18(1)This paragraph supplements paragraph 16(d) so far as it relates to the leasing of ships other than [F1offshore installations] or pleasure craft.U.K.
(2)In the following provisions “ship” accordingly means a ship other than an [F2offshore installation] or a pleasure craft.
(3)If the requirements of sub-paragraph (4) are met, a trade is not to be regarded as consisting in the carrying on of excluded activities within paragraph 16(d) as a result only of its consisting in the letting of ships on charter.
(4)The requirements of this sub-paragraph are that—
(a)every ship let on charter by the company carrying on the trade is beneficially owned by the company;
(b)every ship beneficially owned by the company is registered in the United Kingdom;
(c)the company is solely responsible for arranging the marketing of the services of its ships; and
(d)the conditions mentioned in sub-paragraph (5) are satisfied in relation to every letting of a ship on charter by the company.
(5)The conditions are that—
(a)the letting is for a period not exceeding 12 months and no provision is made at any time (in the charterparty or otherwise) for extending it beyond that period otherwise than at the option of the charterer;
(b)during the period of the letting there is no provision in force (as a result of being contained in the charterparty or otherwise) for the grant of a new letting to end, otherwise than at the option of the charterer, more than 12 months after that provision is made;
(c)the letting is by way of a bargain made at arm’s length between the company and a person who is not connected with it;
(d)under the terms of the charter the company is responsible as principal—
(i)for taking, throughout the period of the charter, management decisions in relation to the ship, other than those of a kind generally regarded by persons engaged in trade of the kind in question as matters of husbandry, and
(ii)for defraying all expenses in connection with the ship throughout that period, or substantially all such expenses, other than those directly incidental to a particular voyage or to the employment of the ship during that period; and
(e)no arrangements exist as a result of which a person other than the company may be appointed to be responsible for the matters mentioned in paragraph (d) on behalf of the company.
(6)If in the case of a letting by the company carrying on the trade (“the letting company”) the charterer is also a company and—
(a)the charterer is a qualifying subsidiary of the letting company, or
(b)the letting company is a qualifying subsidiary of the charterer, or
(c)both companies are qualifying subsidiaries of a third company,
sub-paragraph (5) has effect with the omission of paragraph (c).
(7)Where any of the requirements in sub-paragraph (4) is not met in relation to any lettings, the trade is not, as a result, to be treated as consisting in the carrying on of excluded activities if those lettings and any other excluded activities do not, taken together, amount to a substantial part of the trade.
(8)In this paragraph—
F3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
“pleasure craft” means any ship of a kind primarily used for sport or recreation.
Textual Amendments
F1Words in Sch. 5 para. 18(1) substituted (with effect in accordance with Sch. 27 para. 17(6)(7) of the amending Act) by Finance Act 2004 (c. 12), Sch. 27 para. 17(2)
F2Words in Sch. 5 para. 18(2) substituted (with effect in accordance with Sch. 27 para. 17(6)(7) of the amending Act) by Finance Act 2004 (c. 12), Sch. 27 para. 17(3)
F3Words in Sch. 5 para. 18(8) repealed (with effect in accordance with Sch. 27 para. 17(6)(7) of the amending Act) by Finance Act 2004 (c. 12), Sch. 27 para. 17(4), Sch. 42 Pt. 2(19)