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Finance Bill
Schedule 15 — Tonnage tax
Part 1 — Amendments of Schedule 22 to FA 2000

265

 

Withdrawal notices

3          

After paragraph 15 (and before Part 3) insert—

“Withdrawal notices

15A   (1)  

A withdrawal notice (see paragraph 13(2A)) may be given—

(a)   

in respect of a single company, or

5

(b)   

in respect of a group,

           

but only if the following conditions are met.

      (2)  

Condition 1 is that the notice is given during the period—

(a)   

beginning with the day on which the Finance Act 2005 is

passed, and

10

(b)   

ending with 31st March 2006.

      (3)  

Condition 2 is that, for the whole of the period of three years

ending with the day on which the Finance Act 2005 is passed, a

tonnage tax election or a renewal election has been in force in

respect of the company or group in respect of which the

15

withdrawal notice is to be given.

      (4)  

A withdrawal notice must be given to the Inland Revenue—

(a)   

in the case of a withdrawal notice in respect of a single

company, by that company;

(b)   

in the case of a withdrawal notice in respect of a group,

20

jointly by all the qualifying companies in the group.

      (5)  

A withdrawal notice given in accordance with this paragraph

takes effect at the end of the accounting period that precedes the

first accounting period of the company to begin after 1st July 2005.

      (6)  

In the case of a withdrawal notice given in respect of a group, sub-

25

paragraph (5) has effect in relation to each qualifying company in

the group by reference to that company’s accounting periods.

Power to provide further opportunities for withdrawal

15B   (1)  

The Treasury may by order provide for further periods during

which withdrawal notices under paragraph 15A may be given.

30

      (2)  

Any such order may provide for that paragraph to apply, with

such consequential adaptations as appear to the Treasury to be

appropriate, in relation to any such further period as it applies in

relation to the period specified in sub-paragraph (2) of that

paragraph.

35

      (3)  

The consequential adaptations that may be made include

adaptations of the reference in sub-paragraph (3) of that

paragraph to the period of three years ending with the day on

which the Finance Act 2005 is passed.”.

Qualifying ships

40

4     (1)  

Paragraph 19 is amended as follows.

      (2)  

In sub-paragraph (1) (meaning of “qualifying ship”)—

 

 

Finance Bill
Schedule 15 — Tonnage tax
Part 1 — Amendments of Schedule 22 to FA 2000

266

 

(a)   

in paragraph (a), after “carriage” insert “by sea”;

(b)   

in paragraph (b), after “carriage” insert “by sea”;

(c)   

in paragraph (c), after “assistance” insert “carried out at sea”;

(d)   

in paragraph (d), after “transport” insert “by sea”.

      (3)  

In sub-paragraph (3) (other provisions to which sub-paragraph (1) is

5

subject)—

(a)   

after “subject to” insert—

“(a)”;

(b)   

at the end insert—

“(b)   

paragraph 20A (qualifying dredgers and tugs);

10

(c)   

paragraphs 22A to 22F (flagging).”.

      (4)  

After sub-paragraph (4) insert—

    “(5)  

For the purposes of sub-paragraph (1) “sea” does not include—

(a)   

a port or harbour;

(b)   

an estuary, a tidal or other river or an inland waterway.”.

15

Vessels excluded from being qualifying ships

5     (1)  

Paragraph 20 is amended as follows.

      (2)  

In sub-paragraph (1) (list of excluded vessels) for paragraph (f) (dredgers)

substitute—

“(f)   

dredgers other than qualifying dredgers.”.

20

      (3)  

After sub-paragraph (6) insert—

    “(7)  

In this Schedule “qualifying dredger” means a dredger which—

(a)   

is self-propelled, and

(b)   

is constructed or adapted for the carriage of cargo;

           

(but see further paragraph 20A).”.

