BOTTOM LINE
Summer 2019
Economic substance regulations
Welcome to the latest issue of our quarterly shipping industry newsletter, Bottom Line.
In this issue we focus on the impact for shipping of the OECD/BEPS economic substance agenda.
Also in this edition we:
The OECD/BEPS agenda required a number of generally low tax jurisdictions to amend their legislation to comply with the OECD requirements. In general, the amendments to the legislation were needed by 31 December 2018. One of the items on the OECD agenda was action point 5 Harmful Tax Practices and one of the requirements of that was economic substance. At the same time, the EU Code of Conduct group, as part of a drive to identify and eliminate harmful tax practices, asked those countries which did not have a legal substance requirement to address this issue through the introduction of appropriate legislation, in most cases from 1 January 2019. Most countries responded positively by enacting legislation requiring tax-resident companies to demonstrate adequate substance. However, in many cases the exact requirements are not being made clear despite the fact that the rules are now in force, resulting in widespread confusion.
The legislation typically applies economic substance requirements to tax-resident companies if they conduct any of a number of specific ‘relevant activities’, one of which is shipping.
contact Sue
Shipping must be aware
of economic substance requirements
By Sue Bill
contact michael
BDO Germany continues to build on shipping expertise
By Michael simms
On 28 May, BDO Germany hosted its 12th annual Shipping Forum. This year, the event was held, for the second time, at the Hotel Hafen in Hamburg which, fittingly, enjoys a panoramic view across the River Elbe and the Port of Hamburg.
BDO Germany board member, Frank Biermann, welcomed more than 80 participants to the forum. Expert presentations covered a wide range of topics, from new propulsion technology and the challenges of autonomous shipping, to industry confidence and an update on ship recycling.
When HMRC first announced its intention in 2015 to introduce Making Tax Digital (MTD), no-one really believed it would go ahead, given the looming threat of Brexit and the additional issues that it would create for businesses importing into and exporting from the UK. Yet MTD went live for the majority of UK VAT-registered businesses on 1 April 2019.
Implementation was deferred for a number of businesses, including:
Making Tax Digital:
looking over the horizon
By Terri Bruce
Businesses which fall into one of these categories will enjoy a respite until October 2019, but they should still be preparing.
MTD introduced new digital filing and record-keeping requirements for VAT. It is compulsory for all entities that are VAT-registered in the UK which have an annual taxable turnover in excess of the VAT registration threshold, which is currently £85,000.
‘Taxable turnover’ includes zero-rated income received by most businesses in the shipping sector, be they shipowners, operators, brokers or managers. It also includes the value of any reverse chargeable services procured from suppliers located outside the UK. Equally as important is the fact that taxable turnover does not, in most cases, include income received from clients established outside the UK.
Overseas businesses which are UK VAT-registered but do not have an establishment in the UK
Businesses with one, or more, of the following VAT profiles:
– VAT group registration
– Divisional VAT registration
– Required to make payments on account
– Users of the annual accounting scheme.
For further assistance with VAT and MTD, please contact:
contact TERRI
Review
Consider
Review
COMPLY
Determine
By Cassie Forman-Kotsapa
Are you prepared for
IFRS 16?
The new accounting standard on leases, IFRS 16 Leases, is now effective for periods beginning on or after 1 January 2019. IFRS 16 introduces significant changes for many shipping companies due to the common use of longer-term charters in the industry. Charterers now need to account for charters meeting the new definition of a lease ‘on the balance sheet’, including many time charters and bareboat charters previously treated as operating leases.
Some key questions to consider as part of the transition to IFRS 16 include:
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One of the main messages to emerge from the forum debate was the need to seize the opportunities that will continue to arise from a strengthening of links between energy system transformation and new technology in shipping. However, it was emphasised also that there are no simple solutions in this respect and that the challenges for the industry remain daunting.
