Revenue Note for Guidance

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Revenue Note for Guidance

697M Exclusion of reliefs, deductions and set-offs

(1) Relief which would generally be available for set-off against the profits of a company is not to be available for set-off etc. against a company’s tonnage tax profits.

(2) A company is prevented from using losses accrued from any period before entry into tonnage tax to reduce tonnage tax profits. These losses are, therefore, effectively extinguished. However, they may under paragraph 17 of Schedule 18B be utilised against a balancing charge made on the company.

(3) A prohibition is imposed on setting reliefs which are available as a credit against a company’s tax liabilities being set against that part of a company’s tax liability as is attributable to the company’s tonnage tax profits. Specifically mentioned is double tax relief, but this provision could apply on a wider basis where necessary. The provision does not apply where income tax is deducted from a payment made to the company. Such deductions are still to be allowed against the company’s corporation tax liability.

Relevant Date: Finance Act 2021