TTM06001 - Relevant Shipping Profits: Outline

Tonnage tax profits replace relevant shipping profits

Tonnage tax profits replace relevant shipping profits in a company’s calculation of profits chargeable to tax. The provisions are set out in Part VI of Schedule 22 (paragraphs 44 to 51) with further details on qualifying secondary activities in Regulation 3.

Considerable guidance as to what the Revenue will accept as a relevant shipping profit is set out in paragraphs 57 to 105 of the Statement of Practice.

Tonnage tax profits also replace losses

But tonnage tax profits also replace any losses incurred by a company on activities that, if profitable, would have produced relevant shipping profits.

Thus a company can be subject to corporation tax on tonnage tax profits even in a year when it suffers overall losses.

Only applies to tonnage tax companies

The concept of relevant shipping profits only has application for a company with tonnage tax profits, which it substitutes for its relevant shipping profits. This means that if a company does not operate any ships, it has no relevant shipping profits, even if it carries out ship-related activities on behalf of other members of the group. In such a case all of its income is outside the ring-fence.

References