A 70-year-old yachting business is facing insolvency after being hit with a £50,000 tax bill because its imported boats were too short.

Dorset Yacht Co faces administration after the tribunal found that 120 boats it had imported, Boston Whalers, should not have been classed as ‘seagoing’ as they were less than 12 meters long. Only professional fishing boats or lifeboats can be classed as seagoing below that length.

The decision by tribunal chairman Howard Nowlan was reached ‘reluctantly’, because
of the ‘obtuse drafting’ of the tax rules.

‘While we accept that the following points were of no technical relevance, we do also sympathise with the appellant because Customs officers themselves appeared to classify the boats wrongly,’ said Nowlan.

‘Had the appellant realised that a 1.75% duty was due in respect of the very superior boats that sold at a premium on account of their unique characteristics, we were convinced that no customers would have been lost on account of a resultant small price rise.’

Court documents suggested the company, formed in 1938, may now become insolvent as a result of the substantial bill for back duty.