The debate on topical shipping issues continued after the end of the forum at a wine-and-dine event, at which it was confirmed that the next Shipping Forum is planned for 2020, which year marks BDO’s centenary.
BDO Germany has a long history of providing a diverse range of accountancy and advisory services to the shipping and transport industry. It has unrivalled experience across a number of sectors, including transport and logistics, the energy markets, financial services, trade and consumer goods, technology and insurance. Its experts can provide a full range of interdisciplinary services tailored to meet individual client requirements.
Few, if any, industries are as diverse and international as shipping, and these characteristics are shared by BDO internationally, which is represented in 162 countries throughout the world. BDO Germany is a founding member of the international BDO network, which was set up in 1963 and which currently has some 80,000 employees across 1,600 offices, including in all the main global shipping locations.
Although not quite as old as the Port of Hamburg, BDO Germany has always been and will remain closely associated with the international shipping industry.
Each country has introduced its own, albeit different, legislation, under which, broadly speaking, a company must carry out defined core income-generating activities in the country for each relevant activity and demonstrate economic substance by reference to specific criteria. These criteria include being directed and managed in the country, having physical premises in that country, and having adequate numbers of suitably qualified employees physically present in the country. A list of core income-generating activities is provided for each relevant business activity.
The legislation applied from 1 January 2019 but generally with grandfathering clauses which enabled existing companies to adjust to the new rules by 30 June 2019. To assist them, most jurisdictions as well as changing the law have also issued in the period between February and April 2019 either formal guidance or a draft economic substance code setting the effect of the legislation enacted. This is the case in the British Virgin Islands.
With effect from 1 January 2019, all legal entities are required to submit financial information on an annual basis to enable the competent authority to monitor whether a relevant company is complying with the economic substance requirements. Automatic notification will be made to EU authorities in respect of a relevant legal entity which is found to be in breach of the economic substance requirements, or one which carries on
‘IP-relevant activity’ in high-risk circumstances.
Companies engaged in the shipping industry should review their portfolios to identify any group structures with companies in zero/low-tax jurisdictions and check the substance requirements in those territories. They should seek professional advice on what measures, if any, they need to put in place and, where appropriate, consider the respective advantages and disadvantages of bringing a company onshore.
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Determine
Comply
Review
Consider
Review processes
Determine the date
on which MTD becomes mandatory for your organisation. Were you required to implement MTD on
1 April 2019 or have you been deferred until 1 October 2019?
If you use commercial software to complete your VAT returns, ask your software provider how their product will be updated for MTD. If not, review the software products on the market to consider which will best meet your needs to comply with the requirements to use bridging software to submit VAT returns under MTD from 2019
Review your current accounting systems to map the VAT audit trail and identify areas where digital links will be required. While some digital links, such as transfers from non-API-enabled systems to one or more spreadsheets, may not be compulsory until 2020, businesses should start preparing their systems for full MTD compliance now.
Consider precisely what data you will have to share with HMRC as a consequence of MTD, and review the quality of that data.
Review your VAT systems and processes to ensure that they are complete and accurate.
For guidance on these and other practical issues, click below to read our factsheets on IFRS 16 for Shipping:
IDENTIFYING LEASES: Have you identified all leases based on the definition of a lease? Have you identified any non-lease components to be separated?
EXEMPTIONS: Do you intend to use the scope exemptions, for low-value or short-term leases?
LEASE TERM: Have all options to renew, extend, or terminate leases been identified? How will the likelihood of exercising options be assessed?
VARIABLE LEASE PAYMENTS: Are there any index-based, or in-substance fixed, variable lease payments that will need to be included in the lease liability?
DISCOUNT RATE: Do you know the rate implicit in leases? Do you know your incremental borrowing rate as a lessee?
