Taxes Consolidation Act 1997 section 697F

Requirement not to enter into tax avoidance arrangements

Section 697F makes it a condition of remaining within tonnage tax that a company must not be party to any transaction or arrangement that constitutes an abuse of the tonnage tax regime, and sets out the consequences of such abuse.

• A transaction or arrangement is an abuse if it results in a tax advantage (within the meaning of section 811 or section 811C) for a non-tonnage tax company, or for a tonnage tax company in respect of its non-tonnage tax activities, or if it artificially reduces tonnage tax profits.
• Revenue may give notice excluding a single company or, where the company is a group member, the entire group from tonnage tax.
• For a single company, exclusion takes effect from the beginning of the accounting period in which the abusive transaction was entered into; for a group, from a date specified in the notice, which cannot be earlier than the start of the earliest accounting period in which any group member entered into the transaction.
• Exit charges under section 697P apply where a company is excluded from tonnage tax under this section.