Tonnage tax elections: Example 3
Group companies with differing accounting periods
D Ltd has three subsidiaries, E Ltd, F Ltd and G Ltd. They have varying annual accounting dates as follows:
D Ltd: 31 December
E Ltd: 31 March
F Ltd: 30 June
G Ltd: 30 September
The group makes a tonnage tax election on 1 April 2006, notifying that it wishes the election to have effect from the earliest possible date for each company.
The group election is made on 1 April 2006. The beginning of the accounting period then running for each of the companies in the group is as follows:
* D Ltd: 1 January 2006 * E Ltd: 1 April 2006 * F Ltd: 1 July 2005 * G Ltd: 1 October 2005
With HMRC’s agreement, the election can have effect for D Ltd and E Ltd from the start of the accounting period before that during which the election is made, i.e. from the following dates:
* D Ltd: 1 January 2005 * E Ltd: 1 April 2005
But there is no scope for F Ltd and G Ltd to backdate their entry to the regime to before the period dictated by the normal rule, as they do not have an earlier accounting period starting on or after 1 January 2005.
The election runs for 10 years from the time that the election first had effect for any company. In this case, the election first has effect (for D Ltd) on 1 January 2005, so will expire on 31 December 2014.
|General rule on election taking effect||TTM02200|
|Backdating election to earlier AP||TTM02210|
|Deferring election to next AP||TTM02220|
|Deferring election to next but one AP||TTM02230|
|Group companies with different Aps||TTM02240|