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HMRC internal manual

Tonnage Tax Manual

HM Revenue & Customs
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Tonnage tax elections: When election takes effect

Deferring an election in a further window of opportunity to the next but one accounting period

Where an election is made in a further window of opportunity (see TTM02180), the company or group may request the HMRC’s agreement that in ‘exceptional circumstances’ it should come into effect from the beginning of the next but one accounting period following that in which it was made.

The circumstances must be genuinely exceptional, and related to the commercial activities or structure of the business. The fact that such a deferral may offer large advantages from a tax point of view will not make it exceptional.

The ‘exceptional circumstances’ must be such that it is commercially impracticable for the company/group election to take effect at an earlier date. This could include contractual arrangements that affect qualification and which cannot be renegotiated in time, or unusually complex restructuring that will take more than one accounting period to achieve.

An example of ‘exceptional circumstances’ might be the inability to renegotiate long-term time charters that would push a company or group above the 75% limit on time chartering-in (see TTM05001onwards)


FA00/SCH22/PARA12(4) (when election takes effect) TTM17056
Appeals against HMRC’s refusal to vary date of entry TTM02270