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HMRC internal manual

Tonnage Tax Manual

Qualifying companies and ships: Qualifying tugs - flagging

Flagging on first operation

A tug, will only be a qualifying ship if it is registered on the register of a Member State, See TTM03945 for the meaning of Member States registers. If it is not so registered within three months of first operation of towage it will never be qualifying ship of

  • that company or,
  • if the company is a member of a group, any other company that is a member of that group or which becomes a member of that group.

Re-flagging of qualifying tug

Where a qualifying tug ceases to be registered on any of the Member States registers it will no longer be a qualifying ship of that company, or any company that is or becomes part of the same tonnage tax group (see TTM12000 onwards). In these circumstances:

  • capital allowances in respect of qualifying expenditure on the ship cannot be postponed under CAA01/S130 (see CA25200)
  • on the disposal of the ship the balancing charge, or any part of it, cannot be deferred under CAA01/S135 (see CA25300)
  • relief cannot relief cannot be claimed in respect of a ‘relevant loss’.

A ‘relevant loss’ is a loss incurred in respect of the ship after it ceased to qualify for Tonnage Tax.


FA00/SCH22/PARA22D TTM17141
FA00/SCH22/PARA22E and PARA22F TTM17146
Excluded vessels TTM03620