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Example

Date	Action
1.1. 2001	A Ltd elects into tonnage tax
1.1.2005	A Ltd buys a building used exclusively for its tonnage tax trade from a 3rd party
1.1.2008	A Ltd sells the building to its parent company B Ltd.  B Ltd has no qualifying activities and so uses the building for non tonnage tax purposes.
1.1.2012	B Ltd sells the building to a 3rd party, giving rise to a potential chargeable gain of £7,000

The disposal by A Ltd to B Ltd is an intra-group transfer covered by the normal no gain/no loss provisions, and so it is disregarded for the purpose of applying the time apportionment provisions.

The last ‘third party disposal� of the building is the disposal by the original owner to A Ltd on 1.1.2005.  Therefore P = 7 years

The building is a tonnage tax asset during the period it was owned by A Ltd, but it was not a tonnage tax asset during the period it was owned by B Ltd.  Therefore PTTA = 3 years.

The time apportionment formula applies to reduce Company B’s chargeable gain as follows:

Calculatation	Gain	Amount
(P - PTTA) ÷ P	x gain =	-
(7 - 3) ÷ 7	x £7,000	= £4,000

B’s chargeable gain on the disposal of the building is £4,000 before taking into account any capital losses brought forward, any capital losses arising in the period, or any claims to rollover relief.

References

¸é±ð´Ú±ð°ù±ð²Ô³¦±ðÌý	Link
Outline of time apportionment	TTM08200