Qualifying companies and ships: Examples of bareboat charters-out
The two examples below illustrate how the ship-operation rules work
A company owns ships A, B and C and charters-in D and E.
It bareboat charters-out B for a five year term and because of a temporary slump in bookings, it bareboat charters-out E for a one year term.
It also bareboat charters-out A for a one year term, but this was because it was offered a particularly good deal on the charter fee, rather than because it couldn’t use the ship itself.
- It will be regarded as operating C because the company is operating the ship itself
- It will be regarded as operating D because the company is operating the ship itself
- It will be regarded as operating E because the ship has been chartered out on bare boat charter terms for less than three years because of short term over-capacity
- It will not be regarded as operating A because it has not been chartered out due to over-capacity
- It will not be regarded as operating B because it has been chartered out for more than three years.
Tonnage tax company X enters into a joint venture with non-tonnage tax company Y.
Together they jointly charter-in a ship.
X will be regarded as sharing in the operation of the ship and under paragraph 5 Sch 22 will only be charged to a proportion of the applicable tonnage tax profit - See TTM01310).
|FA00/SCH22/PARA18(5) (meaning of operating a ship)||TTM17096|
|FA00/SCH22/PARA5 (calculation in case of joint operation)||TTM17021|