Taxation - Prescott plan to revive UK shipping
Deputy Prime Minister John Prescott has unveiled radical reforms to the UK’s shipping tax regime as part of a package aimed at ‘putting British shipping back on the map.’
The current maze of tax reliefs are to be swept away and replaced by a simpler tonnage-based corporation tax system, as used in many other regimes.
But the UK’s system will also include a minimum training obligation which shipping companies will have to meet in order to be eligible for the new tax.
Tax rates have not been published, but the system is expected to be designed to keep taxable profits for ships very low indeed – £40m a year is expected to be wiped off the industry’s tax bill.
Prescott said it would be introduced in next year’s Finance Bill, although the option to use it would be made retrospective until January 1, 2000. The system will be based on a report on the tonnage-based corporation tax system by Lord Alexander of Weedon QC.
The package of measures is intended to reverse the decline of the UK merchant fleet. In 1980 it boasted 1,300 vessels and 64,000 seamen, compared to just 250 vessels and 18,000 seamen today. Aside from the new tax system, it includes measures to boost training and inward investment.
‘Today we are turning the tide. We can tell the world the red ensign is back,’ said Prescott.
P&O, the country’s biggest shipper, immediately announced it would double the number of ships on its UK register to around 100, including Grand Princess, the world’s biggest cruise ship.
Paul Powell, shipping partner at Moore Stephens, said: `This is good news as far as the UK flag is concerned and it should bring a lot of vessels back under it.’
But he warned that many details about how the scheme would work had yet to emerge. ‘It’s all in the small print,’ he commented.