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HMRC internal manual

Tonnage Tax Manual

From
HM Revenue & Customs
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Schedule 7 Finance Act 2005: Para 10

Flagging: restrictions where dredger or tug ceases to be qualifying ship under paragraph 22EAfter paragraph 22E insert-

“Flagging: restrictions where ship ceases to be qualifying ship under paragraph 22E

22F (1) This paragraph applies where a qualifying ship operated by a tonnage tax company ceases to be a qualifying ship by virtue of paragraph 22E.

(2) No notice may be given under section 130 of the Capital Allowances Act 2001 for the postponement of all or part of a relevant allowance to which-

(a) the company, or
 
(b) if immediately before the date on which the ship so ceases to be a qualifying ship (“the cessation date”) the company is a member of a tonnage tax group, any company that is or becomes a member of the group,
becomes entitled on or after the cessation date.

(3) In sub-paragraph (2) “relevant allowance” means an allowance in respect of-

(a) qualifying expenditure on the provision of the ship, or
 
(b) qualifying expenditure which-

(i) is incurred on the provision of the ship, and  
   
(ii) is allocated to a single ship pool.   
(4) No claim may be made under section 135 of that Act for deferment of all or part of a balancing charge- 

(a) to which the company or, if immediately before the cessation date the company is a member of a tonnage tax group, any company that is or becomes a member of the group becomes liable, and
 
(b) which arises when there is a disposal event in respect of the ship on or after the cessation date.
(5) Relief in respect of a relevant loss shall not be given under section 393A(1) of the Taxes Act 1988 (losses: set off against profits of the same, or an earlier, accounting period).

(6) Group relief under Chapter 4 of Part 10 of that Act shall not be available in respect of a relevant loss.

(7) Accordingly, relief in respect of a relevant loss shall be given only under section 393(1) of that Act (losses other than terminal losses).

(8) In sub-paragraphs (5) to (7) “relevant loss” means a loss which is incurred in respect of the ship on or after the cessation date in the course of a trade carried on by-

(a) the company, or
 
(b) if immediately before the cessation date the company is a member of a tonnage tax group, any company that is or becomes a member of the group.”.