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HMRC internal manual

Tonnage Tax Manual

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HM Revenue & Customs
Updated
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Tonnage tax elections: Period for which election is in force

General rule

A tonnage tax election will normally remain in force for ten years from:
 

  • in the case of a company election, the first day the election had effect, or
  • in the case of a group election, the first day the election had effect for any member of the group.

So, although group companies may have different start dates, they will all have the same last day in tonnage tax. See example at TTM02303.

When a tonnage tax election ceases to be in force it ceases to have effect on any company which was party to it, and each such company’s accounting period will end on the last day it was so effective. Once an election has ended the company or group will return to the normal corporation tax regime for calculating taxable profits.

Election ceases to have effect in other circumstances

A tonnage tax election will cease to be in force if:

  • It is superseded by a renewal election, (see TTM02600).

  • A singleton company ceases to be a qualifying company.

  • A group ceases to be a qualifying group (because it has no qualifying companies).

  • A company or group is excluded from tonnage tax under the 75% per cent limit rules, (see TTM05330).

  • A company or group is excluded from tonnage tax for tax avoidance, (see TTM05530).

  • A company or group leaves tonnage tax by operation of the merger rules, (see TTM12300 onwards)-.

  • A company or group leaves tonnage tax by giving notice of withdrawal in the period allowed by FA 2005. See TTM14080

References

FA00/SCH22/PARA13 (period for which election is in force) TTM17061
   
FA00/SCH22/PARA14 (effect of election ceasing to be in force) TTM17066
FA00/SCH22 PARA15A (withdrawal notices) TTM02700-TTM2710
FA00/SCH22/PARA52 (accounting period ends on entry or exit) TTM17301