Diverted profits tax – a maritime risk?

Angela Savin, of Norton Rose Fulbright, warns a new tax regime in the UK brings new risks

In the pre-election Finance Act, the UK’s Chancellor of the Exchequer introduced a new tax – the diverted profits tax (DPT). Against the context of international co-operation in the OECD led consultation on ways to ensure profits are taxed where they are generated (the base erosion and profit shifting (BEPS) project), this unilateral action on the part of the UK government came as a surprise. DPT will apply to profits accrued on or after 1 April 2015. There is no grandfathering for existing structures. This new tax has been introduced very quickly, prior to the UK Parliament going into recess before the general election in May and, as a consequence, the opportunity for both Parliamentary scrutiny and consultation with industry has been minimal.