Click below for more detailed guidance is also available in BDO’s IFRS in Practice 2019 – IFRS 16
IFRS 16 Leases – An Introduction for Shipping
IFRS 16 Leases – Presentation and Disclosure Issues in Shipping
IFRS 16 Leases – Transition Arrangements for Shipping
Click to read more
contact CASsie
Richard Greiner
Partner
richard.greiner@bdo.co.uk
Examine the introduction of MTD for VAT
Showcase our new factsheets on IFRS 16 for shipping
Report on the impact of trade wars on shipping confidence
Highlight the issues in IFRS 9 for loan refinancing Look at recent changes made to the UK Ship Register
BDO is also featured as silver sponsors of LISW 2019, with a team entered in the OSCAR dragon boat race.
Finally we cover the 12 Annual Shipping Forum hosted by BDO Germany and profile Elisa Noble, a senior manager in our Technical Services Group.
I hope you enjoy the new format of our newsletter and our articles are of interest. If there are any issues raised that you would like to discuss, please feel free to get in contact.
The new accounting standard on leases, IFRS 16 Leases, is now effective for periods beginning on or after 1 January 2019. IFRS 16 introduces significant changes for many shipping companies due to the common use of longer-term charters in the industry. Charterers now need to account for charters meeting the new definition of a lease ‘on the balance sheet’, including many time charters and bareboat charters previously treated as operating leases.
Some key questions to consider as part of the transition to IFRS 16 include:
By way of example, if a UK shipowner has chartered one vessel to a business established outside the UK it would not be regarded as having any UK taxable income and therefore would not fall within MTD. However, if the same shipowner provided the same chartering
BDO have entered a team for the 5th Dragon Boat Race which will take place at the Docklands Sailing and Watersports Centre at London’s Isle of Dogs on Friday 13 September. The race, which raises money for the OSCAR Campaign funding research into childhood cancer and immune therapies at Great Ormond Street Hospital, marks the end of London International Shipping Week (LISW) 2019, at which event BDO is once again a silver sponsor.
Teams will compete against each other in two heats of 250-metre races, and the top six teams will then battle it out in the final. Last year, the race raised over £116,000 for its charitable cause. While making a real difference to the lives of seriously ill children, participants and attendees will be able to network with people in the shipping industry.
The BDO shipping team, meanwhile, will be in attendance throughout LISW, and looks forward to seeing you there.
+link to justgiving page
Link to just giving page
Watch 2016 event
The average confidence level expressed by respondents to our Shipping Confidence Survey for the quarter ended May 2019 was 6.1 out of 10.0, compared to 6.2 for the previous three months.
The likelihood of respondents making a major investment over the next year was up from 5.3 to 5.4 out of 10.0, while the number of respondents who expected finance costs to increase over the same period was unchanged at 48%. There was an increase in expectations of higher freight rates in the tanker and container ship markets, but an anticipated decline in dry bulk rates. Overall, net rate sentiment was positive in all three tonnage categories and noticeably improved on the last quarter for container ships.
Demand trends, competition, and finance costs were identified by respondents as the factors most likely to influence their performance significantly over the next twelve months.
Meanwhile, 50% of respondents (compared to 36 % one year ago) estimated that the Baltic Dry Index (BDI) would reach a figure of between 1000 and 1499 in 12 months’ time.
Click below to read the full survey report.
Concern over trade wars impact
shipping confidence
Tap headings to reveal
By Richard Greiner
contact Richard
By Michael simms
Enter the dragon
Read report
By Zeshan Adil
IFRS 9 – shipping debt refinancing/restructuring
IDENTIFYING LEASES: Have you identified all leases based on the definition of a lease? Have you identified any non-lease components to be separated?
EXEMPTIONS: Do you intend to use the scope exemptions, for low-value or short-term leases?
LEASE TERM: Have all options to renew, extend, or terminate leases been identified? How will the likelihood of exercising options be assessed?
VARIABLE LEASE PAYMENTS: Are there any index-based, or in-substance fixed, variable lease payments that will need to be included in the lease liability?
