Hello WolfOfTheSteppes; welcome aboard Mate!
What was described doesn't add-up correctly, even given the specific shortcomings of the "game" environment. It's a rainy day, cold and uninviting outside; so I just started another new career beginning in August '39 with a Type II, but here's what I can recall from earlier careers. You should get the notice of war with Great Britain around 0200Z on 3 Sept and, around 1600Z the same day, a missive advising you to take hostile actions immediately, w/o waiting to be attacked first. After that, any merchant ship flying the Red Ensign is fair game. The game seems to recognize that the British gov't asked for a response to their ultimatum by mid-day on the 3rd (11:00 in London and noon in Berlin, IIRC), but we are advised by message that we're at war with Great Britain well before that ultimatum "expired". So, your chart turns British ports from green to red at midnight, but apparently British vessels are still "neutral" until a little later in the day.
In my earlier careers, that started in August/September 1939, I have encountered and sunk British merchant vessels later in the evening of 3 Sept., getting the red "hostile vessel sunk" icon on the chart and credited with hostile tonnage sunk at save-game and end of patrol program closings. So, although Sailor Steve is quite right, something still seems to be "fishy" in your reported experience.
What time did you attack and sink the British coastal merchant? Are you 110% certain it was British? If it was Canadian or South African (also flying a Red Ensign but with their unique Coat of Arms opposite the Union Jack and very hard to see at night) you did indeed sink a "neutral", they didn't declare war until several days later...and I can't recall when India, Australia and New Zealand become belligerents in the game; their merchant vessels also fly a Red Ensign. BTW, the Schiffsflaggen quick reference sheet is not totally accurate with respect to dates that various nations started or stopped hostilities against Germany. I will also nit-pick the KM issuing a handy-dandy reference book that gives the end-date of hostilities for both Allied and Axis nations, while the war is still going on(!); sure, I use it, but it's a lot like a "cheat"...
Anyway, I have also attacked or nearly attacked unlighted Norwegian merchants at night and in bad weather/low visibility, identifying their flag as a Red Ensign, right up until getting within less than 1500m before seeing it clearly. I learned to do that the hard way...sank two of 'em on one patrol in '39 (thought I was due for an EK1, until I got back to homeport). The opposite also was (still is) true, I have mistaken Red Ensigns for Norwegian flags until the target ships got within 1500-2000m and their flags were clearly and completely visible. In my last career, which ended tragically in a minefield around Helgoland
, I had the same kind of "aw $hit" moment when I sank a large Belgian merchant, sailing darkened off the Norwegian coast on a miserable, stormy night in April '40, after "clearly identifying" her Ensign as French.
So, I exercise extreme caution in those cases; when approaching a target vessel from forward of the beam, the aft superstructure can hide or partially obscure a flag on a fantail flagstaff and make positive identification difficult until the last moment. Anyway, considering events that took place in the "real world" of that time, you didn't do any worse than the best of the U-boat commanders. "Sink 'em all!"
