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TTM05250 | The 75% limit on charters-in: How to calculate

From HM Revenue & Customs · Tonnage Tax Manual

Example 4: Ships operated for varying periods during accounting period

A group has five tonnage tax companies. For the year ended 31/12/2003 the representative company summarises the ships operated as:

CompanyShipControlNo. of daysNet tonnage
Company 1Bulk 1Finance leased36511000
Company 2Bulk 2Owned3652800
-Bulk 3Owned & bareboat chartered out to 3rd party (long term)30/12/190022500
-Bulk 4Owned36522500
-Bulk 15 year time charter from Co 136511000
Company 3Bulk 53 year time charter36521000
Company 4Reefer 1Owned3657500
-Reefer 2Owned3654200
Company 5Bulk 635 day voyage charter3522500
-Reefer 360 day voyage charter658100
-Bulk 747 day voyage charter4724000

The ton-days should be calculated for each ship and apportioned between owned and bareboat chartered vessels and those time or voyage chartered-in. Where a vessel is chartered within a group, it should only be counted at its highest level of control. Non-qualifying vessels should be disregarded.

ShipNet tonnageNo. of daysTon-DaysTon-Days OwnedTon-Days Chartered-in
Bulk 111000365401500040150000
Bulk 22800365102200010220000
Bulk 3*22500365000
Bulk 422500365821250082125000
Bulk 1**11000365000
Bulk 521000365766500007665000
Reefer 17500365273750027375000
Reefer 24200365153300015330000
Bulk 62250035787500007875000
Reefer 38100655265000526500
Bulk 72400047112800001128000
Totals--34,714,50017,520,00017,194,500

* Bareboat charter-out makes Bulk 3 a non-qualifying ship, which is disregarded

** Bulk 1 has been chartered intra-group, so is also disregarded.

So the percentage is 17,194,500/34,714,500 x 100 = 49.5 (below the 75% limit).

References

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How to calculate 75% limitTTM05200