Ownership of Bill of Sale

[Dave J]

I'm in the process of buying a wide beam through a broker, I've asked to see copies of the original bill of sales along with the VAT exemption certificate, RCD compliance certification and owner manual.

 

I've been informed I'll receive a bill of sale for my purchase from the brokerage BUT they will keep the original bill of sale on archive, which they say is the norm.

 

Having read numerous articles about the importance of a boats paper trail - it seems counter-intuitive to me that they should hold on the the original bill of sale.

 

Is this usual?

 

Thanks

Dave

 

 

[mrsmelly]

Whilst a paper trail is often non existant regards boats. If the originals are available I would want them, they are not the property of the poxy broker and of no use to him/her. I think they are being an arse which doesnt suprise me having met many brokers ( some are good )

Edited July 7, 2022 by mrsmelly

[Arthur Marshall]

I think most of us don't have any kind of paper trail worth its salt.

Admittedly I bought mine in more informal times, but all I've got is an undated receipt, and another on my mooring was bought by a bloke handing over a suitcase of money to the owner and sailing off.

[mrsmelly]

1 minute ago, Arthur Marshall said:

I think most of us don't have any kind of paper trail worth its salt.

Admittedly I bought mine in more informal times, but all I've got is an undated receipt, and another on my mooring was bought by a bloke handing over a suitcase of money to the owner and sailing off.

Agreed, but we bought boats back in my case in the late 80s. I did indeed buy my first boat with used twenty pound notes at the side of the canal. Nothing unusual in those days. I got zero, nor asked for any paperwork. Peeps are scared of their shadows these days and of course frightened by crap such as RCD.

[Alan de Enfield]

21 minutes ago, Dave J said:

I'm in the process of buying a wide beam through a broker, I've asked to see copies of the original bill of sales along with the VAT exemption certificate, RCD compliance certification and owner manual.

 

I've been informed I'll receive a bill of sale for my purchase from the brokerage BUT they will keep the original bill of sale on archive, which they say is the norm.

 

Having read numerous articles about the importance of a boats paper trail - it seems counter-intuitive to me that they should hold on the the original bill of sale.

 

Is this usual?

 

Thanks

Dave

 

 

 

Its a different market but the RYA say that the paper trail held as 'ships papers' should go all the way back to the original sale from the builder.

The bill of sale belongs to the boat, not to the broker.

 

Call their bluff.

Say you'll buy it if they release all paperwork, or, won't if they don't.

[Tracy D'arth]

They can keep a copy but the original belongs to the boat,  and you as the owner.

[Sea Dog]

So, when they inevitably go bust, move on, shuffle off, or whatever, what happens to "their" archive? Not very difficult for them to retain a certified copy for their own purposes if they feel it that important I'd have thought.

[MrsM]

41 minutes ago, Tracy D'arth said:

They can keep a copy but the original belongs to the boat,  and you as the owner.

Exactly this. We have all the original bills of sale for our boat (bought privately 3 years ago but previously sold through ABNB). If the brokers want to take a copy that's up to them but the originals stay with the boat.

[Dave J]

Thanks everyone - you've confirmed what I thought, I'll be having short conversation with the brokers!!

[BEngo]

If you ever need to register a ship, ( not the Small Ships Register  but the proper Register of Merchant Shipping,  so you can get say, a mortgage on  the thing)   one of the things the Registrar requires is that you prove ownership, of each sixty fourth, right back to the builder.  Like a lot of officialdom they much prefer original documents and certified copies are hard to get certified without an original.

 

I reckon the broker is trying to keep a link to the boat so that if you come to sell, you have to go back to him for the Bill's of Sale.

 

N

[LadyG]

4 hours ago, Arthur Marshall said:

I think most of us don't have any kind of paper trail worth its salt.

Admittedly I bought mine in more informal times, but all I've got is an undated receipt, and another on my mooring was bought by a bloke handing over a suitcase of money to the owner and sailing off.

Things have changed since the year 1999

I suspect they don't want to show you the price.

This can be redacted, ie blacked out.

Edited July 7, 2022 by LadyG

[Alan de Enfield]

6 minutes ago, LadyG said:

Things have changed since the year 1999

I suspect they don't want to show you the price.

This can be redacted, ie blacked out.

 

YOu cannot go 'blacking out' chunks of official documents.

 

Why should the broker be concerned what the previous buyer(s) paid for it ?

