SCHEDULES
SCHEDULE 22 Tonnage tax
Part XIV Withdrawal of relief etc. on company leaving tonnage tax
Introduction
137
1
This Part of this Schedule applies where a company ceases to be a tonnage tax company.
2
The provisions of paragraphs 138 and 139 (exit charges: chargeable gains and balancing charges) apply where a company ceases to be a tonnage tax company—
a
on ceasing to be a qualifying company for reasons relating wholly or mainly to tax, or
b
under paragraph 42 (exclusion from tonnage tax where tax avoidance arrangements entered into).
3
Paragraph 140 (ten year disqualification from re-entry into tonnage tax) applies in every case where a company ceases to be a tonnage tax company otherwise than on the expiry of a tonnage tax election.
Exit charge: chargeable gains
138
1
Paragraph 65(1)(a) (chargeable gain: disposal of tonnage tax assets) has effect in relation to gains (but not losses) on all relevant disposals as if the company had never been a tonnage tax company.
2
For this purpose a “relevant disposal” means a disposal—
a
on or after the day on which the company ceases to be a tonnage tax company, or
b
at any time during the period of six years immediately preceding that day when the company was a tonnage tax company.
3
Where sub-paragraph (1) operates to increase the amount of the chargeable gain on a disposal made at a time within the period mentioned in sub-paragraph (2)(b), the gain is treated to the extent of the increase—
a
as arising immediately before the company ceased to be a tonnage tax company, and
b
as not being relevant shipping profits of the company.
4
No relief, deduction or set-off of any description is allowed against the amount of that increase or the corporation tax on that amount.
Exit charge: balancing charges
139
1
This paragraph applies if in a relevant accounting period during which the company was a tonnage tax company it was liable to a balancing charge in relation to which paragraph 78 (phasing-out of balancing charges) applied to reduce the amount of the charge.
2
For this purpose a “relevant accounting period” means an accounting period ending not more than six years before the day on which the company ceased to be a tonnage tax company.
3
The company is treated as having received an additional amount of profits chargeable to corporation tax equal to the aggregate of the amounts by which those balancing charges were reduced.
4
Those additional profits are treated—
a
as arising immediately before the company ceased to be a tonnage tax company, and
b
as not being relevant shipping profits of the company.
5
No relief, deduction or set-off of any description is allowed against those profits or against corporation tax on them.
Ten year disqualification from re-entry into tonnage tax
140
1
A company election made by a former tonnage tax company is ineffective if made before the end of the period of ten years beginning with the date on which the company ceased to be a tonnage tax company.
2
A group election that—
a
is made in respect of a group whose members include a former tonnage tax company, and
b
would result in that company becoming a tonnage tax company,
is ineffective if made before the end of the period of ten years beginning with the date on which that company ceased to be a tonnage tax company.
3
Sub-paragraphs (1) and (2) do not prevent a company becoming a tonnage tax company under and in accordance with the rules in Part XII of this Schedule (groups, mergers and related matters).
4
In this paragraph “former tonnage tax company” means a company that is not a tonnage tax company but has previously been a tonnage tax company.
Second or subsequent application of this Part
141
Where this Part of this Schedule applies on a second or subsequent occasion on which a company ceases to be a tonnage tax company (whether or not this Part applied on any of the previous occasions)—
a
the references to the company ceasing to be a tonnage tax company shall be read as references to the last occasion on which it did so, and
b
the references to the period during which the company was a tonnage tax company do not include any period before its most recent entry into tonnage tax.