TTM13150 - Partnerships: Operation of ships

75 per cent limit on chartering-in to partner: Example

Beau Ltd is a singleton tonnage tax company with, for the accounting period year ended 31 December 2013:

a 50 per cent share in a corporate partnership, Beau-Geste Ferries,
a 25 per cent share in another corporate partnership, Beau-Regarde Ferries, and
two 3,000-ton vessels (time-chartered-in), which it operates on its own account.

Beau-Geste Ferries operates four 5,000-ton vessels, of which:

Beau-Regarde Ferries operates two vessels:

one 8,000-ton vessel bareboat chartered-in for the whole of the 12-month accounting period, and
one 4,000-ton vessel time chartered-in for the last 6 months of the accounting period.

Beau Ltd’s percentage of chartered-in tonnage is worked out as follows:

-	Beau-Geste Ferries	Beau-Regarde Ferries
Step One	Aggregate Tonnage (in ton-days)	4 x 5,000 x 365=7,300,000	(8,000 x 365) +(4,000 x 184) =3,656,000
Step Two	Tonnage chartered in (ton-days)	1 x 5,000 x 365 = 1,825,000	1 x 4,000 x 184 =736,000
-	% chartered in	0.25	0.2
Step Three	Share in partnership property	50% x 7,300,000 = 3,650,000 ton-days	25% x 3,656,000 = 914,000 ton-days
-	Allocation of chartered-in tonnage in Step 2	25% x 3,650,000 =912,500 ton days	20% x 914,000 =182,800 ton days
Step Four	Total share of tonnage operated	3,650,000 + 914,000 = 4,564,000 ton days	-
-	Share of tonnage chartered-in	912,500 + 182,800 = 1,095,300 ton days	-
Step Five	Own tonnage	2 x 3,000 x 365 =2,190,000	-
-	Total own and partnership tonnage	2,190,000 + 4,564,000 = 6,754,000 ton days	-
-	Own and partnership tonnage chartered- in	2,190,000 + 1,095,300 = 3,285,300 ton days	-
Step Six	Aggregate percentage chartered- in	48.64%	-
-	Apply 75% test to Step Six result	Beau Ltd is below the 75% limit for this accounting period	-

75 per cent limit on chartering-in to partner TTM13140