DISCOUNT RATE: Do you know the rate implicit in leases? Do you know your incremental borrowing rate as a lessee?
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10% quantitative test is retained. However, the accounting treatment for non-substantial modifications has changed significantly.
Under IAS 39, the previous standard, it was common practice that changes in contractual cash flows could be amortised over the remaining term of the modified instrument by recalculating the effective interest rate of the instrument, without recognising any immediate profit or loss. However, under IFRS 9, a gain or loss will be recognised in profit or loss for the difference between the present value of the original contractual cash flows and the present value of the modified cash flows, discounted at the original effective interest rate.
Click here to learn how these IFRS 9 requirements have practical implications applicable to companies in the shipping and offshore maritime sectors which have refinanced or restructured their debts.
For a more comprehensive discussion on this topic and other implications arising from the adoption of IFRS 9, please click the link below:
transitional reliefs
syndicated
loans included
If the modification does result in the de-recognition of the financial liability, the old liability is derecognised and a new liability is recognised, and any costs or fees incurred are recognised in profit or loss as part of the gain or loss on extinguishment. If the modification does not result in de-recognition, it is possible that certain costs or fees could still qualify to be spread forward.
de-recognition of old liability
Less than 10% cashflow
Tap headings to reveal
In cases where there is a difference in the net present value of cash flows of less than 10% and there are no other qualitative factors to indicate that the modification is substantial, the difference in carrying value would now need to be taken to profit or loss. These amounts could be significant.
When there are syndicated loans involved, each lender participating in the syndicated loan will be assessed separately by the borrower when considering whether the modification is substantial or non-substantial.
There are no transitional reliefs in IFRS 9 addressing these requirements. Therefore, for debts still on the balance sheet at the date of initial adoption, which were previously refinanced or restructured in a manner that was treated as a non-substantial modification, an adjustment to retained earnings may be required on adoption of IFRS 9 to reflect the new requirements for modification gains/losses.
One of the most significant changes that IFRS 9 Financial Instruments has introduced is that relating to the treatment of debt refinancing/restructuring. This is of particular relevance to shipping and offshore maritime companies as continuing uncertainty in the market and depressed cash flows have had a significant impact on the ability of many companies to pay their debts as they fall due. Therefore, unsurprisingly, the shipping and offshore maritime sectors have seen a substantial number of restructuring deals.
IFRS 9 has retained the concept of distinguishing between non-substantial modifications and substantial modifications (that is extinguishment) to financial liabilities – for example, the well-known
contact zeshan
Click to read more
By Richard Greiner
UK ship register widens
eligibility criteria
Continuing uncertainty over Brexit will inevitably occupy the minds of those involved in and with the UK shipping industry
until a resolution has been agreed between the UK and the EU. In the meantime, however, the UK Ship register (UKSR) has introduced changes to allow owners from a broader group of countries to register their vessels in the UK.
Commonwealth countries. bringing the UK into line with the Red Ensign Group. The UKSR has also introduced a registration system for bareboat charter-out, so that ships can temporarily reflag for the period of a bareboat charter before returning to the UK flag when that agreement ends.
Benefits that UK-flag customers receive include an Enhanced Authorisation Scheme allowing all surveys / audits to be delegated to an approved Recognised Organisation, and flexible package fee options for registration, inspection and certification.
The UKSR criteria have been widened beyond the current areas of the UK and Europe to include
Elisa Noble is a senior manager in the Technical Standards Group specialising in Financial Reporting Advisory and has had a long association with the shipping industry.
Elisa joined Moore Stephens in September 1999, after graduating with a law degree from Bristol University. She worked as an audit manager with the shipping team in London until 2006, when she moved with her husband to Singapore. There she joined Moore Stephens in Singapore and continued to work with shipping clients for almost three years.
“Singapore is a great port city and a strategic shipping and financial hub. It’s also a really dynamic and diverse place to live and work,” Elisa says. “The original intention was to stay for just a few years, but we enjoyed life in Singapore so much we stayed for more than 11 years.”
