Taxes Consolidation Act 1997 section 697P

Withdrawal of relief etc. on company leaving tonnage tax

Section 697P sets out the consequences where a company ceases to be a tonnage tax company, including the clawback of capital gains exemptions and balancing charge reductions previously enjoyed under the tonnage tax regime.

• The section applies where a company leaves tonnage tax either because it ceases to qualify for reasons mainly related to tax, or because Revenue has excluded it under section 697F.
• Capital gains on disposals made on or after the exit date, or during the preceding six years while the company was in tonnage tax, are recalculated as if the company had never been a tonnage tax company, and any increased gain is treated as arising immediately before exit and is not relevant shipping profits.
• Where balancing charges were previously reduced under paragraphs 16 or 17 of Schedule 18B during accounting periods ending within six years before exit, the aggregate amount of those reductions is treated as additional profits chargeable to corporation tax, arising immediately before exit and not qualifying as relevant shipping profits.
• No relief, deduction, or set-off of any kind is permitted against the increased capital gains, the additional balancing charge profits, or the corporation tax arising on either amount.