Taxes Consolidation Act 1997 Schedule 18B paragraph 8

Meaning of operating a ship

Paragraph 8 of Schedule 18B defines what it means for a company to "operate" a ship for tonnage tax purposes, covering owned ships, chartered-in ships, bareboat charter-outs, and ship management services.

• A company is treated as operating any ship it owns or charters in, but not a ship of which only part has been chartered to it (unless the charter is a joint charter with other persons).
• A ship chartered out on bareboat terms is generally not treated as operated by the chartering-out company, unless the charterer is a fellow group member that is (or will become) a tonnage tax company.
• A company does not cease to operate a ship chartered out on bareboat terms where the charter-out is due to short-term overcapacity and the charter term does not exceed three years.
• A company providing ship management services is treated as operating a qualifying ship only where it has contractual possession, control, and management of the ship across six specified areas, and those terms are actually implemented.

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