TTM14080 - FA2005 opportunity to exit tonnage tax
This page is for historical reference only.
Following the revised EU guidelines on state aid to the maritime transport industry in 2004 it became necessary for companies engaged in port towage to leave tonnage tax. In order to ease their departure the government provided for a relaxation of the exit rules for all companies in tonnage tax, provided two conditions were met:
Condition 1 was that the withdrawal notice has to be given in the period beginning on the day FA2005 received Royal Assent (7 April 2005) and ending on 31 March 2006.
Condition 2 was that a tonnage tax election had been in force for the whole of the three years ending on 7 April 2005 in respect of the company or group for which the withdrawal notice is given.
Where notice was given which met these conditions the withdrawal took effect at the end of the accounting period that preceded the first accounting period to begin after 1 July 2005. This meant for example:
Company year ending: |
Accounting period |
Withdrawal |
|---|---|---|
31 December |
First accounting period to begin after 1 July 2005 is that commencing 1 January 2006 |
Withdrawal therefore takes effect from 31 December 2005 |
30 June |
First accounting period to begin after 1 July 2005 is that commencing 1 July 2006 |
Withdrawal therefore takes effect from 30 June 2006 |
FA05 also contains provision permitting the Treasury to provide further periods during which withdrawal notices may be given.
Where an election is made under these provisions the capital allowance rules on exiting the regime are relaxed, see TTM09305.