 

Many inland brokers are BMF members - the BMF conditions of sale / purchase regarding documentation are :

 

SCHEDULE 3 – DOCUMENTS TO BE PROVIDED ON COMPLETION OF PURCHASE

1. Any Certificates of Registry in the Seller’s possession relating to the Boat, current or expired;

2. A properly executed Bill of Sale relevant to the Purchaser in favour of the Purchaser or his nominee;

3. All other documents of title to the Boat which are in the Seller’s possession or control ;

4. Evidence by way of original or true copy documents regarding the VAT status of the Boat including Builder’s invoices, evidence of VAT payment and dates of arrival in the European Community;

5. Proof of the Boat’s compliance with the Recreational Craft Directive;

6. Instruction manuals and warranty cards for the Boat and all equipment contained within the sale;

7. An express written declaration by the Seller that at the moment of Completion and delivery to the Purchaser the Boat is free of all debts, claims and charges of any every kind.

8. Any delivery order or authority necessary to enable the Purchaser to take immediate possession of the Boat

[MichaelG]

As others have already said, this seems bizarre. I purchased my narrow boat via a broker and I got a folder full of documents including the original bill of sale issued to the first owner some 12 years previously. Before that I had purchased four fibreglass cabin cruisers via brokers and not once did they ever suggest they would have to retain any of the boats paperwork. So I don’t imagine it is the “norm”. I’d be interested to hear any update you have once you’ve spoken again to the broker and got a clear explanation from him of his rationale behind wanting to retain paperwork once ownership has passed to you.

[Dave J]

1 minute ago, MichaelG said:

As others have already said, this seems bizarre. I purchased my narrow boat via a broker and I got a folder full of documents including the original bill of sale issued to the first owner some 12 years previously. Before that I had purchased four fibreglass cabin cruisers via brokers and not once did they ever suggest they would have to retain any of the boats paperwork. So I don’t imagine it is the “norm”. I’d be interested to hear any update you have once you’ve spoken again to the broker and got a clear explanation from him of his rationale behind wanting to retain paperwork once ownership has passed to you.

I spoke with the agent again this afternoon, I've explained that for all the reasons stated in this thread it was both unreasonable and unacceptable - She told me it's prevent fraud by people financing the boat twice!! I'm a cash customer but also explained they had no remit to monitor such a thing and quite frankly once sold it was none of their business! I've explained it's a deal breaker! She's going to talk to her boss so I'll let you know the outcome but it sounds like shady practice to me at the least!

2 hours ago, Alan de Enfield said:

 

YOu cannot go 'blacking out' chunks of official documents.

 

Why should the broker be concerned what the previous buyer(s) paid for it ?

 

Many inland brokers are BMF members - the BMF conditions of sale / purchase regarding documentation are :

 

SCHEDULE 3 – DOCUMENTS TO BE PROVIDED ON COMPLETION OF PURCHASE

1. Any Certificates of Registry in the Seller’s possession relating to the Boat, current or expired;

2. A properly executed Bill of Sale relevant to the Purchaser in favour of the Purchaser or his nominee;

3. All other documents of title to the Boat which are in the Seller’s possession or control ;

4. Evidence by way of original or true copy documents regarding the VAT status of the Boat including Builder’s invoices, evidence of VAT payment and dates of arrival in the European Community;

5. Proof of the Boat’s compliance with the Recreational Craft Directive;

6. Instruction manuals and warranty cards for the Boat and all equipment contained within the sale;

7. An express written declaration by the Seller that at the moment of Completion and delivery to the Purchaser the Boat is free of all debts, claims and charges of any every kind.

8. Any delivery order or authority necessary to enable the Purchaser to take immediate possession of the Boat

Thank you - this is very useful - I'm sending an email copy to the broker

[MichaelG]

Not sure how on earth them retaining an original bill of sale would serve to prevent such a situation.

[Dave J]

Just now, MichaelG said:

Not sure how on earth them retaining an original bill of sale would serve to prevent such a situation.

Me neither and I asked her to explain - her response was "I just work here"!!! The only conclusion I can draw is that they want to create a cash bonus of supplying me the original bill of sale when I come to sell - I can't fathom any other logical explanation...as I mentioned, I won't accept it and unless they adopt a more professional approach I will walk away!

[MichaelG]

Just thought, as you mentioned in your original post VAT exemption. Could the brokers motivation to retain original paperwork relate to their concerns that they may want to be able to show that VAT has been paid previously or is exempt so no VAT is due now. The fraud thing may just be something made up by the employee when put on the spot. 

