TTM13130 - Partnerships: Operation of ships

Strategic and commercial management

As described in TTM03001, a qualifying company is defined as a company that is within the charge to corporation tax, and operates qualifying ships that are strategically and commercially managed in the UK (paragraph 16(1)(c).

But a company that operates ships through a corporate partnership does not operate them, it only shares in the operation of those ships. There is therefore a relaxation of the strategic and commercial management rule for ships operated through a corporate partnership to reflect that fact.

Only a proportion of the ships operated by the partnership must be strategically and commercially managed in the UK. That proportion is the same as the share that the tonnage tax company has in the total partnership property.

For example, say a UK company has a 50% share in a corporate partnership with a non-resident company, so that it would be entitled to 50% of all partnership property in the event of a dissolution. In such a case only 50% of the total tonnage operated by the partnership has to be strategically and commercially managed in the UK in order for the UK company to pass the strategic and commercial management test.

References