697F Requirement not to enter into tax avoidance arrangements.

(1) It shall be a condition of remaining within tonnage tax that a company is not a party to any transaction or arrangement that is an abuse of the tonnage tax regime.

(2) A transaction or arrangement shall be such an abuse as is referred to in subsection (1) if in consequence of its being, or having been, entered into the provisions of this Part and Schedule 18B may be applied in a way that results (or would but for this subsection result) in—

(a) a tax advantage (within the meaning of ^[2]>section 811^<[2][2]>section 811, or section 811C, as the case may be^<[2]) being obtained for—

(i) a company other than a tonnage tax company, or

(ii) a tonnage tax company in respect of its non-tonnage tax activities, or

(b) the amount of the tonnage tax profits of a tonnage tax company being artificially reduced.

(3) If a tonnage tax company is a party to any such transaction or arrangement as is referred to in subsection (1), the Revenue Commissioners may—

(a) if it is a single company, give notice excluding it from tonnage tax;

(b) if it is a member of a group, subject to paragraph 22 of Schedule 18B, give notice to the tonnage tax company excluding the group from tonnage tax.

(4) The effect of such a notice as is referred to in subsection (3)—

(a) in the case of a single company, is that the company’s tonnage tax election shall cease to be in force from the beginning of the accounting period in which the transaction or arrangement was entered into, and

(b) in the case of a group, is that the group’s tonnage tax election shall cease to be in force from such date as may be specified in the notice, but the date so specified shall not be earlier than the beginning of the earliest accounting period in which any member of the group entered into the transaction or arrangement in question.

(5) The provisions of sections 697P apply where a company ceases to be a tonnage tax company by virtue of this section.