U.K. tonnage tax set for “unwelcome” changes for some shipowners

U.K. tonnage tax set for “unwelcome” changes for some shipowners

U.K. tonnage tax set for “unwelcome” changes for some shipowners

The United Kingdom’s Inland Revenue (Her Majesty’s Revenue & Customs) has issued draft legislation that will make a number of vessel types ineligible for the country’s tonnage tax regime, following discussions with the European Commission over the interpretation of the guidelines on State aid for maritime transport.
   Effective April 1, to qualify for the U.K. tonnage tax a ship has to be engaged solely in either carrying passengers or goods at sea, or towage, salvage or other marine assistance carried out at sea. Cable-layers, pipe-layers and survey ships, which were treated as being partly within the regime, are being added to the list of types of vessel that will be specifically excluded.
   Following these changes, companies or groups have been given an opportunity to withdraw their tonnage tax elections by giving notice between April 1 and Sept. 30.
   Sue Bill, a tax partner with British shipping accountancy firm Moore Stephens, said the timing of the U.K. change is unfortunate coming so soon after the Jan. 1 change to Norway’s tonnage tax scheme, where owners now must either opt out of the old regime, which operated on a tax deferral basis, and be taxed immediately, or enter the new regime and pay the previously deferred taxes over a period of 10 years.
   “The good news is that U.K. tonnage tax will remain as a stable and robust regime, as the changes will affect relatively few shipowners. Also, the U.K. government seems to be trying to ensure that the required amendments will be implemented as reasonably as possible,” Bill said.
   “But the changes will nevertheless be very disappointing for affected shipowners who have made a 10-year commitment to the tonnage tax. The timing is unfortunate, too, as shipowners are likely to still be feeling jittery following recent tonnage tax developments in Norway.”
   The HMRC’s note on the tonnage tax amendments is available at www.hmrc.gov.uk/practitioners/noteon-tt.pdf. ' Simon Heaney