articles: Shipping

Enablers of tax avoidance rules: the impact on shipping

New rules have recently been introduced in the UK to combat complex or artificial tax avoidance arrangements. These rules apply to ‘enablers’ of defeated ‘tax avoidance’ arrangements. Where the rules apply, penalties will be imposed on the enabler and they can also be ‘named and shamed’. These new rules have important implications for the shipping industry.

Increased disclosure required under IFRS 15: are you ready?

New accounting standard IFRS 15, Revenue from Contracts with Customers, introduces more detailed requirements for presentation and disclosure than the standards it replaces. Shipping company financial statements do not currently disclose many of these new elements, so attention needs to be given to how this information is obtained and whether accounting systems and processes need to be amended or updated.

Re-assuring clients about your control environment

Ship managers need to demonstrate that they not only have the credentials and expertise to effectively manage their clients’ vessels, but also robust systems and controls in place to ensure complete and accurate financial reporting to their auditors, management, investors and other stakeholders. As a result, many organisations are turning to assurance reports such as ISAE3402 and SSAE18.

Young professionals say London shipping must be adaptable and competitive

A new survey by The Shipping Professional Network in London (SPNL) has found  that London must adapt to a fast-changing environment and improve its competitive edge in order to remain a relevant global maritime centre. Respondents to the survey also identified access to the single market and freedom of movement as key negotiating issues for shipping in the UK’s exit from the European Union.

Fourth successive year of decline in operating costs

Total annual operating costs in the shipping industry fell by an average of 2.4% in 2015. This compares with the 0.8% average fall in costs recorded for 2014, and is the fourth successive overall year-on-year reduction in such costs. All categories of expenditure were down on those for the previous 12-month period. This suggests continued pragmatic management of costs by ship owners and operators, as well as a reduction in active trading for some owners as a result of the prolonged worldwide economic downturn.

Reducing maritime fraud and corruption

Complexity is the friend of the fraudster.  An international trade transaction involves multiple parties that can increase complexity – buyers, sellers, ship-owners, charterers, ships’ masters or crews, insurers, bankers, brokers or agents. In addition, one also has to consider the opportunity for cargo handlers (loading and unloading), government officials, security staff, inspectors, surveyors, hold  cleaners and others to commit fraud or behave corruptly.

Shipping must improve risk management

Not enough companies in the shipping industry are following joined-up risk management procedures.

Our second annual Shipping Risk Survey revealed a fall, when compared to last year, in the overall level of satisfaction on the part of respondents that sound risk management had contributed to the success of their organisations. The involvement of senior management in managing risk at the highest level also declined against last year.

Shipping must disclose or risk being exposed

Corporate governance in shipping has been in sharp focus recently, particularly following publication of the research by Wells Fargo Securities into Shipping’s Corporate Governance War. Businesses in today’s shipping industry are expected to fully comprehend the implications of inadequate management of conflict of interest arrangements, and to recognise the importance of independent directorship.

Potential tax issues for shipping & offshore maritime sector in UK Autumn Statement

The government is to invest £1.3 billion to transform HMRC into ‘one of the most digitally advanced tax administrations’ in the world. Most businesses and self-employed individuals will be required to keep track of their tax affairs digitally and to update HMRC at least quarterly via their digital tax account. The Government will consult on the details in 2016. 

Tax change could snare unwary vessel owners

In December 2014, the UK Government took the drastic step of introducing a new tax, publishing draft legislation introducing a new ‘Diverted Profits Tax’ (DPT). The DPT is designed to counter aggressive tax avoidance by multi-national enterprises such as Google, but is widely drafted and could potentially apply to many UK companies which have entered into transactions with overseas connected parties, including companies in the offshore sector.

The Autumn Statement – what can we expect?

The Chancellor of the Exchequer will deliver his Autumn Statement on Wednesday 3 December. This will provide an update on the government’s plans for the economy based on the latest forecasts from the Office for Budget Responsibility, which will be published the same day.

Small decline in 2013 ship operating costs

Total annual operating costs in the shipping industry fell by an average of 0.3 per cent in 2013. This compares with the 1.8 per cent average fall in costs recorded for the previous year. Crew costs was the only category this time to show an increase over the 12 month period, indicating that ship owners continued to focus on managing costs and conserving cash in 2013.

The Budget 2014 – summary

In a speech full of sound bites, the Chancellor’s 2014 Budget repeated past themes – the need to build a resilient economy and for Britain to live within its means. But his dominant message was new: this was a Budget for “the makers, the doers and the savers”.