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HMRC internal manual

Tonnage Tax Manual

From
HM Revenue & Customs
Updated
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The 75% limit on charters-in: How to calculate

Example 4: Ships operated for varying periods during accounting period

A group has five tonnage tax companies.  For the year ended 31/12/2003 the representative company summarises the ships operated as:
 

Company Ship Control No. of days Net tonnage
         
Company 1 Bulk 1 Finance leased 365 11000
Company 2 Bulk 2 Owned 365 2800
  Bulk 3 Owned & bareboat chartered out to 3rd party (long term) 30/12/1900 22500
  Bulk 4 Owned 365 22500
  Bulk 1 5 year time charter from Co 1 365 11000
Company 3 Bulk 5 3 year time charter 365 21000
Company 4 Reefer 1 Owned 365 7500
  Reefer 2 Owned 365 4200
Company 5 Bulk 6 35 day voyage charter 35 22500
  Reefer 3 60 day voyage charter 65 8100
  Bulk 7 47 day voyage charter 47 24000

The ton-days should be calculated for each ship and apportioned between owned and bareboat chartered vessels and those time or voyage chartered-in. Where a vessel is chartered within a group, it should only be counted at its highest level of control. Non-qualifying vessels should be disregarded.

 

 

Ship Net tonnage No. of days Ton-Days Ton-Days Owned Ton-Days Chartered-in
           
Bulk 1 11000 365 4015000 4015000  
Bulk 2 2800 365 1022000 1022000  
Bulk 3* 22500 365      
Bulk 4 22500 365 8212500 8212500  
Bulk 1** 11000 365      
Bulk 5 21000 365 7665000   7665000
Reefer 1 7500 365 2737500 2737500  
Reefer 2 4200 365 1533000 1533000  
Bulk 6 22500 35 7875000   7875000
Reefer 3 8100 65 526500   526500
Bulk 7 24000 47 1128000   1128000
Totals     34,714,500 17,520,000 17,194,500

 

 

  • Bareboat charter-out makes Bulk 3 a non-qualifying ship, which is disregarded

** Bulk 1 has been chartered intra-group, so is also disregarded.
 

So the percentage is 17,194,500/34,714,500 x 100 = 49.5 (below the 75% limit).

References

How to calculate 75% limit TTM05200