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 Reporter June 2015 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Finance

Buoys in Disputed Waters Roil South China Sea Dispute

Buoys stretched "as far as eye could see" - Philippine sailor. The Philippine navy recently found a large steel marker bearing Chinese inscriptions and hundreds

Navis N4 TOS Open in Liverpool Terminal

Peel Ports, owners and operators of the Port of Liverpool, has achieved a major milestone in its multi-million investment program to transform the port into Europe’s

AkzoNobel’s Carbon Credits Methodology Wins Award

AkzoNobel’s landmark carbon credits methodology for the shipping industry has won the Best Offsetting Project award in the 2015 Voluntary Carbon Market Rankings.

Consulting

Indonesia Expects Total to Decide on Mahakam within days

French oil firm Total  will decide how much interest it will retain from 2018 in Indonesia's offshore Mahakam oil and gas block over the next two days, the

Research Vessel Heincke: Serving Science for 25 years

7 July 2015. A quarter of a century old, with over 900,000 kilometres (488,842 nautical miles) logged and still on the cutting edge of science and technology:

New Record Year in Dry Bulk Demolition Underway - BIMCO

The monthly average for the first six months in 2015 is 3.3m DWT. In 2014 the first half year averaged at 1.33m DWT per month.   April 2015 saw 5.36 million DWT being retired from active service,

 
 
Maritime Careers / Shipboard Positions Maritime Security Naval Architecture Navigation Offshore Oil Port Authority Salvage Ship Electronics Ship Repair Sonar
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: 0.1061 sec (9 req/sec)