TTM03930 - Qualifying companies and ships: flagging - substitute ships

FA00/Sch22/Para22A (7) - (8)

Where the Company starts to operate a vessel that is not registered on the register of a member state, then it may not have the option of re-registering the ship on the register of a member state.

For example where a ship is time chartered in, the owner may be unwilling to re-flag the vessel.

In these circumstances the company may make an election to register a different, or “substitute”, qualifying ship onto the register on a member state.

This substitute vessel must:

• be of at least the same tonnage as the new ship: two smaller ships that, when combined, equal the tonnage of the new ship would not be substitute ships
• registered other than on the register of a member state
• have been first operated by that company at least 3 months before the date on which the vessel it is substituting was first operated.

Where the company is a member of a Tonnage Tax group, the substitute ship may be one operated by another member of that group.

Election:

When a company first operates ship A, and decides to register a substitute vessel, ship B, it has to make an election to HMRC within 3 months of first operating ship A.

The election should be made to the HMRC office dealing with the company’s corporation tax affairs.

Where the company is a member of a Tonnage Tax group, the election must be made jointly by all the qualifying companies in that group.

For information on what constitutes the register of a member state see TTM03945.

An election should detail:

For the new vessel

• the name
• the date first operated
• the gross tonnage
• the IMO number
• the current flag

For the substitute vessel

• the name
• the date first operated by the company or by a company in the same group
• the gross tonnage
• the IMO number
• the member state flag and the date it was put on the register
• the previous flag

References