U.K. Government revises Finance Bill 2012 to favor UK Shipowning Companies

(Press Release)
Monday, April 30, 2012

International accountant and shipping adviser Moore Stephens has welcomed the UK government’s decision to minimize the effect of new rules in Finance Bill 2012 which resulted in a potentially serious trap for existing UK shipowners entering tonnage tax.
Finance Bill 2012 originally extended some anti-avoidance rules relating to leasing companies, so that they applied to existing UK shipowning companies chartering out ships which enter UK tonnage tax. But the rules have now been changed following representations made by Moore Stephens and by other shipping industry representatives.
Moore Stephens tax partner Sue Bill says, “The rules apply where, very broadly, at least half the value of the company’s plant and machinery is chartered out or at least half its income in the previous twelve months is from the chartering out of plant and machinery, including ships, even where the chartering is to another group company.
“As originally drafted, the proposed new rules could have applied where a UK shipowning company in a tonnage tax group entered tonnage tax because it started to carry on activities which qualified for tonnage tax, for example because it owned a vessel which ceased to be chartered out on a long-term bareboat charter, or a vessel that started to be used ‘at sea’, or because the company’s ships started to be strategically and commercially managed in the UK. The rules also applied in some circumstances where a company was acquired by a UK tonnage tax group.
“Broadly speaking, if the rules apply, the company will be taxed on an amount equal to the excess of the net book value of its assets over their tax written-down value. It may be possible to reduce this taxable income using tax losses and/or capital allowances. Clearly, this could result in a very large tax liability. Once the company has gone into tonnage tax, the normal transitional rules will apply whereby a balancing charge can arise if any vessels held on entry into tonnage tax are sold within seven years. This could mean there is effectively a double charge to tax.
“The rules have now been amended so that they apply only where there is a change in ownership of the company chartering out plant and machinery. They will still apply where a company leasing out plant and machinery becomes a member of a UK tonnage tax group, whether or not the company goes into tonnage tax at the same time. A company will become a member of a UK tonnage tax group if, broadly speaking, it comes under common control with companies in a UK tonnage tax group."
Although the effect of the new rules has been significantly reduced, care will need to be taken where a company comes under common control with companies in a UK tonnage tax group.
Sue Bill concludes, “It was unfortunate that the Finance Bill 2012 originally introduced legislation which posed a potentially serious threat for some UK shipowners going into tonnage tax. The government has however listened to representations and acted quickly to minimize the effect of the proposed new rules. This seems to be a sign of the UK government’s commitment to ensuring as far as possible the stability of the UK tonnage tax regime.”
 

Maritime Today


The Maritime Industry's original and most viewed E-News Service

Maritime Reporter May 2016 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Finance

Defense Appropriations Bill Includes $1 Bln for US Icebreaker

The U.S. Senate Appropriations Committee’s FY2017 Defense Appropriations Bill has included $1 billion in funding to accelerate construction of a new polar icebreaker for the U.

Higher Capesize Demand Pushes up Baltic Index

The Baltic Exchange's main sea freight index, tracking rates for ships carrying dry bulk commodities, rose on Friday buoyed by higher demand for capesize vessels.

TT Club Reports Robust Financial Results for 2015

TT Club has announced its financial results for the year ended December 31, 2015, and AM Best affirms its A- (Excellent) rating for the 10th consecutive year.   Knud Pontoppidan,

News

GloMEEP Project Forges Ahead with Train-the-Trainer Workshop

A global Train-the-Trainer workshop on energy efficiency has been delivered in China (23-27 May), preparing the personnel needed to cascade knowledge on energy

Diana Charters Out Two Bulkers

Diana Shipping Inc. today announced that, through a separate wholly-owned subsidiary, it entered into a time charter contract with Bunge S.A., Geneva, for one of its Panamax dry bulk vessels,

Long Beach Port Maintains Strong Bond Rating

Fitch Ratings, one of the top three U.S. credit analysis agencies, has affirmed the Port of Long Beach’s “AA” rating on its outstanding debt. Fitch stated the AA rating — its highest for U.

Government Update

Details El Faro's Sinking Emerge from US Probe

U.S. investigators on Friday concluded two weeks of hearings into the sinking of cargo ship El Faro in a hurricane last fall that included reports the vessel had

Defense Appropriations Bill Includes $1 Bln for US Icebreaker

The U.S. Senate Appropriations Committee’s FY2017 Defense Appropriations Bill has included $1 billion in funding to accelerate construction of a new polar icebreaker for the U.

DSC Dredge Receives President’s E-Star Award

DSC Dredge, LLC, based in Reserve, La., has received the 2016 President’s “E-Star” Award for exports.   In a ceremony held on May 16, 2016, at the U.S. Department

 
 
Maritime Careers / Shipboard Positions Maritime Contracts Maritime Security Maritime Standards Offshore Oil Port Authority Ship Electronics Ship Repair Sonar Winch
rss | archive | history | articles | privacy | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1044 sec (10 req/sec)