25

Qualifying dredgers and tugs

6          

After paragraph 20 insert—

“Qualifying dredgers and tugs

20A   (1)  

This paragraph applies where a company operates a ship in an

accounting period and the ship—

30

(a)   

is a qualifying dredger or a tug, and

(b)   

would, apart from this paragraph, be a qualifying ship.

      (2)  

The ship shall not be regarded as a qualifying ship operated by the

company in that accounting period unless it is used for one or

more of the activities mentioned in paragraph 19(1)(a) to (d) for

35

more than 50% of its operational time.

      (3)  

In this paragraph “operational time”, in relation to a ship operated

by a company in an accounting period, means the time during that

accounting period during which the ship is—

(a)   

operated by the company, and

40

(b)   

used for any activity.

 

 

Finance Bill
Schedule 15 — Tonnage tax
Part 1 — Amendments of Schedule 22 to FA 2000

267

 

      (4)  

For the purposes of sub-paragraph (2) assisting a self-propelled

vessel into or out of a port or harbour is not to be regarded as use

for an activity mentioned in paragraph 19(1)(c).

      (5)  

For the purposes of sub-paragraph (3) any waiting time spent by a

tug for the purposes of a particular activity is to be treated as time

5

during which the tug is used for that activity.”.

Effect of change of use

7     (1)  

Paragraph 22 is amended as follows.

      (2)  

In sub-paragraph (1) (qualifying ship beginning to be used as vessel of

excluded kind ceases to be such ship when it begins to be so used) for “as a

10

vessel of an excluded kind” substitute “for non-qualifying purposes”.

      (3)  

In sub-paragraph (2)(b) (use as vessel of excluded kind for up to 30 days in

accounting period to be disregarded) for “as a vessel of an excluded kind”

substitute “for non-qualifying purposes”.

      (4)  

In sub-paragraph (5) (meaning of references to use as vessel of excluded

15

kind) for “as a vessel of an excluded kind are to” substitute “for non-

qualifying purposes are to—

(a)   

use for an activity other than any of the activities

mentioned in paragraph 19(1)(a) to (d), or

(b)”.

20

      (5)  

After that sub-paragraph insert—

    “(6)  

This paragraph does not apply for the purposes of sub-paragraphs

(2) to (5) of paragraph 20A (qualifying dredgers and tugs).”.

Flagging: rule for ships other than dredgers and tugs

8          

After paragraph 22 insert—

25

“Flagging: rule for ships other than dredgers and tugs

22A   (1)  

This paragraph applies if the following conditions are satisfied in

the case of a ship which—

(a)   

is neither a qualifying dredger nor a tug, and

(b)   

would, apart from this paragraph, be a qualifying ship.

30

      (2)  

Condition 1 is that, at a time after the later of the reference date

(see paragraph 22B(1)) and 30th June 2005,—

(a)   

in the case of a tonnage tax company which is a single

company, the company begins, in a financial year which is

not excepted (see paragraph 22B(2)), to operate the ship for

35

the first time, or

(b)   

in the case of a tonnage tax company which is a member of

a tonnage tax group, the company begins, in a financial

year which is not excepted, to operate the ship for the first

time, the ship not having previously been operated by any

40

other member of the group.

 

 

Finance Bill
Schedule 15 — Tonnage tax
Part 1 — Amendments of Schedule 22 to FA 2000

268

 

      (3)  

Condition 2 is that less than 60% of the company’s total tonnage is

Community-flagged (see paragraph 22B(3)) on average over the

period—

(a)   

beginning with the first day of the financial year

mentioned in condition 1, and

5

(b)   

ending with the day on which the company so begins to

operate the ship.

      (4)  

Condition 3 is that—

(a)   

the percentage of the company’s total tonnage which is

Community-flagged on average over the period

10

mentioned in condition 2,

is less than

(b)   

the percentage of the company’s total tonnage which was

Community-flagged on the reference date.

      (5)  

Condition 4 is that, on the date on which the company so begins to

15

operate the ship, the ship is not registered in one of the Member

States’ registers (see paragraph 22B(7)).

