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HMRC internal manual

Tonnage Tax Manual

Offshore activities following Finance Act 2005: The special rules

The special rules apply to all qualifying ships (TTM03500) engaged in offshore activities (TTM11010), except to the extent that they are performing activities that are specifically excluded (see below).


* a vessel is time-chartered out to a service provider on long-term charter, and
* during the term of the charter the charterer utilises the vessel on the United Kingdom Sector of the Continental Shelf (UKCS)

the fact that the owner has no control over the vessel’s area of operations does not prevent the special rules from taking effect.

But the special rules will not be applied unless a company’s ships are engaged in offshore activities for more than a total of 30 days in any accounting period (TTM11140).

Activities excluded from being offshore activities are:

  • Offshore supply services. The transport of equipment, supplies and personnel between shore bases and offshore oil installations;
  • Towage, salvage or other marine assistance. Generally the towage of drilling rigs (and other vessels such as cargo barges) to and between the offshore locations;
  • Anchor handling. Used to position drilling rigs and the laying of large anchors on the sea bed (to keep the rig in position during drilling) and their retrieval once the rig is ready to move to the next location;
  • Carriage of liquids or gases. Tankers generally used to transport crude oil from offshore oil installations to oil refineries or terminals;
  • Safety or rescue services. Generally specialist Safety/Standby vessels, sometimes called Emergency Response and Rescue Vessels (ERRVs);
  • The carriage of cargo in connection with dredging. Although offshore activities are generally taken to refer to oil and gas related activities, it refers also to exploitation of all natural resources which will include minerals dredged from the seabed. This provision ensures that having allowed the transport of dredged materials aboard dredgers into tonnage tax they are not then excluded by the offshore activities’ rules.

Multi Function Vessels

As the exclusion from the special rules is now activity based there is no longer an exclusion for multi function vessels. Such vessels engaged in offshore activities are eligible for tonnage tax to the extent that they perform any of the excluded activities listed above.


FA00/SCH22/Para103(2) (number of days to not exceed 30) TTM17591
FA00/SCH22/PARA104 (Meaning of ‘offshore activities’) TTM17596
FA05/SCH7/PARA15 (meaning of ‘offshore activities’) TTM20015
De minimis activity ignored TTM11140