Schedule 32 - Tonnage tax: restrictions on capital allowances for lessors of ships
Finance Bill
7:45 pm
Mr Howard Flight (Arundel and South Downs, Conservative)
That demonstrates yet again the inevitability of measures such as the original tonnage tax, which create a major cliff edge between fully taxable activities outside the regime and those within the rules, opening opportunities for taxpayers.
I want to raise a couple of matters that the Law Society has raised. The schedule inserts new paragraph 89A into schedule 22 of the Finance Act 2000 which sets out exceptions to the quantitative restriction on capital allowances for lessors of ships in paragraphs 94 to 102 of that schedule. Clarification is sought concerning the operation of paragraph 89A(4) in two circumstances. First, leases commonly contain sales agency provisions allowing the lessee to sell the ship at the end of the period of charter as agent for the lessor. Confirmation is sought that such arrangements do not fall within paragraph 89A(4)(c) in respect of whether they expressly preclude the lessee or person connected with the lessee from acquiring the vessel. Secondly, confirmation is sought that the condition in paragraph 89A(4)(c) will be satisfied provided there are no relevant arrangements when the charter is entered
into and that the conditions would not be breached if arrangements came into existence subsequent to the charter being entered into.
The Paymaster General may not be able to answer those questions now, but they are outstanding technical issues.