TTM02160 - Tonnage tax elections: When to elect

Window of opportunity when qualifying after 28 July 2000

Newly qualifying companies or groups may make an election under FA00/SCH22/PARA10 (2) and (3), but any such election must be made within 12 months of the date on which they become qualifying.  (See TTM03001 for the meaning of ‘qualifying’ company or group.)

This window of opportunity is only available from the date on which the company or group first becomes a qualifying company or group. In particular:
 

  • A newly qualifying company may not make an election under this provision if it has previously been a qualifying company since 28 July 2000.
     
  • A group may not make an election under this provision if it is substantially the same as a group that was previously a qualifying group at any time since 28 July 2000.

These rules are framed so as to prevent a company or group avoiding the normal time restrictions for making an election into tonnage tax.  For example:

  • A company that chose not to enter tonnage tax during the initial period might arrange to become non-qualifying by divesting itself of its shipping interests, and then become qualifying again by buying them back.

Such a company would previously have been a qualifying company, and would therefore be ineligible to make an election under the provisions applying to newly qualifying companies.

  • A group that chose not to enter tonnage tax during the initial period might arrange for its shipping activities to be transferred to a newly formed subsidiary.

Such a group would be ‘substantially the same’ as a previously qualifying group, and would therefore be ineligible to make an election under these provisions.

Although it may not benefit from the provisions relating to newly qualifying companies or groups, a previously qualifying company or group may become eligible to make an election under the special provisions relating to mergers (see TTM02170).

HMRC has a measure of flexibility to consent to elections made after the end of the 12 months period mentioned above where there was a reasonable excuse for the failure to meet the requirement and consent was requested without delay, or there was a reasonable excuse for any further delay.  See FA22/S25 (2).  The aim is to admit elections delayed for unforeseen administrative reasons.  Consent should be sought from the Tonnage Tax Technical Adviser, see TTM01120.

References

FA00/SCH22/PARA10 (newly qualifying companies and groups) TTM17046
Foreign companies or groups new to the UK TTM02265
Special rules for certain mergers TTM02170