HMRC told the buyers they had to find £30,000+ within a couple of weeks.

 

Never try and fiddle the VAT man !!

 

HMRC are keeping their 'eye on' sales of new boats.

 

Yes, with ex-hire boats you need to ensure that the BoS shows that VAT is itemised seperately.

 

 

I agree, hence "largely ignored", but it doesn't sound relevant in this case - a private seller of a secondhand boat.  If VAT status was generally important for UK inland boats the usual ship's papers would be more carefully looked after, as I know you are aware.

 

Still, a donation to the "coffee fund" can help with VAT paperwork I've heard!

 

[LadyG]

32 minutes ago, ditchcrawler said:

Depending on the age there may or may not be a HIN (Hull Identification Number) welded on somewhere.

On salty boats it's on starboard side, engine bearers area.

[wakey_wake]

I joined the RYA (personal, £47) for access to their legal helpline (waiting) & discounts. Thanks @TheBiscuits for the tip.

 

5 minutes ago, ditchcrawler said:

Its almost impossible for the VAT not to have been paid on a narrowboat. The only way I can think of is if its owned by a VAT registered company who would be responsible for collecting the tax when they sell it. How old is this boat and what sort of money are you talking about.

The 50ft, I know little about except the owner seems like a decent chap.

The 55ft I know less about, seller is in a big rush /!\ but I do want the extra length.

Each is under £25k which presumably means there will be problems. I didn't want a "finished" boat anyway.

 

Previously I had the impression that the VAT status was a property of the boat. One builder explained that only boats over a certain size (which basically means 60ft+ widebeam) can be zero-rated for VAT and anything else is 20%.

 

Is the liability for paying VAT actually a property of the sale, and hence not relevant for private sale including where a broker is involved (boat not owned by a company)? And so also not attaching to the boat to encumber future sales?

[Alan de Enfield]

4 minutes ago, TheBiscuits said:

Still, a donation to the "coffee fund" can help with VAT paperwork I've heard!

 

Not sure how well the offer would be received in this country.

 

 

2 minutes ago, LadyG said:

On salty boats it's on starboard side, engine bearers area.

 

The RCD demands that it is on the Transom, Stbd side.

Edited March 10, 2021 by Alan de Enfield

[ditchcrawler]

32 minutes ago, wakey_wake said:

 

 

Is the liability for paying VAT actually a property of the sale, and hence not relevant for private sale including where a broker is involved (boat not owned by a company)? And so also not attaching to the boat to encumber future sales?

There is no liability to pay VAT, its paid on the new boat just like a second hand car

33 minutes ago, Alan de Enfield said:

 

 

 

The RCD demands that it is on the Transom, Stbd side.

I wonder where LadyG's is

[Alan de Enfield]

1 hour ago, wakey_wake said:

Is the liability for paying VAT actually a property of the sale, and hence not relevant for private sale including where a broker is involved (boat not owned by a company)? And so also not attaching to the boat to encumber future sales?

 

If the VAT on a new boat is reclaimed by the buyer ( a company or anyone VAT registered) 'when new', the when the boat is sold (secondhand) VAT has to be charged on the sale, and paid by the new buyer.

So, in certain circumstances the VAT can be applied to secondhand purchases.

 

 

 

1 hour ago, wakey_wake said:

One builder explained that only boats over a certain size (which basically means 60ft+ widebeam) can be zero-rated for VAT and anything else is 20%.

 

It is that very dangerous statement that got some buyers of widebeams into trouble and the requirement to pay HMRC the VAT due which should have been paid at the time of the sale. So came as a very nasty surprise - having just a few days to find a totally unexpected £30,000 each.

The law is not based on the length on the boat. The boat has to have a gross tonnage of at least 15 tonnes (that is not the weight of the boat) and there is a formula to calculate the 'tonnage'. A boat whose gross tonnage that is in excess of 15 tonnes becomes a 'qualifying 'ship'

 

Only a very few widebeams that have very high Gunwales can comply.

 

• A VAT-free boat is known as a ‘qualifying ship’. There are two specific legal criteria for a qualifying ship.
• The first is that the boat has not been ‘designed or adapted’ for recreation or pleasure. The fact that your boat is designed as a live-aboard and not as a ‘pleasure craft’ means that it fulfills the first condition even if you are not intending to live aboard permanently or at all.
• The second criterion relates to gross tonnage. This gross tonnage figure must be not less than 15 tons.  Gross tonnage is to be calculated as under the Merchant Shipping Acts.  Where gross tonnage has not been certified in accordance with those Acts HMRC guidance in Notice 744C (available online) sets out a modified version of that calculation for VAT purposes.

 

The HMRC formula for calculating gross tonnage for vessels of less than 24m in length is as follows.

L (m) x B (m) x D (m) x 0.16 (see below for HMRC definitions of L,B & D)

HMRC then go on to specifically define the D measurement for canal boats and this is measured from under the top of what we know as the gunwale to the base plate.

As an interesting example, take ‘Panache’ a huge 69’ long (L) x 11″ beam (B) with a height of 46” (D).

Let’s work out the calculation by first converting the imperial measurements to metric so we have:

21.03m x 3.35m x 1.16m = 81.35 x 0.16 = 13.01 gross tons… Not a qualifying vessel.

 

So here’s the interesting part in order to get a boat even of this size to qualify the standard (D) measurement would need another 190mm adding giving a (D) measurement of 1.35m. See the revised calculation below:

(21.03m x 3.35m x 1.35) = 95.10 multiplied by 0.16 = 15.21 gross tons, a qualifying ship.

Edited March 10, 2021 by Alan de Enfield

[David Mack]

Surely the simple way round the VAT issue is for the bill of sale to state that the agreed purchase price includes any VAT which may be payable. That leaves the liability for any VAT with the seller.

 

[Alan de Enfield]

12 minutes ago, David Mack said:

Surely the simple way round the VAT issue is for the bill of sale to state that the agreed purchase price includes any VAT which may be payable. That leaves the liability for any VAT with the seller.

 

 

The standard terms in the sales contracts normally say :

 

1) The Seller warrants that VAT and Customs Duty is not payable on the sale of the Vessel which is the subject of this Agreement, or

 

2) Further, * I/we, as transferor(s), hereby declare that * I/we have the power to transfer in the manner described above the above mentioned shares, and that they are free from encumbrances.

 

Edited March 10, 2021 by Alan de Enfield

[wakey_wake]

1 hour ago, Alan de Enfield said:

[...]

It is that very dangerous statement that got some buyers of widebeams into trouble and the requirement to pay HMRC the VAT due which should have been paid at the time of the sale.  [...]

The law is not based on the length on the boat. The boat has to have a gross tonnage of at least 15 tonnes [...]

 

I will here plead guilty to oversimplifying things I didn't understand. ?

 

The boat builder I called (Collingwood? Someone advertising in WW mag) did outline tonnage figures and calculation, but from my point of view: the zero-VAT figure cannot be achieved with a narrowboat. It is therefore irrelevant for my immediate concerns and the details of the criteria didn't stay in my head.

[wakey_wake]

~~~~ (later... will it merge my posts?) ~~~~

8 hours ago, wakey_wake said:

When I break down the issues, do these cover all concerns?

1. that I get legal ownership
2. I can sufficiently prove that ownership later
3. that I know about technical (mechanical, structural) problems and have some idea what they would cost to fix

 

there is also

4. outstanding finance risk