Moore Stephens Warns of Threats to UK Shipping
Accountant and shipping adviser Moore Stephens has welcomed the UK government’s decision to issue consultation papers on statutory residence and the taxation of non-domiciliaries. But it warns that the UK shipping industry faces a growing threat from other jurisdictions.
Her Majesty’s Revenue & Customs’ consultation papers propose a statutory residence test and certain changes to the taxation of non-domiciliaries with effect from April 2012. “These could have important implications for shipping,” says Moore Stephens shipping partner, Richard Greiner, “and are generally to be welcomed.”
The stated objectives of the non-dom taxation reforms are to ensure that non-doms make a fair tax contribution and to encourage non-doms to invest in the UK. To achieve the latter objective, the government intends to allow non-doms to remit overseas funds to the UK tax-free for commercial investment in a qualifying business. Greiner says, “Although these measures are at present the subject only of a consultation paper, and could change as a result of responses received by the government before the cut-off date of September 9, 2011, they represent a positive development.
“Similarly, the draft proposals for a statutory residence test should result in rules which are clear and fair, providing some long-overdue clarity in what has previously been a very grey area. This is especially appropriate for a country which seeks to attract, and retain, international business.
“The government’s commitment to consult on these issues is particularly positive, but is in stark contrast to its recent unilateral decision to reinterpret the rules on UK tonnage tax. The importance of tonnage tax should not be underestimated. A recent report by UK Maritime notes that, had the UK-owned fleet continued to decline at the rate seen in the years immediately before the introduction of tonnage tax, the UK shipping industry would have contributed £3.9 billion less to UK GDP in 2009 than it actually did, and there would have been 81,000 fewer jobs in total.
“UK shipping faces a serious and growing threat from other, more user-and-tax-friendly regimes. We have already seen movement to other jurisdictions. If this is not to become an exodus, it is essential to maintain the competitiveness of the UK shipping industry.”
(Source: Moore Stephens Press Release)