SolvedTTM13150 | Partnerships: Operation of ships
From HM Revenue & Customs · Tonnage Tax Manual
75% limit on chartering in to partner: Example
Beau Ltd is a singleton tonnage tax company. For the accounting period year ended 31 December 2013 it has:
a 50% share in a corporate partnership, Beau-Geste Ferries,
a 25% in another corporate partnership, Beau-Regarde Ferries, and
two 3,000-ton vessels, time-chartered-in, which it operates on its own account.
Beau-Geste Ferries operates four 5,000-ton vessels, of which:
three are bareboat chartered in, and
one held on a time charter for the whole of the 12 month accounting period.
Beau-Regarde Ferries operates two vessels:
one 8,000-ton vessel bareboat chartered in for the whole of the 12 month accounting period, and
one 4,000-ton vessel time chartered in for the last 6 months of the accounting period.
Beau Ltd’s percentage of chartered in tonnage is calculated as follows:
| - | Beau-Geste Ferries | Beau-Regarde Ferries | |
|---|---|---|---|
| Step One | Aggregate Tonnage (in ton-days) | 4 x 5,000 x 365 = 7,300,000 | (8,000 x 365) + (4,000 x 184) = 3,656,000 |
| Step Two | Tonnage chartered in (ton-days) | 1 x 5,000 x 365 = 1,825,000 | 1 x 4,000 x 184 = 736,000 |
| - | % chartered in | 0.25 | 0.2 |
| Step Three | Share in partnership property | 50% x 7,300,000 = 3,650,000 ton-days | 25% x 3,656,000 = 914,000 ton-days |
| - | Allocation of chartered in tonnage in Step 2 | 25% x 3,650,000 = 912,500 ton-days | 20% x 914,000 = 182,800 ton-days |
| Step Four | Total share of tonnage operated | 3,650,000 + 914,000 = 4,564,000 ton-days | - |
| - | Share of tonnage chartered in | 912,500 + 182,800 = 1,095,300 ton-days | - |
| Step Five | Own tonnage | 2 x 3,000 x 365 = 2,190,000 | - |
| - | Total own and partnership tonnage | 2,190,000 + 4,564,000 = 6,754,000 ton-days | - |
| - | Own and partnership tonnage chartered in | 2,190,000 + 1,095,300 = 3,285,300 ton-days | - |
| Step Six | Aggregate percentage chartered in | 48.64% | - |
| - | Apply 75% chartered in limit to Step Six result | Beau Ltd is below the 75% limit for this accounting period | - |
References
75% limit on chartering in to partner TTM13140