Moore Stephens Urges Changes to UK Tonnage Tax

Posted by Eric Haun
Monday, March 10, 2014

International accountant and shipping adviser Moore Stephens has made representations to Her Majesty’s Revenue & Customs (HMRC) about changing the way in which the written-down values of vessels are calculated under the U.K. tonnage tax rules, which it considers are not realistic in terms of their interaction with the capital allowances regime.

Moore Stephens tax partner Sue Bill said, “Where a company exits tonnage tax other than on the expiry of an election, and still owns ships, unless a ship falls within the definition of a ‘long-life asset’, its cost for capital allowances purposes is written down broadly as if the company had claimed capital allowances at 25 percent on a reducing balance basis for each year that it owned the ship.

“The company’s ships are therefore likely to have relatively low tax written-down values which will bear no relation to the capital allowances that would have been claimed if the company had not been in tonnage tax for the relevant period. As a result, the company is likely to exit tonnage tax with large deferred tax liabilities. This will apply to companies that cease to satisfy such requirements for the tonnage tax regime as the strategic and commercial management tests.”

Moore Stephens considers that the tax written-down value should be calculated in a different way. Sue Bill explained, “Other possible methods are to write down the cost of the vessel to market value, or for the cost of the vessel to be depreciated on a time-apportionment basis, bearing in mind its expected economic life when new. Another possible but less beneficial option, although one which is likely to be more acceptable to HMRC, is to adjust the existing rules so that the cost is written down in line with the normal rates for plant and machinery capital allowances, which have reduced from 25 percent to 18 percent.”

moorestephens.com
 

Maritime Today


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

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

Finance

Baltic Index Rises on Increased Demand Across Segments

The Baltic Exchange's main sea freight index, tracking rates for ships carrying dry bulk commodities, rose on Thursday on higher demand across all vessel segments.

PALFINGER Finalizes Harding Acquisition

The PALFINGER Group closed the acquisition of 100 percent of the shares in Herkules Harding Holding AS, i.e. the globally operating Harding Group, supplier of lifesaving

Beijing Slams South China Sea Court Proceedings

Permanent Court of Arbitration ruling set for July 12. An international court said it would deliver a hotly anticipated ruling in the Philippines' case against

Consulting

MAST, AMSA Partner for Risk Management Services

Maritime security company Maritime Asset Security Training (MAST) has announced their partnership with Astbury Marine Services & Associates (AMSA), a specialist

Boon, Non-executive Director of ST Engineering Resigns

Singapore Technologies Engineering Ltd (ST Engineering) today announced the resignation of Mr Quek Tong Boon as non-executive Director with effect from 1 July 2016.

BIMCO - Oil Product Tankers Earnings Decline as stockbuilding Slows Down

BIMCO’s expectations remain as the oil product tanker fleet continues to grow with earnings at the lowest since Q3 in 2014. But there is still money to be made in the second half of 2016.

 
 
Maritime Security Maritime Standards Navigation Pipelines Pod Propulsion Port Authority Ship Repair Ship Simulators 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: 0.0620 sec (16 req/sec)