Taxes Consolidation Act 1997 section 697E

Requirement that not more than 75 per cent of fleet tonnage is chartered in

Section 697E imposes a 75 per cent limit on the proportion of qualifying ship tonnage that may be chartered in by a tonnage tax company or group, and sets out the consequences where that limit is breached.

• No more than 75 per cent of the net tonnage of qualifying ships operated by a tonnage tax company (or, for a group, the aggregate net tonnage of qualifying ships operated by qualifying group members) may be chartered in on terms other than bareboat charter terms.
• Where an election is made during the initial period and the limit is breached in the first accounting period, the election is treated as never having had effect; where an election is made after the initial period, breach in up to three consecutive opening periods may void or defer the election.
• Revenue may give notice excluding a company or group from tonnage tax where the 75 per cent limit is breached in two or more consecutive accounting periods, with effect from no earlier than the start of the period following the second consecutive breach.
• Finance Act 2006 permits the Minister for Finance to remove the 75 per cent limit by commencement order, but this order has not yet been made, so the limit remains in force.