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HMRC internal manual

Tonnage Tax Manual

Qualifying companies and ships: Strategic management

Strategic management

The strategic management test displays features in common with the central management and control test for corporate residence, operating at a high level of decision making including

  • decisions on significant capital expenditure and asset disposals (e.g. purchase and sale of ships)
  • award of major contracts
  • agreement on strategic alliances (e.g. shipping ‘conferences’ - see TTM15210 - and vessel pooling)
  • direction of foreign establishments.

Possible factors include

  • location of headquarters, including senior management staff
  • location of company board meetings
  • location of operational board meetings
  • residence of directors and key employees.

Strategic management will be in the United Kingdom if the UK directors and key personnel have effective independent power to make strategic decisions, genuinely and not just formally: their power over the affairs of the company must not be delegated.

The directors and key personnel may need to take account of guidance from the parent company reflecting overall group policy but nevertheless must form an independent judgment on strategic management rather than merely acting as a rubber stamp for decisions made elsewhere.  This means they form their own independent judgments as to strategy but where appropriate taking account of comments made by the parent company in relation to the objectives of the group as a whole.

Particular issues arise with a permanent establishment in the UK.  To satisfy the strategic management test it would be necessary to demonstrate that the business of the establishment was strategically managed in the UK, distinctly from the other affairs of the company.  Ultimately this is a question of fact.


FA00/SCH22/PARA16(1)(c) (strategic and commercial management) TTM17086
Introduction to strategic and commercial management TTM03800
Commercial management TTM03820
Additional factors TTM03830
Examples TTM03840