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HMRC internal manual

Tonnage Tax Manual

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HM Revenue & Customs
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Tonnage Tax Regulations 2000: Regulation 3

Qualifying secondary activities

SI00/2303/REG3(1) The descriptions of activity to be regarded as qualifying secondary activities shall be determined in accordance with the following paragraphs.

(2) A tonnage tax company’s qualifying secondary activities means its ship-related activities, other than commercial activities which form part of the operation of a port carried on for profit, that –

(a) have a substantial connection with the company’s core qualifying activities or, where the company is a member of a tonnage tax group, the core qualifying activities of another qualifying company in that group,

(b) fall within the descriptions in paragraph (3) or (4), and

(c) in the case of paragraph (3) are carried on at any level and in the case of paragraph (4) are carried on at the permitted level.
(3) The descriptions in this paragraph are –

(a) the carriage of passengers or cargo otherwise than on board a qualifying ship operated by the company, where -

(i) there is a single contract with the customer for a journey which includes a voyage on the qualifying ship, and  
  
(ii) the transport for the remainder of the journey is purchased or obtained by the company by provision (“arm’s length provision”) which would have been made as between independent enterprises;  

(b) administrative and insurance services which are directly related to the carriage of passengers or cargo, including under a contract described in sub- paragraph (a)(i);

(c) the embarkation and disembarkation of passengers on a qualifying ship operated by the company, and the provision of relevant facilities by the company;

(d) the provision of excursions for passengers of a qualifying ship operated by the company, where any cabin for the passenger remains available for his exclusive use;

(e) the provision of holidays, sold to the customer under a single contract, where –

(i) part of the holiday is a voyage on a qualifying ship operated by the company, and the remaining part is land-based (“the land-based part”),  
  
(ii) the land-based part is purchased or obtained by the company by arm’s length provision, and  
  
(iii) the cost to the company of the land-based part in accordance with paragraph (ii) is less than one half of the price paid by the customer under the single contract;  

(f) sales and facilities which are normally provided to customers by seagoing passenger ships, including –

(i) the provision of food or drink,  
  
(ii) entertainment, but not betting or gambling (see paragraph (4)(b)(i)),  
  
(iii) the sale of alcoholic beverages, perfume and tobacco, but not luxury goods (see paragraph (4)(b)(ii)),  
  
(iv) the exchange of amounts of different currencies for personal expenditure;  

(g) the loading and unloading of cargo carried on a qualifying ship operated by the company, and the provision by the company of facilities used exclusively for those purposes;

(h) the consolidation or breaking of cargo carried on a qualifying ship operated by the company, immediately before or after the voyage, where the activity is not haulage-related;

(i) the temporary placement of cargo carried on a qualifying ship operated by the company, on or at the dockside, where the activity is not part of a long-term storage operation;

(j) the rental or provision to customers of containers for goods to be carried on a qualifying ship operated by the company;

(k) activities carried on by the company in relation to a qualifying ship operated by another qualifying company in the same tonnage tax group, which would be core qualifying activities of the first-mentioned company if carried on in relation to a qualifying ship operated by that company.
(4) The descriptions and permitted levels in this paragraph are –

(a) services which, if carried out in relation to qualifying ships operated by the company, would be core qualifying activities of the company or activities of the company which would fall within the descriptions in paragraph (3), but only to the level where –

(i) the relevant staff and assets are needed by the company to carry out the company’s main function, and the services are undertaken to make full use of those staff and assets, and  
  
(ii) the services are minimal compared to the main function;  

(b)

(i) betting or gambling facilities normally offered to customers by seagoing passenger ships for entertainment, and  
  
(ii) the sale to passengers on seagoing ships of luxury goods of a kind normally offered to such passengers,   

but only to the level where the turnover from those activities is negligible compared to the turnover from the company’s core qualifying activities.
(5) In paragraph (4)(a) “the company’s main function” means the company’s core qualifying activities and those of its activities which fall within the descriptions in paragraph (3).

References

Qualifying secondary activities TTM06100
   
Wholly qualifying secondary activities TTM06110
Secondary activities qualifying up to set limits TTM06120
Work carried out for third parties TTM06130
Activities outside the ring fence TTM06140
Betting and gambling TTM06150
Sale of luxury goods TTM06160