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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: If limit exceeded

Exclusion procedure

Exclusion of singleton company

If HMRC decides to exercise the power to exclude a singleton company, the tax specialist should give notice in writing to the company, specifying the date from which it is excluded from tonnage tax. The specified date must not be earlier than the beginning of the accounting period that follows the second accounting period in which the limit is exceeded.

The effect of the notice is that the tonnage tax election ceases to be in force from that date.  If that date is not already the beginning of an accounting period a new accounting period will commence at that time (FA00/SCH22/PARA52).

See TTM14100 for effects of exiting regime.  Exit charges will not apply, unless the exit was for reasons relating wholly or mainly to tax, seeTTM14120).

Exclusion of a group

If HMRC decides to exercise the power to exclude a group, the tax specialist should give notice in writing to the representative company, specifying the date from which all the qualifying companies in the group are excluded from tonnage tax.

The specified date must not be earlier than the beginning of the accounting period, for any one tonnage tax company (the ‘relevant company’) in the group, that follows the second accounting period in which the group limit is exceeded.
 

Where there is no representative company the notice should be sent to the ‘relevant company’.

The effect of the notice is that the tonnage tax election ceases to be in force from that date.  If that date is not already the beginning of an accounting period for previously qualifying members of the tonnage tax group a new accounting period will commence at that time for each affected company (seeTTM07010).

See TTM14100 for effects of exiting regime.  Exit charges will not apply, unless the exit was for reasons relating wholly or mainly to tax, see TTM14120).

References

FA00/SCH22/PARA39 (exclusion of company if limit exceeded) TTM17236
   
FA00/SCH22/PARA40 (exclusion of group if limit exceeded) TTM17241
Consideration of exclusion by HMRC TTM05310
Action by officer where limit exceeded TTM05320
Appeals against exclusion TTM05340