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HMRC internal manual

Tonnage Tax Manual

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HM Revenue & Customs
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Offshore activities: Allowance for training costs

Computational procedure

The training allowance is based on the rate of payments in lieu of training (PILOT).  It is equal to:

  • the cost of the training requirement, as actually agreed with DfT, minus
  • the cost of the training requirement that would have applied if the ship had not been a qualifying ship when it was engaged in offshore activities.

For this purpose the ‘cost of the training requirement’ is taken to be:

  • the cash equivalent of the training, calculated by reference to the rate of PILOT, plus
  • any actual PILOT payments.

The rate of payments in lieu of training is specified in the regulations; at 1 October 2013 this was £1,176 per trainee per month, and will apply until a further regulation is issued.

Apportionment of PILOT for group

The training requirement agreed with DfT will relate to the tonnage tax group as a whole.  The special allowance for training costs can ordinarily be calculated using any reasonable method of apportioning the cash equivalent of the training provided by the group (and any PILOT payments) to the offshore activities of each individual company’s qualifying ships.

Suggested acceptable method of apportionment

In practice, an allowance calculated using the method described below will be acceptable.

Step 1: Calculate the cash equivalent of the training provided by the group plus any payments in lieu of training.

The period covered by an annual training commitment will normally be the year ending 30 September.  Where this period coincides with the accounting period, the cash equivalent will be a sum equivalent to the rate of payment in lieu of training (PILOT).  To find this:

multiply

* the number of officer trainees actually trained under the training commitment for that period (as agreed with DfT)

by

* the rate of payment in lieu of training, which is currently £1,176 per month or £14,112 per annum for each trainee,

then add

* any additional PILOT payments made for that accounting period.

Where the training period does not coincide with the accounting period, time-apportion the cash equivalents of the two training periods covering that accounting period.

Step 2: Calculate the cash equivalent of the training provided (plus any PILOT) in respect of each ship engaged in offshore activities by apportioning the result of Step 1 by reference to the number of posts in the effective officer complement of each ship.

The complement will be the number used in arriving at the annual training commitment.

Step 3: Calculate the amount of the allowance in respect of each ship by time apportioning the cash equivalent of the training provided (plus any payments in lieu of training) attributed to it in Step 2.

The apportionment will be made by reference to the number of days that the ship was engaged in offshore activities.

Step 4: Identify the corporation tax attributable to offshore profits and set off the allowance against this.

 

 

 

 

The allowance to be deducted from the company’s CT liability in respect of profits from offshore activities will be the aggregate of the amounts arrived at by applying Step 3 for each ship.

 

 

References

Overview of training requirement for offshore activities TTM11400
   
Example calculation of training costs allowance TTM11420