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HMRC internal manual

Tonnage Tax Manual

Partnerships: Capital allowances

On exit from tonnage tax: Introduction

As explained at TTM13020, separate tax computations are required for each type of partner. In particular, separate computations are required to compute the profits of the tonnage tax and the non-tonnage tax partners.

These different methods of computation will (not surprisingly) produce different results. In particular, when a partner leaves tonnage tax (and changes from one method of computation to another) there may be a discrepancy between

  • the qualifying expenditure to be taken forward to post-tonnage tax periods, computed in accordance with the rules that normally apply when a company leaves tonnage tax (see TTM09300), and
  • the actual figure for qualifying expenditure brought forward as shown in the computations used by the non-tonnage tax members of the partnership.

Therefore, when a corporate partner leaves tonnage tax, the balances on the partnership’s capital allowance pools as at the beginning of the AP in which the partner leaves tonnage tax are recalculated in proportion to the interests of the partners.

See TTM13420 for details of how this recalculation is to be performed.


SI00/2303/REG8 (adjustments when partner leaves tonnage tax) TTM18008