Moore Stephens has welcomed the decision of Her Majesty’s Revenue & Customs (HMRC) to revise, as promised, its UK Tonnage Tax Manual to at least partly restore, on an interim basis, the pre-2009 interpretation of the strategic and commercial management tests.

Moore Stephens has been working for some time with the shipping industry, and in particular with the Chamber of Shipping, in campaigning for HMRC to reconsider its 2009 reinterpretation of the tonnage tax rules. This reinterpretation created a lack of certainty and sent completely the wrong signals to international shipowners who had relocated to the UK to take advantage of its tonnage tax regime.

Moore Stephens tax partner Sue Bill says, “The HMRC changes to its reinterpretation of the strategic and commercial management test are very good news for a number of shipowners who are in the UK tonnage tax regime. At the moment, this is only an interim measure. However, although the location of technical management in the UK is no longer a pre-requisite for qualification for the regime, the current interim guidance emphasises the need for a company to review its activities in light of EU guidelines and comments that the management activities must contribute substantially to economic activity and employment within the EU. Therefore it is not clear from the latest guidance whether the pre-2009 position has been completely restored. But this move does aim to address the immediate concerns of most shipowners in relation to the 2009 reinterpretation, and a full consultation will be carried out.

“The revised guidance includes some helpful comments regarding the application of the strategic and commercial management tests where ships are time-chartered in.

“The UK government has recently stated that it is keen to support the UK maritime sector. This is very good news. It is important that progress continues to be made and that the consultation process results in a consensus regarding the future position. The government should take the opportunity to consider other areas of the tonnage tax regime where changes to the rules would assist the UK shipping sector, which is currently facing difficult trading conditions and competition from other jurisdictions.”

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