TTM11100 - Offshore Activities: Different types of vessels and their treatment

Vessels that are engaged in offshore activities are treated in three different ways by the legislation:

• Vessels to which the special rules apply

The special rules only apply when they are engaged in offshore activities; when they are engaged elsewhere they come within the normal tonnage tax regime. See TTM11110.

• Vessels to which the special rules do not apply

Vessels which come within the normal tonnage tax regime wherever they operate. See TTM11120. 

• Vessels outside Tonnage Tax

Vessels which are excluded from the tonnage tax regime wherever they operate. See TTM11130.

(NB Remember that the ‘normal’ tonnage tax regime only applies to shipping profits.)

Many vessels, which engage in offshore activities, will be qualifying ships by virtue of paragraph 19(1)(d) as ships that provide ‘transport in connection with other services of a kind necessarily provided at sea’.

Under the ‘normal’ Tonnage Tax regime only the transport element will generate profits which fall within the ring fence as ‘relevant shipping profits’; profits from the service element will always fall outside the ring fence, and will be chargeable to Corporation Tax under the normal rules. Most ships engaged in offshore activities, and to which the special rules apply, are likely to have a service element and this will be a computational factor, (see TTM06600).

Small vessels

Note that vessels which are not seagoing, or which are less than 100 gross tons, cannot be qualifying ships (TTM03500). All such vessels will come within the normal Corporation Tax regime wherever they operate.

References