      (6)  

Where this paragraph applies in relation to the ship, the ship shall

not, at any time on or after that date, be regarded as—

(a)   

a qualifying ship operated by the company, or

20

(b)   

if immediately before that date the company is a member

of a tonnage tax group, a qualifying ship operated by any

company that is or becomes a member of the group.

      (7)  

But sub-paragraph (6) does not apply if—

(a)   

the ship has become registered in one of the Member

25

States’ registers by the end of the period of three months

beginning with that date, or

(b)   

the conditions in sub-paragraph (8) are satisfied.

      (8)  

Those conditions are that—

(a)   

a substitute ship which was not registered in one of the

30

Member States’ registers has, during the period mentioned

in sub-paragraph (7)(a), become so registered, and

(b)   

no later than the end of that period—

(i)   

if the company is a single company, the company

makes an election under this sub-paragraph in

35

relation to the substitute ship, or

(ii)   

if the company is a member of a tonnage tax group,

all the qualifying companies in the group jointly

make such an election.

      (9)  

In sub-paragraph (8) a “substitute ship” means a qualifying ship—

40

(a)   

the tonnage of which is no less than that of the ship

mentioned in sub-paragraph (1), and

(b)   

which was first operated by the company or, if the

company is a member of a tonnage tax group, by any other

member of the group more than three months before that

45

date;

           

and for this purpose the tonnage of a ship is to be determined on

the same basis as it is under paragraph 22B(3).

 

 

Finance Bill
Schedule 15 — Tonnage tax
Part 1 — Amendments of Schedule 22 to FA 2000

269

 

     (10)  

An election under sub-paragraph (8) is made by notice to the

Inland Revenue.

Flagging: meaning of terms used in paragraph 22A

22B   (1)  

In paragraph 22A “the reference date” means 17th January 2004 or,

if later,—

5

(a)   

in the case of a single company, the date of the end of the

accounting period in which the company became (or

becomes) a tonnage tax company;

(b)   

in the case of a member of a group, the date of the end of

the accounting period in which the group became (or

10

becomes) a tonnage tax group;

           

but where the members of a group had (or have) different

accounting periods at the time the group became (or becomes) a

tonnage tax group, paragraph (b) has effect by reference to the first

of those accounting periods.

15

      (2)  

For the purposes of sub-paragraph (2) of paragraph 22A a

financial year is excepted if it is designated by an order made by

the Treasury as a financial year in relation to which that paragraph

is not to have effect (see further paragraph 22C(1) to (3)).

      (3)  

For the purposes of paragraph 22A the percentage of a company’s

20

total tonnage which is Community-flagged is—equation: cross[over[times[char[C],char[F],char[T]],times[char[T],char[T]]],num[100.0000000000000000,

"100"]]

           

where—

CFT is the aggregate tonnage of such of the relevant ships as

are registered in one of the Member States’ registers, and

TT is the aggregate tonnage of all the relevant ships.

25

      (4)  

For the purposes of sub-paragraph (3) the ships which are the

relevant ships are—

(a)   

if the company is a single company, the ships operated by

the company, or

(b)   

if the company is a member of a tonnage tax group, the

30

ships operated by each member of the group which is a

qualifying company.

      (5)  

Sub-paragraphs (3) and (4) are subject to any regulations made

under paragraph 22C(4).

      (6)  

A ship shall not be counted more than once in determining for the

35

purposes of sub-paragraph (3) the aggregate tonnage of relevant

ships.

      (7)  

In this Schedule “Member States’ registers” has the meaning given

by the Annex to Commission communication C(2004) 43 —

Community guidelines on State aid to maritime transport (as from

40

time to time amended or replaced).

 

 

Finance Bill
Schedule 15 — Tonnage tax
Part 1 — Amendments of Schedule 22 to FA 2000

270

 

Flagging: provisions supplementing paragraphs 22A and 22B

22C   (1)  

An order under paragraph 22B(2) designating a financial year

shall be made if—

(a)   

the Treasury are satisfied, on the basis of the information

available to them, that the percentage of the tonnage tax

5

fleet which is Community-flagged has not decreased on

average over a prescribed three year period, and

(b)   

the order is made before the beginning of that financial

year.