[Dave J]

This is a whole different can of worms. The seller bought the boat new and paid VAT on the fittings but not on the hull. It's an aqualine (12ft x 68ft) and their sales literature says it's vat exempt. Apparently (according to the broker) the bill of sale states the same...I'm still waiting to see it!! However when I had it surveyed I asked the surveyor to check the measurements and as far as I can see it may not be VAT exempt. But having spoken to a marine vat specialist he thinks if it's sold as VAT exempt and later proven not to be (although highly unlikely anyone will question it) then HMRC re likely to chase the original sales company. BUT the fact the (so I'm told) the bill of sale states its VAT exempt if further reason for it to be in my possession! 

 

[Alan de Enfield]

36 minutes ago, Dave J said:

This is a whole different can of worms. The seller bought the boat new and paid VAT on the fittings but not on the hull. It's an aqualine (12ft x 68ft) and their sales literature says it's vat exempt. Apparently (according to the broker) the bill of sale states the same...I'm still waiting to see it!! However when I had it surveyed I asked the surveyor to check the measurements and as far as I can see it may not be VAT exempt. But having spoken to a marine vat specialist he thinks if it's sold as VAT exempt and later proven not to be (although highly unlikely anyone will question it) then HMRC re likely to chase the original sales company. BUT the fact the (so I'm told) the bill of sale states its VAT exempt if further reason for it to be in my possession! 

 

 

 

Be very, very careful.

 

Certain manufcturers of widebeam boats have included a clause in their sales T&Cs that should the boat subsequently be found to be liable to VAT, irrespective of what the manufacturer has told the buyer, then the buyer accepts all liability for any VAT due.

 

The incorrect application of 'zero rating' of VAT (which is different to VAT exempt) has come to light when the manufacturer has had their VAT audit - it HAS resulted in the buyer getting a VAT bill for over £20,000 (based on the original selling price)

 

 

I'd suggest you take legal advice and / or a tax advisors' advice if the documentation says 'Zero rated' VAT

 

From the fitout pontoon website :

 

 

VAT Free Canal Boats… Understanding The Rules!

This is an often misunderstood topic, in part due to recent court cases and the “rumour mill”. Also although HMRC are clear on how they would like boats to be treated for VAT purposes their published views sometimes do not accurately reflect the law. In particular, what has not been so clear has been the actual application of the law in relation to claims for tax-free status on the sale/purchase of a new boat.

A few general points first:

1. The sale of any vessel is only subject to VAT if the owner is carrying on a business.
2. Boats are either standard rated (taxable at 20%) or zero-rated (taxable at 0%), sometimes referred to as ‘VAT free’.
3. VAT Exempt is different to VAT free (zero rated).
4. If nothing is said about VAT in the purchase documentation, the price includes any VAT due.
5. It is the seller’s responsibility to charge the correct amount of VAT and he has to account for it to HMRC.

Houseboats are always zero-rated. Houseboats are defined for VAT purposes as ‘boats or other floating decked structures designed or adapted for use solely as places of permanent habitation, and not having the means of, or not capable of being readily adapted for, self propulsion’.

So if your boat is classified as a houseboat and you have no means of propulsion (engine), nor any easy way of fitting one in the future, then the houseboat will be VAT-free.

What about live-aboards that are not houseboats? Well, this is an interesting topic and, in the words of HMRC, proving whether a vessel qualifies partly involves proving a negative as explained below.

This is how it works:

• 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’ the widebeam boat featured on our build diary of 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.

So here’s the bottom line…

Provided  that the boat is not designed or adapted for recreation or pleasure at the time you buy it and so long as the gross tonnage (L x W x D (from the underside of the back deck, or gunwale if no back deck) x 0.16) works out to be not less than 15 tons the supply of the boat is zero-rated so no VAT. Simple!

Many canal boat builders are now offering specially designed wide beam craft with higher gunwales that give live-aboard boaters the opportunity for VAT savings.

Misconceptions regarding VAT exempt vessels & residential usage…

There is no legal requirement that a VAT-free vessel be designed as or even used as a residence. Any conditions in HMRC’s Notice 744C (‘Ships, aircraft and associated supplies’) which go further than the statutory provisions are of no legal force. There is no legal justification for imposing an additional condition of permanent residential use.

