Member Login

Email address required.
Password required.
×

Moore Stephens warns on dangers of diving unprepared into shipping pools

Posted on: 19 April 2017

International accountant and shipping adviser Moore Stephens has warned ship owners and operators to check carefully the financial, tax and jurisdictional implications of participating in shipping pool arrangements.

Shipping partner Michael Simms says, “Shipping pools can be an attractive option, particularly in difficult markets and during periods of economic uncertainty. Interest in the concept generally is increasing as a way to leverage money and maximise economies of scale. But while it might make good commercial sense for like-minded shipping interests to pool their resources to mutual advantage, traps may lie in wait for the unwary.”

Shipping pools can take a variety of forms, from incorporated entities or partnerships to joint-ventures and other forms of agreement. The jurisdiction in which the pool is established is of primary importance, since it will have fundamental tax and reporting implications.

Simms notes, “Historically, tax-friendly offshore jurisdictions have been a natural fit for many shipping pools, but the recent increased focus on general tax transparency and on proper governance and reporting procedures may serve as a catalyst for change in this regard. The existing structure of shipping pools established in offshore jurisdictions is unlikely to change, but it would be reasonable to expect the members of any new pool arrangements to at least consider the option of establishing the pool in a more traditional jurisdiction.

“A move towards greater corporatisation of shipping pools, which may grant access to trade finance solutions, might be a viable option for many owners, provided the terms of entry and exit are acceptable.”

Moore Stephens has advised on a number of pool agreements during the past 12 months. There are a range of tax issues to consider when setting up, amending or joining a pool. In the case of a new pool, it will be necessary to consider the tax position of each entity within the pool structure. Other important considerations include the terms of the pool agreement itself, the status of the pool under competition law, the effectiveness of the marketing strategy, and the way pool accounts are prepared and submitted.

Michael Simms concludes, “Shipping pools have clear advantages for some. But it is a challenging market, and one subject to increasingly stringent evaluation. It would be a mistake to just dive in without careful consideration.”

What is Maritime London?

Maritime London – the promotional body for UK based companies providing professional services to the international shipping industry

Funded by over 100 companies and organisations from a wide range of disciplines, Maritime London ensures that the UK remains a world beating location to base a maritime related business. Maritime London’s mission is to promote the UK as the world’s premier maritime business centre.

Our core Maritime Services

The UK is home to a world beating array of professional maritime service providers. Maritime sectors include:

© 2024 All Rights reserved. || Privacy/Terms