TTM02303 - Tonnage tax elections: Example 3
Group companies with differing accounting periods
D Ltd has three subsidiaries, E Ltd, F Ltd and G Ltd. They have varying annual accounting dates as follows:
D Ltd: 31 December
E Ltd: 31 March
F Ltd: 30 June
G Ltd: 30 September
The group makes a tonnage tax election on 1 April 2006, notifying that it wishes the election to have effect from the earliest possible date for each company.
The group election is made on 1 April 2006. The beginning of the accounting period then running for each of the companies in the group is as follows:
- D Ltd: 1 January 2006
- E Ltd: 1 April 2006
- F Ltd: 1 July 2005
- G Ltd: 1 October 2005
With HMRC’s agreement, the election can have effect for D Ltd and E Ltd from the start of the accounting period before that during which the election is made, that is, from the following dates:
- D Ltd: 1 January 2005
- E Ltd: 1 April 2005
But there is no scope for F Ltd and G Ltd to backdate their entry to the regime to before the period dictated by the normal rule, as they do not have an earlier accounting period starting on or after 1 January 2005.
The election runs for 10 years from the time that the election first had effect for any company. In this case, the election first has effect (for D Ltd) on 1 January 2005, so will expire on 31 December 2014. Note that the election period was by FA22 reduced from 10 years to 8 for elections made on or after 1 April 2022.
References
General rule on election taking effect | TTM02200 |
Backdating election to earlier AP | TTM02210 |
Deferring election to next AP | TTM02220 |
Deferring election to next but one AP | TTM02230 |
Group companies with different APs | TTM02240 |