Font Size

HM Revenue and Customs Brief 42/09


HM Revenue and Customs -Tax Authorities

Tax Articles
Submit Articles   Back to Articles

Issued 21 July 2009

Tonnage Tax – Treatment of specialist ships


This Revenue & Customs Brief is relevant to those shipping companies that have elected to have their corporation tax profits from the maritime transport activities of qualifying ships calculated under the rules of Tonnage Tax.

HM Revenue & Customs (HMRC) is today announcing a change of view on the interpretation of paragraph 19(1)(d), Schedule 22, Finance Act 2000, which deals with the treatment under Tonnage Tax of specialist ships that provide transportation in connection with other services of a kind necessarily provided at sea.


When the Tonnage Tax regime was introduced in FA 2000, it was intended that the profits/losses from the operation of specialist ships providing transport in connection with other services of a kind necessarily provided at sea would be apportioned so that the part attributable to the:

  • provision of transport would form part of the relevant shipping profits within Tonnage Tax, and
  • provision of other services would fall outside Tonnage Tax and be computed and assessed under the normal corporation tax rules.

The types of ships to which paragraph 19(1)(d) applies include diving support vessels, cable-layers and survey ships.

Change of view

HMRC now considers that its interpretation of the legislation is incorrect;

HMRC now accepts that where a vessel qualifies for Tonnage Tax under paragraph 19(1)(d) Schedule 22 Finance Act 2000 as a ship providing transportation in connection with other services of a kind necessarily provided at sea then there is no requirement for the profits from operating the ship to be apportioned between a transportation and a services element.

As a result HMRC accepts that the profits from the ship arising from both transportation and services fall within the Tonnage Tax ring-fence.

HMRC will settle any open case involving specialist ships on this basis. It will approach any amended returns for in-date years on the same basis.

The Government shares the shipping industry’s desire to maintain the stability of the Tonnage Tax regime, to enable companies to plan ahead. The Government therefore does not propose to amend the tonnage tax legislation to reintroduce a requirement to apportion profits from specialist ships.


As a result of the change of view set out above, the guidance at TTM03570 and TTM06600 is no longer applicable.

HM Revenue & Customs will be publishing revised guidance on the treatment of ships qualifying under paragraph 19(1)(d) Schedule 22 Finance Act 2000 later in 2009.

About the Author

© Crown Copyright 2009.

A licence is need to reproduce this article and has been republished for educational / informational purposes only. Article reproduced by permission of HM Revenue & Customs under the terms of a Click-Use Licence. Tax briefs are updated regularly and may be out of date at time of reading.

Follow us @Scopulus_News

Article Published/Sorted/Amended on Scopulus 2009-07-23 13:15:59 in Tax Articles

All Articles

Copyright © 2004-2021 Scopulus Limited. All rights reserved.