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HMRC internal manual

Tonnage Tax Manual

Exiting tonnage tax: Effects of exiting tonnage tax regime

Ten year disqualification

No re-entry into tonnage tax for 10 years

For all cases, except on expiry of an election, there is a ten-year disqualification from re-entry into tonnage tax under FA00/SCH22/PARA137 (3).  The ten years will run from the first day after leaving tonnage tax.  If a further window of opportunity were offered for entry into the regime, a company could still not re-enter if any part of its first accounting period following re-entry into tonnage tax would fall within the 10-year disqualification period.

Exception to 10-year rule

The only exception to this rule is where, under the merger rules, either:

  • an ex-tonnage tax group or company were taken over by a tonnage tax group or company which was the ‘dominant party’ or, there being no dominant party, which could elect to be so (FA00/SCH22/PARA123), or
  • an ex-tonnage tax group or company were taken over by a non-qualifying group or company which was the ‘dominant party’ (PARA125).

In those limited circumstances an ex-tonnage tax company can re-enter tonnage tax before the expiry of its 10 year disqualification.

(NB The 10 year disqualification does not apply to a company which remains in a group which continues to be a tonnage tax group (because at least one other company in the group is a tonnage tax company), see TTM14030.)


FA00/SCH22/PARA140 (ten year disqualification from re-entry) TTM17776
FA00/SCH22/PARA137 (company ceases to be tonnage tax company) TTM17761
FA00/SCH22/PARA123 (merger between T and QNT) TTM17691
FA00/SCH22/PARA125 (merger between NQ and QNT) TTM17701
Merger between T and QNT TTM12320
Merger between NQ and QNT TTM12340