The Tonnage Tax training requirement has been amended with effect from 1 October 2016 by The Tonnage Tax (Training Requirement) (Amendment) Regulations 2016, SI 2016 No. 819. The change made is to increase payments in lieu of training (PILOTs) in line with UK inflation. A company which is unable to provide the required training may propose to make PILOTs. SI 2016 No. 819 increases the PILOT from £1,218 to £1,236 per calendar month per trainee with effect from 1 October 2016. There are penalties for non-compliance in the form of a 50 percent or, for repeated non-compliance, 100 percent increase in the basic rate of PILOTs payable in following periods. SI 2016 No. 819 increases the basic rate from £1,134 to £1,151 per calendar month per trainee with effect from 1 October 2016.
The training requirement is administered by the Department for Transport (DfT). It is set out in detail in a statutory instrument, SI 2000/2129. This is usually amended annually to increase rates of payment in lieu in line with inflation, with effect from 1 October.
Broadly, one officer trainee is required to be trained for each 15 officers in the company or group’s qualifying ships. Trainees are required to be both EEA residents and UK ordinary resident taxpayers. With effect from 1 October 2015 the type of officer counting for this purpose has included a new role of ‘electro-technical officer’. Also with effect from 1 October 2015 ratings (i.e. non-officer crew members) have counted towards the test: three trainee ratings count as one officer cadet.
A training commitment must be submitted annually in advance to the DfT and approved by the DfT. A company which is unable to provide the required training may propose to make PILOTs – SI 2016 No. 819 increases the PILOT from £1,218 per calendar month per trainee to £1,236 from 1 October 2016.
Failure to meet the training commitment for two or more periods may result in the DfT issuing a certificate of non-compliance.
A tonnage tax election is invalid unless the DfT has approved the taxpayer’s initial training commitment. If a certificate of non-compliance has been issued and has not been withdrawn by DfT, a tonnage tax renewal election may not be made.
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