(28th August 2009) FURTHER UPDATE ON REVENUE'S DECISION REGARDING RECLASSIFICATION OF SHIPS RELATING TO SEAFARERS EARNINGS DEDUCTION

 

There has been a decision of the First-Tier Tribunal (Tax Chamber) issued on 18th June 2009. The decision concerns a claim to Seafarer's Earnings Deduction (SED) in Spowage and Others v HMRC. The result of the decision is that some seafarers who were not previously entitled to SED, will be entitled to SED for 2008/09 onwards. The decision results in a relaxation of the rules that previously applied so that some vessels that were previously defined as an 'offshore installation' and now defined as a 'ship'.

Seafarers and Merchant Seaman can contact Seatax for further advice on whether the changes to SED rules effect them.

An extract of the ruling is included below:

 

"For the purposes of this section a 'ship' does not include -

• (a) any offshore installation within the meaning of the Mineral Workings (Offshore Installations) Act 1971, or
• (b) what would be such an installation if the references in that Act to controlled waters were to any waters."

 

Regulation 3 of the 1995 Regulations provides so far as relevant,

• "(1) ...the expression 'offshore installation' means a structure which is, or is to be, or has been used, while standing or stationed in relevant waters... -
  • (a) for the exploitation, or exploration with a view to exploitation, of mineral resources by means of a well;
  • (b) for the storage of gas in or under the shore or bed of relevant waters or the recovery of gas so stored;
  • (c) for the conveyance of things by means of a pipe; or
  • (d) mainly for the provision of accommodation for persons who work on or from a structure falling within any of the provisions of this paragraph;

 

and which is not an excepted structure.

• (2) For the purposes of paragraph (1) the excepted structures are -
  • ...
  • (b) a well;
  • ...
  • (e) a mobile structure which has been taken out of use and is not for the time being intended to be used for any of the purposes specified in paragraph (1); and
  • (f) any part of a pipeline.

 

• (3) For the purposes of these Regulations there shall be deemed to be part of an offshore installation -
  • (a) any well for the time being connected to it by pipe or cable;
  • (b) such part of any pipeline connected to it as is within 500 metres of any part of its main structure;
  • (c) any apparatus or works which are situated -
    • (i) on or affixed to its main structure; or
    • (ii) wholly or partly within 500 metres of any part of its main structure and associated with a pipe or system of pipes connected to any part of that installation.

 

• (4) Where two or more structures are, or are to be, connected permanently above the sea at high tide they shall for the purposes of these Regulations be deemed to comprise a single offshore installation.