H M Revenue & Customs TAX Ruling

[Aidan Karley]

If HMRC have said in writing that you have nothing to pay then you have nothing to pay

I am not a tax lawyer, and having spent precisely one month in the exaulted realms of PAYEing at higher rate (whatever rate that is ; I got a £1600 ahead-of-schedule bonus on top of the normal pay and rig bonus which apparently tipped me into the rich boys bucket) I know very little about it.
The impression that I’ve always received (from casual perusing of financial advice, radio programmes etc, as well as talking with a (diving club) friend who is a VATman) is that the taxman is careful to avoid saying that "you have a liability of X" (including X<=0) ; rather they phrase things that "this officer is of the opinion that you have a liability of X". This is done deliberately for several reasons :

– the tax officer may in fact be wrong, in either direction ; the system is complex;
– the rules may change at some future date, or a case currently in the courts may come to a settlement that changes the interpretation of the rules before your case is finalised, and so what you’re due changes;
– thirdly, having this flexibility leaves the taxman with the perverse and cruel but not illegal option of hitting you with a bankrupting tax demand to force you to drop a law suit.

They’re not a nice organisation, and even their staff can be shamfaced about their more terrorist tactics. Their job is to get the money, one way or another.

I may be missing the point here but what is the point of an oil uni0n which is claiming to be ROV orientated or at least on our side when it does not have a solicitor who is specialist in the kind of legal issues which are affecting us.

We’re not telepaths. We’re volunteers. Most of our members are from platform engineering staff, while our current activists are mostly from drilling (onshore and offshore). So, without the ACTIVE participation of ROVers, we’re working on a very small experience base. The full-time Regional Officer may know more about ROVers issues, but we’ll still need the active participation of ROV members to understand the issues.

And also what kind of message does it send out stating that the solution lies with ourselves when we are supposed to join the uni0n to fight our fights for us. I think that qualifies as a mixed message at the very least.

We can (and will) do what we can to help, but we do need help ourselves. We don’t know what your issues are ; we don’t know where you are ; we don’t know how when or where to arrange to meet with you. So we need someone from the ROV world to volunteer to help us understand these things.
You’re sounding like a good volunteer, LuckyJim. But take heart – we understand the realities of offshore life, so we encourage several people "job sharing" so that when you’re on the rig (you do work 24/7 cover, of course?), someone else can take up the baton.

Maybe the government is not aware of how big a deal this issue is and I hope all the petition signing works for all the guys it affects.

Which petition is this? We’ve been up to our eyeballs in Doncaster all week, and this is literally the first I’ve heard of someone organising a petition. To whom? On what terms? Who’s it being distributed to? Is there anything we can do to help it’s distribution? Are you going to be petitioning your various MPs too? The MPs for the towns where your employer’s office staff live and work (since they’ll be affected by people leaving the country and/ or the industry)?
As for the government – well the less said about them the better. It leaves less swear words on the board.

[luckyjim37]

Adrian,

Obviously your friend has much more knowledge of the tax system than myself so I will not dispute what he has said.

In regard to how the uni0ns work I think on previous posts I have made it clear that I have a dislike for the Uni0n movement and in retrospect to some of my comments the ROV uni0n set up you are all involved in is in its infancy so will take time. I do wish everyone involved good luck but I personally never would be.

The petition I refered to was back on the first few pages of this thread.

Everyone else,

Earlier on in this thread I remarked on the poll in the top right hand corner.

This has led to some PM messages between myself and the site owner.

I would firstly like to point out that I apologise for any offence caused and that I and am sure every other user appreciate the hard work which James and Gina put into the site.

My only aim was to point out, in what was probably the wrong way, that many of the guys in the ROV industry are really not affected by SED and so the current tax rulings are in probability just level the playing field between rig workers and vessel workers.

In the current climate of what a lot of guys seem to posting about standing together one voice everyone equal and all of that good stuff it would appear the taxman is generating tax equality for us.

I do think it is a crap thing that it is being taken off a lot of guys and have sympathy for anyone who will get stung for retrospective taxes if that happens which proabably won’t due to it being political suicide for the government.