During her time in Singapore, Elisa moved into roles involving audit and financial reporting training, quality control and technical support, specialising in IFRS. She joined BDO Singapore in 2012 and when she returned to the UK in August 2017, Elisa transferred to BDO UK, taking up her current role as a senior manager in the Financial Reporting Advisory team.
Elisa is pleased to be back in London, although there are things about Singapore which she misses, not least the weather. Following the merger, Elisa now finds herself once more working with a number of her colleagues from the legacy Moore Stephens shipping team. “It has been good to renew some old acquaintances,” says Elisa, “and to make some new ones. It is good, also, to be part of such a strong team, and I am looking forward, among other things, to helping the firm’s shipping clients adapt to new accounting standards such as those relating to revenue and lease transactions.”
Elisa says, “I really enjoy working on projects involving the shipping sector. The international nature of the business appeals to me.” She is herself very international. Elisa was born in Finland and thus far has lived in Brussels, the Middle East and the Far East. These days, she is residing in Berkshire, but her outlook and focus remain typically global in nature.
contact RICHARD
VISIT UKSR WEBSITE
PROFILE: ELISA NOBLE
This publication has been carefully prepared, but it has been written in general terms and should be seen as containing broad statements only. This publication should not be used or relied upon to cover specific situations and you should not act, or refrain from acting, upon theinformation contained in this publication without obtaining specific professional advice. Please contact BDO LLP to discuss these matters in the context of your particular circumstances. BDO LLP, its partners, employees and agents do not accept or assume any responsibility or duty ofcare in respect of any use of or reliance on this publication, and will deny any liability for any loss arising from any action taken or not taken or decision made by anyone in reliance on this publication or any part of it. Any use of this publication or reliance on it for any purpose or in anycontext is therefore at your own risk, without any right of recourse against BDO LLP or any of its partners, employees or agents.BDO LLP, a UK limited liability partnership registered in England and Wales under number OC305127, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. A list of members'names is open to inspection at our registered office, 55 Baker Street, London W1U 7EU. BDO LLP is authorised and regulated by the Financial Conduct Authority to conduct investment business.BDO is the brand name of the BDO network and for each of the BDO member firms.BDO Northern Ireland, a partnership formed in and under the laws of Northern Ireland, is licensed to operate within the international BDO network of independent member firms.Copyright © August 2019 BDO LLP. All rights reserved. Published in the UK.
PROFILE: BDO HAMBURG, GERMANY
Making TAX DIGITAL
IFRS 16 LEASES
Making TAX DIGITAL
OSCAR Dragon Boat RACE
SHIPPING CONFIDENCE
IFRS 9
UKSR
Profile: eLisa Noble
country for each relevant activity and demonstrate economic substance by reference to specific criteria. These criteria include being directed and managed in the country, having physical premises in that country, and having adequate numbers of suitably qualified employees physically present in the country. A list of core income-generating activities is provided for each relevant business activity.
The legislation applied from 1 January 2019 but generally with grandfathering clauses which enabled existing companies to adjust to the new rules by 30 June 2019. To assist them, most jurisdictions as well as changing the law have also issued in the period between February and April 2019 either formal guidance or a draft economic substance code setting the effect of the legislation enacted. This is the case in the British Virgin Islands.
With effect from 1 January 2019, all legal entities are required to submit financial information on an annual basis to enable the competent authority to monitor whether a relevant company is complying with the economic substance requirements. Automatic notification will be made to EU authorities in respect of a relevant legal entity which is found to be in breach of the economic substance requirements, or one which carries on ‘IP-relevant activity’ in high-risk circumstances.
