H.M. TREASURY NEWS RELEASE

HM Treasury News Release

133/99

12 August 1999

PUBLICATION OF LORD ALEXANDER OF WEEDON'S REPORT "INDEPENDENT ENQUIRY INTO A TONNAGE TAX"

The Treasury today published the Independent Enquiry into a Tonnage Tax, a report by Lord Alexander of Weedon QC. The report's main recommendations have been accepted by the Chancellor and, subject to the necessary Parliamentary and EC approvals, will be worked up for implementation in the next Finance Bill.

NOTE TO EDITORS

1. The Chancellor announced in his Budget statement on 9 March 1999 that he had asked Lord Alexander of Weedon QC to study the case for a ring-fenced tonnage-based corporation tax, to be linked with incentives for enhanced training provision, taking account of the Government's objectives for shipping, the national and international competitiveness issues involved and the need to combat tax avoidance.

2. Lord Alexander's report sets out ways of ring-fencing the regime, minimising the risk of tax avoidance, and concludes that a tonnage tax regime with integral training incentives is workable and necessary if the partnership between the government, the industry and the unions is to have a real prospect of reviving the UK shipping industry. The report proposes that the shipping industry, provided it commits itself to enhanced training provision, should enjoy favourable tax status. Capital allowances on leased ships would continue to be available for those leasing to shipping operators within the tonnage tax regime but should be subject to a cap on their value.

3. The report's main recommendations have been accepted by the Chancellor and, subject to the necessary Parliamentary and EC approvals, will be worked up for implementation in the next Finance Bill for accounting periods beginning on or after 1 January 2000. The report also lists a number of detailed design points where further work is needed.

4. See also DETR Press Release 826/99.