Are there any specials rules?

There are special rules applying to:

Vessels providing services at sea, where only the transport element is subject to Tonnage Tax

• "Offshore activities" carried on on the UK Sector of the continental shelf, but not:
    - offshore supply services,
    - towage, salvage or other marine assistance
    - anchor-handling
    - carriage of liquids or gases
    - safety or rescue services
    - the carriage of cargo in connection with
       dredging which are subject to normal
       tonnage tax rules

• Transitional provisions on capital allowances (allowances for depreciation)
• Transitional provisions on chargeable gains
• Ring-fencing of tonnage profits from non-tonnage tax profits or losses, particularly finance costs
• Leasing companies owning vessels, which cannot make an election, and to which a special regime of capital allowances applies
• Corporate partnerships
• Legal avoidance

How does a company enter tonnage tax?

By electing for an initial period of ten years.

Businesses newly liable to UK tax, or newly qualifying for tonnage tax, have one year from commencing the operation of qualifying ships to elect into tonnage tax. The regime applies from the beginning of the accounting period in which an election is made.

Otherwise existing qualifying UK ship operators can not elect into tonnage tax .

A tonnage tax election may be renewed for a further ten years at any time prior to its expiry.

Companies have the option,, prior to election, to seek clearance from HMRC. Relevant issues can be discussed and agreed with the Tonnage Tax Unit in Liverpool LBS at the address below..

Ship operators requiring further information should contact Liverpool Large Business Service.

HM Revenue & Customs
Tonnage Tax Unit
Liverpool Large Business Service
Regian House
James Street
Liverpool
L75 1AE