Companies engaged in the shipping industry should review their portfolios to identify any group structures with companies in zero/low-tax jurisdictions and check the substance requirements in those territories. They should seek professional advice on what measures, if any, they need to put in place and, where appropriate, consider the respective advantages and disadvantages of bringing a company onshore.
contact ELISA
The debate on topical shipping issues continued after the end of the forum at a wine-and-dine event, at which it was confirmed that the next Shipping Forum is planned for 2020, which year marks BDO’s centenary.
BDO Germany has a long history of providing a diverse range of accountancy and advisory services to the shipping and transport industry. It has unrivalled experience across a number of sectors, including transport and logistics, the energy markets, financial services, trade and consumer goods, technology and insurance. Its experts can provide a full range of interdisciplinary services tailored to meet individual client requirements.
Few, if any, industries are as diverse and international as shipping, and these characteristics are shared by BDO internationally, which is represented in 162 countries throughout the world. BDO Germany is a founding member of the international BDO network, which was set up in 1963 and which currently has some 80,000 employees across 1,600 offices, including in all the main global shipping locations.
Although not quite as old as the Port of Hamburg, BDO Germany has always been and will remain closely associated with the international shipping industry.
Determine the date
on which MTD becomes mandatory for your organisation. Were you required to implement MTD on
1 April 2019 or have you been deferred until 1 October 2019?
If you use commercial software to complete your VAT returns, ask your software provider how their product will be updated for MTD. If not, review the software products on the market to consider which will best meet your needs to comply with the requirements to use bridging software to submit VAT returns under MTD from 2019
Consider precisely what data you will have to share with HMRC as a consequence of MTD, and review the quality of that data.
Review your current accounting systems to map the VAT audit trail and identify areas where digital links will be required. While some digital links, such as transfers from non-API-enabled systems to one or more spreadsheets, may not be compulsory until 2020, businesses should start preparing their systems for full MTD compliance now.
Review your VAT systems and processes to ensure that they are complete and accurate.
Are you prepared for IFRS 16?
The new accounting standard on leases, IFRS 16 Leases, is now effective for periods beginning on or after 1 January 2019. IFRS 16 introduces significant changes for many shipping companies due to the common use of longer-term charters in the industry. Charterers now need to account for charters meeting the new definition of a lease ‘on the balance sheet’, including many time charters and bareboat charters previously treated as operating leases.
Some key questions to consider as part of the transition to IFRS 16 include:
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For guidance on these and other practical issues, click below to read our factsheets on IFRS 16 for Shipping:
Concern over trade wars impact shipping confidence
The average confidence level expressed by respondents to our Shipping Confidence Survey for the quarter ended May 2019 was 6.1 out of 10.0, compared to 6.2 for the previous three months.
The likelihood of respondents making a major investment over the next year was up from 5.3 to 5.4 out of 10.0, while the number of respondents who expected finance costs to increase over the same period was unchanged at 48%. There was an increase in expectations of higher freight rates in the tanker and container ship markets, but an anticipated decline in dry bulk rates. Overall, net rate sentiment was positive in all three tonnage categories and noticeably improved on the last quarter for container ships.
Demand trends, competition, and finance costs were identified by respondents to the survey as the factors most likely to influence their performance significantly over the next twelve months.
Meanwhile, 50% of respondents (compared to 36 % one year ago) estimated that the Baltic Dry Index (BDI) would reach a figure of between 1000 and 1499 in 12 months’ time.
Click below to read the full survey report.
IFRS 9 – SHIPPING DEBT
REFINANCING/RESTRUCTURING
Benefits that UK-flag customers receive include an Enhanced Authorisation Scheme allowing all surveys / audits to be delegated to an approved Recognised Organisation, and flexible package fee options for registration, inspection and certification.
Elisa Noble is a senior manager in the Technical Standards Group specialising in Financial Reporting Advisory and has had a long association with the shipping industry.
Elisa joined Moore Stephens in September 1999, after graduating with a law degree from Bristol University. She worked as an audit manager with the shipping team in London until 2006, when she moved with her husband to Singapore. There she joined Moore Stephens in Singapore and continued to work with shipping clients for almost three years.
