Revenue Note for Guidance

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Revenue Note for Guidance

697H Relevant shipping income: distributions of overseas shipping companies


Rules are set out which are to apply if distributions of an overseas company are to be treated as relevant shipping income.


(1) The only distributions which qualify are distributions which are made in respect of profits arising to the overseas company at a time when the company concerned complies with all the rules and the company receiving the distributions is at that same time a tonnage tax company. Accordingly, distributions made in respect of profits arising at a time when the rules were not complied with by the overseas company or which arose in respect of a time when the company receiving the distributions was not a tonnage tax company do not qualify.

(2) These distributions are to qualify even where they are received through a chain of companies, provided the distribution can be traced back to income which would have been qualifying shipping income if the overseas company which earned the income were a tonnage tax company.

(3) The surcharge on the undistributed investment profits of a close company provided for by section 440 does not apply to these distributions.

Relevant Date: Finance Act 2021