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HMRC internal manual

Tonnage Tax Manual

HM Revenue & Customs
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Relevant shipping profits: Secondary activities qualifying up to set limits

Sale of luxury goods

Whether or not goods are luxury goods depends upon the standard of goods and services that would normally be expected by the passengers on a particular cruise or journey, and the extent to which they will continue to be enjoyed by the purchaser after completion of the journey.

You should accept turnover from the sale of luxury goods as negligible if it does not exceed 10% of

  • total ticket sales plus
  • receipts from the letting of cabins and
  • sales of food and drink for immediate consumption for that voyage.

The test applies separately to each individual voyage. In this context, a round-the-world cruise should be viewed as a single voyage.

Where the turnover from sale of luxury goods on a particular voyage is more than negligible, then the whole of the profits from sale of luxury goods on that particular voyage will fall outside the ring-fence.

Where luxury goods are offered for sale on board by third party concessionaires and the ship operator’s income from the concession varies partly in relation to turnover, then the “neglible” test will also apply to the income from the concessionaire.

Is it a qualifying ship?

If the turnover from the sale of luxury goods is significantly more than 10% of total ticket sales, you should consider whether the ship is in fact a qualifying ship – since it may be being used to provide services of a kind normally offered on land, such as a floating shop, (see TTM03600).


SI00/2303/REG3 (4)(b)(ii) (permitted levels) TTM18003