Thanks for the repro steps, to add to that is only triggers if the HW REALLY 
can do HW Timestamping (which likely is the reason it was missed as e.g. virtio 
devs can't).
You can check with:
  ethtool -T <dev>

>From man chrony.conf
This directive is supported on Linux 3.19 and newer. The NIC must support HW 
timestamping, which can be verified with the ethtool -T command. The list of 
capabilities should include
SOF_TIMESTAMPING_RAW_HARDWARE, SOF_TIMESTAMPING_TX_HARDWARE, and 
SOF_TIMESTAMPING_RX_HARDWARE. Receive filter HWTSTAMP_FILTER_ALL, or 
HWTSTAMP_FILTER_NTP_ALL, is necessary for timestamping of received packets. 
Timestamping of packets received from bridged and bonded interfaces is 
supported on Linux 4.13 and newer. When chronyd is running, no other process 
(e.g. a PTP daemon) should be working with the NIC clock.

In a KVM guest it will run with SW timestamping which works.
>From chronc > ntpdata
[...]
TX timestamping : Kernel
RX timestamping : Kernel

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https://bugs.launchpad.net/bugs/1761327

Title:
  Apparmor denies net_admin for hwtimestamp

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