“Singapore is a great port city and a strategic shipping and financial hub. It’s also a really dynamic and diverse place to live and work,” Elisa says. “The original intention was to stay for just a few years, but we enjoyed life in Singapore so much we stayed for more than 11 years.”
During her time in Singapore, Elisa moved into roles involving audit and financial reporting training, quality control and technical support, specialising in IFRS. She joined BDO Singapore in 2012 and when she returned to the UK in August 2017, Elisa transferred to BDO UK, taking up her current role as a senior manager in the Financial Reporting Advisory team.
Elisa is pleased to be back in London, although there are things about Singapore which she misses, not least the weather. Following the merger, Elisa now finds herself once more working with a number of her colleagues from the legacy Moore Stephens shipping team. “It has been good to renew some old acquaintances,” says Elisa, “and to make some new ones. It is good, also, to be part of such a strong team, and I am looking forward, among other things, to helping the firm’s shipping clients adapt to new accounting standards such as those relating to revenue and lease transactions.”
Elisa says, “I really enjoy working on projects involving the shipping sector. The international nature of the business appeals to me.” She is herself very international. Elisa was born in Finland and thus far has lived in Brussels, the Middle East and the Far East. These days, she is residing in Berkshire, but her outlook and focus remain typically global in nature.
Elisa Noble is a senior manager in the Technical Standards Group specialising in Financial Reporting Advisory and has had a long association with the shipping industry.
Elisa joined Moore Stephens in September 1999, after graduating with a law degree from Bristol University. She worked as an audit manager with the shipping team in London until 2006, when she moved with her husband to Singapore. There she joined Moore Stephens in Singapore and continued to work with shipping clients for almost three years.
“Singapore is a great port city and a strategic shipping and financial hub. It’s also a really dynamic and diverse place to live and work,” Elisa says. “The original intention was to stay for just a few years, but we enjoyed life in Singapore so much we stayed for more than 11 years.”
During her time in Singapore, Elisa moved into roles involving audit and financial reporting training, quality control and technical support, specialising in IFRS. She joined BDO Singapore in 2012 and when she returned to the UK in August 2017, Elisa transferred to BDO UK, taking up her current role as a senior manager in the Financial Reporting Advisory team.
Elisa is pleased to be back in London, although there are things about Singapore which she misses, not least the weather. Following the merger, Elisa now finds herself once more working with a number of her colleagues from the legacy Moore Stephens shipping team. “It has been good to renew some old acquaintances,” says Elisa, “and to make some new ones. It is good, also, to be part of such a strong team, and I am looking forward, among other things, to helping the firm’s shipping clients adapt to new accounting standards such as those relating to revenue and lease transactions.”
Elisa says, “I really enjoy working on projects involving the shipping sector. The international nature of the business appeals to me.” She is herself very international. Elisa was born in Finland and thus far has lived in Brussels, the Middle East and the Far East. These days, she is residing in Berkshire, but her outlook and focus remain typically global in nature.
Elisa joined Moore Stephens in September 1999, after graduating with a law degree from Bristol University. She worked as an audit manager with the shipping team in London until 2006, when she moved with her husband to Singapore. There she joined Moore Stephens in Singapore and continued to work with shipping clients for almost three years.
“Singapore is a great port city and a strategic shipping and financial hub. It’s also a really dynamic and diverse place to live and work,” Elisa says. “The original intention was to stay for just a few years, but we enjoyed life in Singapore so much we stayed for more than 11 years.”
During her time in Singapore, Elisa moved into roles involving audit and financial reporting training, quality control and technical support, specialising in IFRS. She joined BDO Singapore in 2012 and when she returned to the UK in August 2017, Elisa transferred to BDO UK, taking up her current role as a senior manager in the Financial Reporting Advisory team.
