No News May be Good News for Shipping in UK 2009 Budget

LEADING shipping accountant Moore Stephens says the fact that the 2009 UK Budget does not include any measures which significantly affect the shipping sector could be regarded as good news for the industry.

April 22, 2009Although the government has been asked to make changes to UK tonnage tax, the 2009 Budget makes no mention of it. Moore Stephens tax partner Sue Bill says, “Possible changes to the tonnage tax regime could have included an amendment to the EU flagging rules excluding ships time-chartered into the fleet, and clarification of the position with regard to the changes proposed in January 2008 which were later withdrawn. But these are complex issues to resolve as they depend on agreement with the European Commission.

“In the current economic climate, it is not surprising that the relatively minor change to the tonnage tax regime which has been requested has not been made, and that the UK government’s position has not been clarified. Companies in the shipping sector may in any case have more pressing financial concerns at the moment. And, overall, the fact that there is not a great deal of specific interest for the shipping sector might be regarded as good news, because the taxation regime at least continues to be reasonably stable”.

Further tonnage tax guidance is expected in the next few months from Brussels and is expected to cover issues such as whether ship management companies can be included in tonnage tax regimes.

The Budget does, however, include some provisions which could be of interest to some shipping groups. The Finance Bill 2009 will include an exemption from tax for most foreign dividends. In conjunction with this there are consequent minor changes to the rules relating to so-called ‘controlled foreign companies’ (CFCs). The exemption from the CFC rules which previously applied if the company followed an ‘acceptable distribution policy’ will no longer apply and certain holding company exemptions will also be removed.

Sue Bill says, “An exemption from tax for most foreign dividends may be helpful for some international groups. However, the CFC rules will still apply and those will need to be taken into consideration.”

•About Moore Stephens LLP:

Moore Stephens LLP is noted for a number of industry specialisations and is widely acknowledged as a leading shipping and insurance adviser. Moore Stephens LLP is a member firm of Moore Stephens International Limited, one of the world's leading accounting and consulting associations, with 647 offices of independent member firms in 98 countries employing 21,224 people. Fee income increased in 2008 by US$353 million to US$2,237 million, a growth rate of 18.7%. (Ref: 04/09)

•For more information:

Sue Bill, Moore Stephens LLP / Tel: +44 (0)20 7334 9191 / email: [email protected]