TTM02600 - Tonnage tax elections: Renewal election
Renewal election at any time
An election may be renewed at any time whilst the previous election remains in force, subject to the exceptions described below.
A renewal election follows the same rules as those for an initial election as regards the type of election, the method of election, the person by whom an election is to be made, the period for which the election is in force, and when an election ceases to have effect.
Unless it is a bridging renewal election, see below, a renewal election has effect from the date that it is made, and supersedes the existing election.
Renewal election not affected by 75% rule
A renewal election, which is otherwise valid, will remain effective even if the 75% rule (see TTM05300) is not satisfied at the time that it is made. However, the company or group may still be excluded under the normal rules (see TTM05310) if it exceeds the 75% limit in two or more consecutive accounting periods, regardless of whether those periods fall wholly or partly before the date of the renewal election.
Renewal election affected by training requirement
A renewal election will be ineffective if:
- no training certificate is in force (see TTM04001), or
- a ‘certificate of non-compliance’ with the training requirement is in force, see TTM04230.
Rolling election
A company or group may renew its election every year if it wishes to do so.
For example, a company or group may renew its election every year to ensure that tax provisions in its commercial accounts continue to be based on its liability under the tonnage tax regime. Eliminating the deferred tax charge in its accounts may be a main reason why a quoted group elects into tonnage tax.
Bridging renewal election
FA22/S25 (4) and (5) allow HMRC a measure of flexibility to accept a 'bridging renewal election' where a tonnage tax election is no longer in force and the opportunity to re-elect has inadvertently been missed. This power may be exercised where
- the last tonnage tax election has expired (and has not lapsed for any other reason),
- nothing has happened following expiry which would have caused an election that had continued to be in force to lapse, and
- the renewal election is made with the consent of HMRC.
Consent may be given where the election is made without delay after the company or group first became aware that the previous election had expired, and the behaviour of the company or group in connection with tonnage tax has not involved conduct the main purpose, or one of the main purposes, of which was the avoidance of tax.
Where consent is given, the previous election is treated as having continued until the bridging election comes into effect. Consent shoud be requested from the Tonnage Tax Technical Adviser, see TTM01120.
References
| FA00/SCH22/PARA15 (renewal election) | TTM17071 |
| FA00/SCH22/PARA26 (3) (training commitment required) | TTM17171 |
| FA00/SCH22/PARA32 (5) (effect of certificate of non-compliance) | TTM17201 |
| Form of election | TTM02110 |
| Period for which election in force | TTM02500 |