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HMRC internal manual

Tonnage Tax Manual

Background material: Liner conferences and pooling

Liner shipping

The term ‘liner shipping’ describes the shipping service where there is an advertised regular route and timetable for the operation of the ships. The rates charged to shippers are normally based on a tariff.

(The opposite type of service is in tramp shipping, where a shipowner hopes to pick up voyage charters for his ship on the spot market.)

Such services are most frequently operated using containerships, but other types such as the traditional tweendeckers or ro-ros may be used.

Smaller ports not on the main liner route may be served by feeder services from the nearest main port.

At its simplest there will be a single ship plying between ports A and B. On the longer routes, extending as far as round-the-world, there may well be a number of intermediate ports of call. Where there is more than one company competing over the same route, the companies may form themselves into a ‘conference’ to offer a joint service.

Liner conferences

Where two or more shipping lines offer a joint service, they are described as forming a ‘liner conference’, (also called a ‘freight conference’ or ‘shipping conference’). The members agree a set of tariffs, conference terms and conditions of carriage, the number and type of ship each member will contribute, and the timetable for sailings. A secretariat, often run by one of the members, will co-ordinate activities.

Slot charters

Slot charters between shipping companies will be accepted as qualifying secondary activities under the same principles set out in the paragraphs below on pooled liner services.


A ship operator may form alliances or pools with other companies and share liner routes. It is the nature of a pooled liner service that the cargo, having been booked by the ship operator, may actually be carried in one of the partners’ ships. HMRC accepts that, provided a reasonable balance is maintained between the amount of pool bookings taken by a tonnage tax company and the amount of space in its own pool ships, then the trade will be regarded as one of ship operation and will be a core qualifying activity.

A reasonable balance will be regarded as maintained where in an alliance or pool, over a three year period, the pool bookings a tonnage tax company takes do not exceed 110 per cent of the capacity available in its own tonnage tax pool vessels. If during any three year period the cargo booked exceeds this limit, the income from excess bookings will not fall within tonnage tax and will be charged to corporation tax in the ordinary way. Where similar arrangements exist in other non-liner sectors, similar principles will be applied as appropriate, suitably adapted to the circumstances of the sector.

Each member line may still make their own bookings for their own ships, or they may pool the business, so that, for example, a container from Line A may be carried on a ship of either Line A or Line B, depending on when the container reaches the port, which ship is sailing first, and whether there is available space.

Pool accounts will be produced on an annual basis and income and expenditure shared between the members in proportion to their contribution.

As business fluctuates, members may contribute more ships or withdraw ships from a particular pool. Where business has declined one or more members may withdraw their ships completely, but remain members of the conference and contribute freight to the pool, continuing to share in its profits.

In these circumstances the income will be still regarded to be relevant shipping income, provided an overall balance is struck between various pools of which the line is a member, and any consistent structural underprovision of ships in relation to cargoes booked does not exceed 10 per cent over a three-year period.

Taxation of pools

Pools are not normally taxable entities in themselves, and their managers effectively act as bare trustees for pooling income and expenditure and apportioning the overall profit and loss to their members.

Where it is considered that a pool in the UK should be assessed (under tonnage tax or normal corporation tax) in its own right, submit to the Tonnage Tax Technical Adviser.

Where a shipping company has trading income outside tonnage tax, it may be worthwhile to review any pool accounts to check whether income and expenditure have been correctly treated for tax purposes.


Relevant shipping income: core qualifying activities TTM06050
Contact points TTM01120