INTERNATIONAL accountant and shipping adviser Moore Stephens says the UK Budget 2012 contains some encouraging signs for the shipping industry.

The government has stated that it will consult later this year on whether to introduce a rule allowing companies with a non-sterling functional currency to compute their capital gains and losses in such functional currency, rather than in sterling, as is currently the case. Moore Stephens tax partner, Sue Bill, says, “This is of particular relevance for UK companies which own vessels outside the UK tonnage tax regime, either because the company did not elect into tonnage tax, or because the ship does not qualify for tonnage tax, for example because it is chartered out on a long-term bareboat charter, or is a type of vessel excluded from tonnage tax such as a fishing vessel. As all capital gains are currently calculated in sterling, where a company has a different functional currency its capital gains and losses will include an exchange gain or loss. This possible change in the rules would minimise taxable capital gains arising due to (or being reduced by) exchange rate movements.”

Another change introduced by the Budget is a reduction in corporation tax rate by an additional one per cent from April 2012. This means that the rate will be 24 per cent from April 2012, reducing to 23 per cent in April 2013 and 22 per cent in April 2014. The government has said that it expects this measure to increase the level of business investment in the UK by approximately one per cent.

Tags: Moore Stephens