TTM03530 - Qualifying companies and ships: Area of operation limited to sheltered waters

What is sea? Area of operation limited to sheltered waters

Certification

To qualify for Tonnage Tax, a ship has to be certificated as capable of navigation at sea. This means it has to be certificated as capable of operating in waters defined as “sea” under the relevant Merchant Shipping legislation.

UK waters

The waters around the coast of the UK are categorised by the Marine & Coastguard Agency, the appropriate competent authority, to distinguish between what is ‘“sea” and what is not ‘sea’. The categories range from Category A (narrow rivers) to Category D (tidal rivers and estuaries where the wave height is not expected to exceed 2 metres). MCA category waters A to D are not “sea” for Tonnage Tax purposes (see TTM03500 and TTM03595)

A ship that is only certified to travel in waters falling within Categories A to D is therefore not certificated as ‘seagoing’ and is not a qualifying ship for TT purposes. A ship will only be ‘seagoing’ if it is certificated for navigation outside these waters. See also TTM03520 for vessels operating under restricted certificates.

Foreign waters

Other countries will normally have categorised their own waters to distinguish between what is ‘sea’ and what is not ‘sea’. A ship whose Certificate does not permit it to operate at sea, as defined by the appropriate competent authority, does not qualify for Tonnage Tax.

Further advice

In cases of doubt or difficulty please contact the Tonnage Tax Unit for advice.

References