TTM03930 | Qualifying companies and ships: Flagging - substitute ships

FA00/SCH22/PARA22A (7) - (8)

These EU/EEA 'flagging' rules were repealed by FA22/S25 (6) and (7) with effect from 1 April 2022

Where the company started to operate a vessel that was not registered on a relevant register (EU/EEA plus UK and Gibraltar), then it might not have the option of re-registering the ship, for example where a ship was time chartered in and the owner was unwilling to re-flag it.

In these circumstances the company might make an election to register a different, or ‘substitute’, qualifying ship on a relevant register.

This substitute vessel must:

• have been of at least the same tonnage as the new ship: two smaller ships that, when combined, equal the tonnage of the new ship would not be substitute ships,

• have been registered other than on a relevant register, and

• have been first operated by that company at least three months before the date on which the vessel it was substituting was first operated.

Where the company was a member of a tonnage tax group, the substitute ship might be one operated by another member of that group.

Election

When a company first operated ship A, and decided to register a substitute vessel, ship B, it had to make an election to HMRC within 3 months of first operating ship A.

Where the company was a member of a tonnage tax group, the election had to be made jointly by all the qualifying companies in that group.

An election had to detail:

For the new vessel,

• the name

• the date first operated

• the gross tonnage

• the IMO number

• the current flag.

For the substitute vessel,

• the name

• the date first operated by the company or by a company in the same group

• the gross tonnage

• the IMO number

• the flag and date it was put on the register

• the previous flag.

The legislation was amended by SI2020/332 to maintain its effect following departure from the EU/EEA, referring to relevant registers, ,but was repealed by FA22 with effect from 1 April 2022.