Elisa is pleased to be back in London, although there are things about Singapore which she misses, not least the weather. Following the merger, Elisa now finds herself once more working with a number of her colleagues from the legacy Moore Stephens shipping team. “It has been good to renew some old acquaintances,” says Elisa, “and to make some new ones. It is good, also, to be part of such a strong team, and I am looking forward, among other things, to helping the firm’s shipping clients adapt to new accounting standards such as those relating to revenue and lease transactions.”
Elisa says, “I really enjoy working on projects involving the shipping sector. The international nature of the business appeals to me.” She is herself very international. Elisa was born in Finland and thus far has lived in Brussels, the Middle East and the Far East. These days, she is residing in Berkshire, but her outlook and focus remain typically global in nature.
When HMRC first announced its intention in 2015 to introduce Making Tax Digital (MTD), no-one really believed it would go ahead, given the looming threat of Brexit and the additional issues that it would create for businesses importing into and exporting from the UK. Yet MTD went live for the majority of UK VAT – registered businesses on 1 April 2019.
Implementation was deferred for a number of businesses, including:
By way of example, if a UK shipowner has chartered one vessel to a business established outside the UK it would not be regarded as having any UK taxable income and therefore would not fall within MTD. However, if the same shipowner provided the
same chartering services to a UK business, the income would be taxable (albeit at the zero rate) and it would therefore need to be MTD – compliant.
Under MTD, initially, businesses are required to maintain digital records and to submit VAT returns to HMRC via special software. From 1 April 2020 (or 1 October 2020 if implementation has been deferred), the relevant VAT return data must be digitally linked so that any transaction can be traced from source (i.e., purchase/sales ledger) through to the VAT return.
For businesses which either already have an ERP system or use accounting software for all their VAT records, the change requirements will be small. However, businesses which presently keep their records in a cashbook, spreadsheet or non–MTD–compliant software will need to make changes as the ability to log in to the HMRC website and to key in the VAT return figures will be removed for businesses with a turnover greater than £85,000.
Click here for checklist which will help businesses plan for compliance with MTD:
Watch 2016 event
Businesses which fall into one of these categories will enjoy a respite until October 2019, but they should still be preparing.
MTD introduced new digital filing and record-keeping requirements for VAT. It is compulsory for all entities that are VAT-registered in the UK which have an annual taxable turnover in excess of the VAT registration threshold, which is currently £85,000.
‘Taxable turnover’ includes zero-rated income received by most businesses in the shipping sector, be they shipowners, operators, brokers or managers. It also includes the value of any reverse chargeable services procured from suppliers located outside the UK. Equally as important is the fact that taxable turnover does not, in most cases, include income received from clients established outside the UK.
When HMRC first announced its intention in 2015 to introduce Making Tax Digital (MTD), no-one really believed it would go ahead, given the looming threat of Brexit and the additional issues that it would create for businesses importing into and exporting from the UK. Yet MTD went live for the majority of UK VAT-registered businesses on 1 April 2019.
Implementation was deferred for a number of businesses, including:
services to a UK business, the income would be taxable (albeit at the zero rate) and it would therefore need to be MTD-compliant.
Under MTD, initially, businesses are required to maintain digital records and to submit VAT returns to HMRC via special software. From 1 April 2020 (or 1 October 2020 if implementation has been deferred), the relevant VAT return data must be digitally linked so that any transaction can be traced from source (i.e., purchase/sales ledger) through to the VAT return.
For businesses which either already have an ERP system or use accounting software for all their VAT records, the change requirements will be small. However, businesses which presently keep their records in a cashbook, spreadsheet or non-MTD-compliant software will need to make changes as the ability to log in to the HMRC website and to key in the VAT return figures will be removed for businesses with a turnover greater than £85,000.
Click here for checklist which will help businesses plan for compliance with MTD:
More detailed guidance is also available below in BDO’s IFRS in practice 2019 – IFRS 16
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