TTM14110 - Exiting Tonnage Tax: Effects of exiting Tonnage Tax regime

Ten year disqualification

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No re-entry into Tonnage Tax for 10 years

For all cases, except on expiry of an election, there is a ten-year disqualification from re-entry into Tonnage Tax under paragraph 137(3). The ten years will run from the first day after leaving Tonnage Tax. If a further window of opportunity were offered for entry into the regime, a company could still not re-enter if any part of its first accounting period following re-entry into Tonnage Tax would fall within the 10-years disqualification period.

Exception to 10-year rule

The only exception to this rule is where, under the merger rules, either:

• an ex-tonnage tax group or company were taken over by a tonnage tax group or company which was the ‘dominant party’ or, there being no dominant party, which could elect to be so (paragraph 123), or
• an ex-tonnage tax group or company were taken over by a non-qualifying group or company which was the ‘dominant party’ (paragraph 125).

In those limited circumstances an ex-tonnage tax company can re-enter Tonnage Tax before the expiry of its 10 years disqualification.

(NB The ten year disqualification does not apply to a company which remains in a group which continues to be a tonnage tax group (because at least one other company in the group is a tonnage tax company), see TTM14030.)

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