      (2)  

The Treasury may make provision by regulations for or in

10

connection with—

(a)   

specifying the meaning, for the purposes of sub-paragraph

(1)(a), of the percentage of the tonnage tax fleet which is

Community-flagged;

(b)   

specifying the way in which an average is to be calculated

15

for those purposes;

(c)   

requiring any tonnage tax company or tonnage tax group

to provide prescribed information for the purposes of

enabling the Treasury to determine whether the condition

in sub-paragraph (1)(a) is met;

20

(d)   

imposing penalties in respect of a failure to comply with a

provision of the regulations made by virtue of

paragraph (c) (including, in prescribed cases or

circumstances, the exclusion of a company or group from

tonnage tax).

25

      (3)  

Section 828(3) of the Taxes Act 1988 shall not apply in relation to

an order under paragraph 22B(2).

      (4)  

The Treasury may make provision by regulations as to the way in

which the percentage of a company’s total tonnage which is

Community-flagged is to be calculated for the purposes of

30

paragraph 22A.

      (5)  

The provision that may be made by regulations under sub-

paragraph (4) includes provision for or in connection with—

(a)   

determining the percentage of a company’s total tonnage

which is Community-flagged on average over a period;

35

(b)   

specifying the basis on which the tonnage of a ship is to be

determined;

(c)   

treating ships which would, but for the regulations, be

relevant ships for the purposes of paragraph 22B(3) as not

being relevant ships for those purposes;

40

(d)   

including in the calculation set out in paragraph 22B(3)

only such proportion of the tonnage of a relevant ship as

may be prescribed.

      (6)  

Regulations under this paragraph—

(a)   

may make different provision for different cases or

45

circumstances, and

(b)   

may contain such supplementary, incidental,

consequential and transitional provisions as appear to the

Treasury to be necessary or expedient.

 

 

Finance Bill
Schedule 15 — Tonnage tax
Part 1 — Amendments of Schedule 22 to FA 2000

271

 

      (7)  

In this paragraph “prescribed” means—

(a)   

specified in, or

(b)   

determined in accordance with,

           

regulations under this paragraph.”.

Flagging: rules for dredgers and tugs

5

9          

After paragraph 22C insert—

“Flagging: rule on first operation of qualifying dredger or tug

22D   (1)  

This paragraph applies if—

(a)   

a company begins to operate a ship which—

(i)   

is a qualifying dredger or a tug,

10

(ii)   

would, apart from this paragraph, be a qualifying

ship, and

(iii)   

has not previously been operated by the company

or, if the company is a member of a group, by any

member of the group, and

15

(b)   

on the date on which the company so begins to operate the

ship, the ship is not registered in one of the Member States’

registers.

      (2)  

The ship shall not, at any time on or after that date, be regarded

as—

20

(a)   

a qualifying ship operated by the company, or

(b)   

if immediately before that date the company is a member

of a group, a qualifying ship operated by any company

that is or becomes a member of the group.

      (3)  

But sub-paragraph (2) does not apply if the ship has become

25

registered in one of the Member States’ registers by the end of the

period of three months beginning with that date.

Flagging: rule on subsequent re-flagging of qualifying dredger or tug

22E   (1)  

This paragraph applies if—

(a)   

a qualifying ship operated by a company ceases to be

30

registered in any of the Member States’ registers, and

(b)   

the ship is a qualifying dredger or a tug.

      (2)  

The ship shall not, at any time on or after the date on which it

ceases to be so registered, be regarded as—

(a)   

a qualifying ship operated by the company, or

35

(b)   

if immediately before that date the company is a member

of a group, a qualifying ship operated by any company

that is or becomes a member of the group.”.

 

 

 
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