TTM03100 - Qualifying companies and ships: Operating a ship - meaning
Ships
FA00/SCH22/PARA16 (1)(b) requires a qualifying company to operate ‘qualifying ships’ - in this context ‘ships’ can mean a single ship.
Operating a ship - meaning
The general rule is that a company is regarded as operating any ship that is:
- owned by the company, or
- chartered to the company
Exceptions
A company is not regarded as the operator of a ship:
- where part only of the ship has been chartered to it (see below).
- that has been chartered-out by it on bareboat charter terms, except as provided in FA00/SCH22/PARA18(4)-(6). See TTM03150
The practical effect of these restrictions is that profits from a charter of part of a ship, or from a ship that is chartered-out on bareboat terms, will not normally be included in a tonnage tax company’s relevant shipping profits - and they will therefore by charged to corporation tax outside the ring fence in the normal way.
A company which has temporarily ceased to operate any ships may be treated as if it were still operating any ship or ships it owned immediately before the temporary cessation, if certain conditions are satisfied, (see TTM03050).
Part of a ship
A company is not regarded as the operator where part only of the ship has been chartered to it. This restriction is aimed at slot charters and space charters, where the company is effectively hiring space on a ship, rather than hiring the ship itself.
This restriction does not apply to a joint charter of the whole ship. A company will be regarded as operating a ship which is chartered to it jointly with one or more other persons.
See TTM15030 for further details of the different types of charter that a shipping company may enter into.
References
| FA00/SCH22/PARA18 (meaning of operating a ship) | TTM17096 |
| FA00/SCH22/PARA16(1)(b) (qualifying ship) | TTM13100 |
| FA00/SCH22/PARA5 | TTM17021 |