Relevant shipping profits: Merchant adventurers
Some ship operators behave as ‘merchant adventurers’ by taking full or part ownership of their cargo, rather than simply acting as carriers. If there is a price risk associated with the cargo, then a just and reasonable apportionment of the profit or loss on the voyage must be made.
A price risk is any situation where the operator buys and sells the cargo at different prices. Officers may accept that where the ship operator does not bear any price risk relating to the cargo, then the whole of any profit or loss on the voyage will be within relevant shipping profits for tonnage tax purposes.
Tanker operators provide an example of merchant adventuring. For instance, some tanker owners load their own cargo of oil and transport it to a destination in the hope of reaching the market at the right time to achieve a larger profit. Similarly, oil can be sold on a ‘delivered’ basis, where the oil is sold at the end of a voyage at the prevailing price, the price risk remaining fully with the ship operator.
In these situations a profit split would need to be made between the non-tonnage tax profit on the oil and the tonnage tax profit on its transportation.
However, where the oil is bought FOB (free on board) by the ship operator and then sold on C&F (cost and freight), the ship operator would not normally have a price risk on the oil itself. In effect, the operator would receive freight income for the route, depending on supply and demand for tankers, plus additional remuneration from the shipper if diversions were made from that route to another port. In such a situation a profit split may not need to be made.