Income Tax (Earnings and Pensions) Act 2003 Schedule 5 paragraph 18

Excluded activities: leasing of certain ships

Paragraph 18 sets out the conditions under which leasing ships on charter will not be treated as an excluded activity for the purposes of the enterprise management incentives (EMI) scheme.

• Ship chartering can qualify as a non-excluded activity provided the company beneficially owns all chartered ships, registers them in the UK, and handles its own marketing
• Each charter must be for no more than 12 months with no provision for extension beyond that period (except at the charterer's option), and must be on arm's length terms with an unconnected party
• The company must retain principal responsibility for management decisions and ship expenses throughout the charter, and no arrangements may exist allowing a third party to take over those responsibilities
• Where some charter lettings fail the requirements, the trade is not treated as excluded provided those lettings and any other excluded activities do not together form a substantial part of the trade

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