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COVID-19 – UK tonnage tax update
UK Government provides helpful guidance on the strategic management test
In order to qualify for the UK tonnage tax regime, a company must both strategically and commercially manage its ships in the UK. The UK Government has provided helpful guidance on the application of the strategic management test in an emergency such as COVID-19, stating:
The situs of strategic-level management is a question of fact and while, as recognised in company residence case law, the place of board meetings is an important consideration, the answer to the question is subtle and depends on all the surrounding circumstances. It follows that if the arrangements for board meetings are disrupted by an international emergency, the answer to the place of management question does not change by virtue of that circumstance alone.
In other words if decisions have to be made by an international group at group level and not at UK board meetings as a result of COVID-19 this will not mean that the UK companies fail the strategic management test. However UK boards should still as much as possible form their own independent judgments as to strategy although where appropriate taking account of the objectives of the group as a whole.
For further details on other measures being taken to support businesses, please click here.
