**In the highly specialised world of Superyachts, getting it wrong can cost you big money. Quentin Bargate, Head of the Superyacht Group at Bargate Murray Solicitors, tells us more.** You want to purchase a yacht, but there are a few key questions to ponder before rushing in. Firstly, how will you finance this purchase and what are the cash flow and tax implications? Are there tax implications for the ownership and operation of your yacht? Secondly, how do you intend to operate the yacht and are there ways to minimise VAT – for example by flagging abroad and relying on temporary importation for a private yacht, or importing in to the EU through a tax-efficient jurisdiction for commercial yachts. Last but not least, how can you arrange comprehensive insurance packages for your vessel, for public liability, and for yourself and your crew? These are just a handful of many tricky factors to negotiate. If your purchase is a new-build, when negotiating the construction contract it’s advisable to employ an experienced lawyer to help you through the paperwork as these are very complex documents.

Stage payments

Don’t pay too much too soon. A good yacht lawyer can assist in negotiations to ensure that stage payments are not too front-loaded and should also try to secure repayment cover by way of refund guarantees for the first few payments when the yacht is in the early stages of construction.

Title

When the yacht is part-completed ensure the title is passed to you and negotiate strong refund guarantees for the first few payments.

Insurance

Good insurance is vital. It’s paid for by the yard during construction but how comprehensive is it? Who are the underwriters and what happens to claim monies? The package of main financial measures – stage payments, delay penalties, performance guarantees, insurance, yard uplift and VTC (variations to contract) charges (or discounts) are all matters a yacht lawyer can assist with and in the process, help add value to the project, reduce risk and save you money.

Penalties for delay

With top superyachts being chartered for anything up to $1m per week, delay in delivery could be costly. Ensure you impose stiff penalties if the yacht is delivered late, as many often are. Prior to the delivery/purchase of your yacht there are certain things you must check you’ve covered: **Different finance structures** such as leasing are worth exploring. Also ensure the vessel is held in a SPV to minimise personal exposure. Your bank, if the project is being financed, may have a major role to play in financial structuring. **Ensure your post delivery operation structure is in place** – it can take a year or more to make all the arrangements necessary for a large Superyacht, such as ISM compliance. Other issues will include ongoing management, both technical and commercial as well as crewing etc. Much will depend upon how the yacht will be used and there are major financial risks attached to Superyacht operations. Some of these costs can be minimised if you have a full understanding of what to do, if not, it’s worth speaking to someone who can help answer your queries and provide sound advice at every stage of the process. For further information, don’t hesitate to contact: Quentin Bargate
Bargate Murray Solicitors
+44 (0)107 374 1393

You can also find out the best foreign exchange payment methods for large purchases by calling Currency Solutions on +44(0)20 7740 0000