Shipping companies should take positive action now, if they want to avoid a big U.K. tax bill, say leading accountants Moore Stephens. In the current issue of Moore Stephens' shipping newsletter, the bottom line, Philip Parr, partner, recommends a transfer pricing study to prevent the Inland Revenue from charging international shipping companies, with a UK arm, any additional tax, interest and penalties.
Transactions involving associated overseas companies are affected by the new tax legislation, which introduced self assessment and revised the transfer pricing rules two years ago. Shipping, as a highly international industry, is particularly affected by the new rules.
According to Parr, "The rules changed the emphasis from action that had to be taken by the Inland Revenue to positive action that has to be taken by the taxpayer to avoid tax penalties being charged." He warns, "It is vital to carry out a study to prevent the Inland Revenue trying to attribute a share of the profits of the overseas group, if it is highly profitable, which could be very expensive in terms of U.K. tax."
Also in the bottom line,
Moore Stephens reports on changes in the deferred tax regime and the consequences for
tonnage tax shipping companies, and profiles Igor Borisenko, Sovcomflot's chief financial officer. For copies of the bottom line contact John Guy at john@merlinco.com