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HMRC internal manual

Tonnage Tax Manual

From
HM Revenue & Customs
Updated
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Offshore activities: Types of vessel

De minimis activity ignored

Company’s ships operated for 30 days or less

The special rules do not apply to a company in an accounting period unless the qualifying ships operated by that company are engaged in offshore activities for more than 30 days in total.

When applying this de minimis time rule exclusion, it should be noted that the limit is measured:
 

  • in ship-days

The 30-days limit applies to the total number of ship-days for the company.

Thus, if a company operates two ships, and one is engaged in offshore activities for 15 days and the other for 16 days - then the total is 31 and the special rules will apply to both ships. In short, aggregate the offshore activities of all the ships in the fleet to arrive at the 30-days time rule.

  • by reference to an accounting period

The 30-days limit applies to each accounting period separately.

Thus, if a company operates one ship which is engaged in offshore activities for 80 days in one accounting period and 20 days in the next: then the special rules will apply to the first period, but not to the second. The limit is not reduced pro rata for a short accounting period.

  • for a company, not a group

The 30-days limit applies to each company in a tonnage tax group separately.

Thus, if company A operates one ship which is engaged in offshore activities for 80 days, and company B operates one ship which is engaged in offshore activities for 20 days; then the special rules will apply to company A, but not to company B.

References

FA00/SCH22/PARA103(2) (number of days do not exceed 30) TTM17591
   
Different types of vessel and their treatment TTM11100
Periods of inactivity TTM11150