A word of warning…

It is vital as a ‘Purchaser’ you read all the contractual documentation regarding the purchase of any vessels and in particular VAT free vessels. There’s been a case highlighted to us where a boat had been sold as ‘VAT free’ unfortunately on incorrect grounds which post sale lead to the HMRC correctly chasing the seller for the VAT which should have been charged. In this particular case the contract of sale placed the responsibility to satisfy any such VAT claim on the purchaser so they had to stump up.

 

 

[SLC]

I find it very, very surprising that a seller can legally include in their T&Cs a clause that should the boat subsequently be found to be liable to VAT, irrespective of what the manufacturer has told the buyer, then the buyer accepts all liability for any VAT due. I thought it was the supplier who determined whether VAT was payable and what the amount was. To then pass that on to the buyer via a clause in their T&Cs would be most unfair and unreasonable. Unfair Terms and Conditions under EU Law? A buyer should surely know at the time of purchase whether VAT is payable and the amount. 

I freely admit that in the boating world everything is different, it is another world but in my previous job we were registered for VAT as part of our services were liable to VAT. We were regulated by the FCA and we had to ensure that the customer knew at first contact when he or she received their Client Agreement if the service we provided was liable to VAT. If we, the provider got it wrong we were liable for the payment to HMRC and there is no way on earth we would be allowed to go back to the customer for the extra amount. No clause could be inserted in our T&Cs to allow recovery and if we did, the FCA would demand that the customer got their money back and the firm would be censored. Fined. Why? Because it is grossly unfair. How can you be liable for a further fee once a sale has been agreed? And I cannot believe that such a clause would be deemed fair in English Law.

I am shocked if this is the case. Of course I have probably misunderstood things as I normally do!

[Dave J]

4 minutes ago, SLC said:

I find it very, very surprising that a seller can legally include in their T&Cs a clause that should the boat subsequently be found to be liable to VAT, irrespective of what the manufacturer has told the buyer, then the buyer accepts all liability for any VAT due. I thought it was the supplier who determined whether VAT was payable and what the amount was. To then pass that on to the buyer via a clause in their T&Cs would be most unfair and unreasonable. Unfair Terms and Conditions under EU Law? A buyer should surely know at the time of purchase whether VAT is payable and the amount. 

I freely admit that in the boating world everything is different, it is another world but in my previous job we were registered for VAT as part of our services were liable to VAT. We were regulated by the FCA and we had to ensure that the customer knew at first contact when he or she received their Client Agreement if the service we provided was liable to VAT. If we, the provider got it wrong we were liable for the payment to HMRC and there is no way on earth we would be allowed to go back to the customer for the extra amount. No clause could be inserted in our T&Cs to allow recovery and if we did, the FCA would demand that the customer got their money back and the firm would be censored. Fined. Why? Because it is grossly unfair. How can you be liable for a further fee once a sale has been agreed? And I cannot believe that such a clause would be deemed fair in English Law.

I am shocked if this is the case. Of course I have probably misunderstood things as I normally do!

During my research into this subject there have definitely been court cases where the buyer bot won and lost their case against HMRC claiming back dated VAT on a vessel. It does appear to basically come down to the wording in the contract (hence my interest in seeing the bill of sale and associated t&C's). It does appear our courts will deem it payable by the purchaser if the signed agreement passes all liability to the purchaser!

[Alan de Enfield]

4 minutes ago, Dave J said:

During my research into this subject there have definitely been court cases where the buyer bot won and lost their case against HMRC claiming back dated VAT on a vessel. It does appear to basically come down to the wording in the contract (hence my interest in seeing the bill of sale and associated t&C's). It does appear our courts will deem it payable by the purchaser if the signed agreement passes all liability to the purchaser!

 

As has already been proven in a number of cases

[Momac]

9 hours ago, Dave J said:

BUT they will keep the original bill of sale on archive, which they say is the norm

 

 

No it's not normal. Walk away.

[SLC]

Wording of the contract maybe. But were the contract terms fair? Definitely not imho and that of the FCA certainly. I thought there was an unfair terms and conditions law? Nevertheless, each case must be judged on its merits and if the seller is reliant on the purchaser for information which determines if VAT is payable that could be a different case. I hated VAT with a loathing as there was so much conflicting information from so called "professional" bodies and the later clarification made it worse!!

Incidentally, why are originals required when we have copiers?

If in doubt walk away I guess. Peace of mind is priceless.

[Peanut]

Interesting, does the broker even own the boat?  While you may rely on their professional service, you may be buying the boat from the owner who is not a business and claims to know nothing.  The brokers will say that they rely on what the owner told them, and could prove a slippery fish.