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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 9

Corporate partners - modifications of the requirements for being a qualifying company (with supplementary provision relating to finance leases)

SI00/2303/REG9(1) Paragraphs (1) to (3), (5) and (6) of this regulation prescribe modifications to the requirements for determining whether -

(a) a corporate partner operates qualifying ships within the meaning in paragraphs 16(1)(b) and 18(1) to (4) of Schedule 22, and

(b) those ships are strategically and commercially managed in the United Kingdom within the meaning in paragraph 16(1)(c) of Schedule 22.(2) Where -

(a) a qualifying ship is owned by, or (other than by a charter described in paragraph (3)) chartered to, one or more of the members of a partnership but is not partnership property, and

(b) activities of the partnership business which, if carried on by a tonnage tax company, would be tonnage tax activities, are carried on in relation to the ship,the ship shall be treated as if it were owned by, or chartered to, all the partners, as the case may be, and as if everything done by or to any of the partners in relation to it had been done by or to all the partners.

(3) Any charter of a ship from one or more members of the partnership to the other partners, or to the partnership, for use in the tonnage tax activities carried on in that partnership, shall be treated for the purposes of paragraph 18(4) of Schedule 22 as a charter to a person who is not a third party.

(4) A finance lease (within the meaning in section 82A of the 1990 Act of a qualifying ship where the lessee is one or more members of a partnership which includes a tonnage tax company as a member, or is such a partnership, and the ship is used in the tonnage tax activities which the tonnage tax company carries on as a member of the partnership, shall be treated for the purposes of Part X of Schedule 22 as if -

(a) the qualifying ship were provided (within the meaning in paragraph 89(1) of Schedule 22) to the tonnage tax company;

(b) the tonnage tax company were the “lessee” for the purposes of paragraphs 98 and 99 of Schedule 22; and

(c) the references in paragraph 92 of Schedule 22 to the ship being owned by a tonnage tax company included references to the ship being owned by one or more of the partners, or by the partnership.(5) Paragraph 16(1)(c) of Schedule 22 shall be modified as if, in relation to activities carried on by a corporate partner in a partnership, the reference to those ships were replaced with a reference to the requisite proportion of those ships.

(6) In paragraph (5) “the requisite proportion of those ships” means a proportion of those ships such that –

E is not less than G
   
F  

where -

E equals the aggregate net tonnage of all the qualifying ships which are -

(a) operated by the partners of the partnership concerned, in their capacity as such partners, and  
  
(b) strategically and commercially managed in the United Kingdom;

F equals the aggregate net tonnage of all the qualifying ships which are operated by the partners of the partnership concerned, in their capacity as such partners; and

G equals the share of the corporate partner, expressed as a fraction, in the partnership property of the partnership concerned.

References

Operation of ships by partnership TTM13100
   
Bareboat charter-out TTM13120
Strategic and commercial management TTM13130
Finance leasing TTM13310