THE Baltic Exchange, Chamber of Shipping, Maritime London and Joint Hull Committee (which represents the Lloyd’s and International Underwriters’ Association (IUA) hull underwriters) have jointly called on the UK government to abandon its proposed changes to the non-domiciled resident tax regime as they will undermine the UK’s £1.5bn maritime services sector.
In a submission to the UK government, the organisations warn that international shipping enterprises based in London will move abroad with a substantial negative impact on the maritime services sector if the proposals set out in the government’s Pre-Budget Report and subsequent draft legislation are implemented. This would lead to a negative impact on a large number of UK based maritime service providers.
The key points of the submission are that:
The direct tax take from the proposed changes will be neutral or negative as a result of the departure of most, if not all, non-domiciled shipping businesses from the UK; The indirect damage to overseas earnings and other UK government income will be substantial; The proposal for a new fee to qualify for a remittance basis of taxation is already highly damaging, but since the Pre-Budget Report it has evolved to become intrusive, expensive, and filled with additional pitfalls and tax traps; By publishing a list of potential additional measures, the government has created a climate of uncertainty and threat which is already harming maritime business in the UK; The very tight deadline for implementation is exacerbating the situation, with many feeling forced to become non-resident purely on the grounds of timing
The proposed legislation increases the cost of international shipping companies’ London operations by adversely changing the tax position of long-serving overseas staff as well as creating a considerable reporting burden on non-domiciled residents.
The submission’s authors believe that the proposed changes create an uncertain business environment which, if implemented, will lead to a flood of departures from the UK to overseas locations.
“The implementation of proposals from the Autumn Statement would lead to the continual attrition and eventual demise of the international shipping community in London and the policy should be abandoned. Even an implementation of the original proposals from the Autumn Statement and an offer of clear assurances to the non-domiciled community and those who rely on their business that there will be no further change, would cause serious damage.
“We believe that, in order to begin to restore confidence in the maritime services market, it is essential that Treasury and Transport Ministers make clear public statements as to the importance of the maritime sector and the fiercely competitive global environment in which it operates.”
Baltic Exchange Chief Executive Jeremy Penn said: “These proposals have such serious consequences for so many UK maritime businesses that the Baltic Exchange, Maritime London, Chamber of Shipping and Joint Hull Committee are working together to explain the damage the government is causing.” London is currently the largest centre worldwide for the provision of maritime services including shipbroking, ship finance, legal and arbitration services, insurance, accountancy, average adjusting and surveying and technical consultancy. Latest figures from International Financial Services, London (IFSL) suggest that the international shipping business generates the employment of 14,300 and generates net earnings of £1.5 bn.
However London faces increasing competition from other cities to attract maritime business including Singapore, Dubai, Athens, Copenhagen and New York.