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

Finance

DP World Launches $1.2 bln Sukuk Issue to Cover Tender

Dubai-based ports operator DP World launched a seven-year $1.2 billion sukuk issue on Tuesday, a document from lead managers showed.   The issue, structured to

Baltic Index Falls on Weaker Demand

The Baltic Exchange's main sea freight index, tracking rates for ships carrying dry bulk commodities, fell on Tuesday as demand for larger vessel segments declined.

China Shipbuilding Plans Major Restructuring

State-owned China Shipbuilding Industry Corp (CSIC) is undertaking a major restructuring as it grapples with an industry downturn, and it will be the largest restructuring

Consulting

IMO to Prevent Cyber-attacks

At a meeting of the IMO's Maritime Safety Committee (MSC), it was recognised that ships may also be exposed to so-called cyber-attacks. Now, the IMO wants to

APL Reduces Carbon Emissions by 45.5%

APL today announced that it has reduced its fleet carbon dioxide emissions by 45.5% in 2015, compared to its emissions level in 2009. This achievement marks APL’s

Rising VLGCs fleet Impact LPG Freight Rates

LPG shipping freight rates are forecast to deteriorate further through 2016 as a result of the fast rising fleet of Very Large Gas Carriers (VLGCs) which has already

 
 
Maritime Careers / Shipboard Positions Maritime Security Maritime Standards Naval Architecture Navigation Pipelines Port Authority Salvage Shipbuilding / Vessel Construction 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: 0.0592 sec (17 req/sec)