At the end of the day though in our industry this ruling will only affect the minority.

As I understand from reading all of the threads back the guidelines are due to be published in a couple of months. It just concerns me that a lot of people are responding to secondhand information without having all of the facts on the issue and it will lead to the taxman being negative toward dealing with us further down the line.

I personally feel until we get all of the facts that we have a more measured response.

[Andy Shiers]

My only aim was to point out, in what was probably the wrong way, that many of the guys in the ROV industry are really not affected by SED and so the current tax rulings are in probability just level the playing field between rig workers and vessel workers.

This is not a slagging match so don’t think it !
BUT what planet do you come from >
You have obviously got many , many worldly years and experience in this industry to come up with that !
The Governements stand on SED will effect I would say nearly everyone in the ROV industry except those of you who have never bothered to claim it , It effects Salary as well as Mercenaries . This ruling is s step towards more taxation on us and you are somewhat of a muppet if you canna see it !
The problem with this Labour clamp down is the repercussions it has on All personnel on these vessels not just Divers / ROV / Survey !
As an Industry we are one of the most Taxed of any Industries in Britain , We have also the Highest Insurance premiums due to our "Dangerous work area" and also one of the highest Liability insurance premiums !
Take a long hard think before coming out with your thoughts on this matter, Your views on this are quite the opposite to helping the situation 👿

[Anonymous]

The only solution to this recent daylight robbery from this useless robbing Labour government,is to up and get the hell out of once Great Britain.The place is going down rapidly,and is only going to get worse…I got the hell out of there,a few years ago.Still paying taxes but now at least living somewhere with a decent quality of life,so can at least see some benefit of paying taxes,unlike the UK,where you pay throught the nose for everything,and all you get back is more shit …,more immigrants….etc,etc.

[SpearROV]

I fear this problem will cause no end of head aches to a great load of people 😕
I agree with you Brigs34 , It’s time to move out of this once great country and live like an immigrant in someone elses 😀
Mind you 😕 For an Industry the stems right around the world this stupid " Tax incentive " of the British Governement will push the British Industry further down the Toilet 🙁
Hey Lostboy , Why don’t we start our own Uni0n 😀 At least we have enough experience with these clowns to know what we are talking about 😀

[CheckoffsUglyRumor]

There’s plenty of talk, and probably quite a bit of thought, going on about moving to more benevolent tax regimes – it’s not just rhetoric.

I’ve come across a few ROV pilots who have moved to France, being welcomed in a couple of villages near Perpignan because their young kids suddenly up the numbers thus forestalling the closure of local schools. Also a couple of guys who have moved to Montenegro, and one who is based in a Swiss alpine resort. Although these places don’t have the same SED rules, some have tax rules for offshore workers that are far more generous than the UK’s now that SED has died a death. I’m told that if you live less then 180 days in France, and your income is from oil & gas then you pay very little tax…but would like to discuss with someone who is there and has first hand knowledge.

Each place has its good and bad points, trouble is sorting the fact from rumor – perhaps James/Gina would consider a new forum for potential migrants where we could discuss these matters?

By the way James & Gina – you’re doing a cracking job! Thanks

[luckyjim37]

[As an Industry we are one of the most Taxed of any Industries in Britain , We have also the Highest Insurance premiums due to our "Dangerous work area" and also one of the highest Liability insurance premiums ]

One years insurance for me is around £1000 for everywhere in the world except the US. That is both liability insurances required for a Ltd company. That is not to unreasonable less than £100 a month.

Tax is the same as every other worker/company in the country or am I seriously missing something.

The Governements stand on SED will effect I would say nearly everyone in the ROV industry except those of you who have never bothered to claim it , ]

I am sure all of the guys who are on regular drill support jobs in the north sea would disagree. Or the guys who choose to have more time at home and do less days.

This situation is still only affecting the guys who do enough qualifying days which I and I know I am not the only one think is not the majoritiy of ROV workers.

As for the argument about how it will affect divers and everyone else. I am sure the divers did not think about anyone else when they went on strike to get better pay and conditions.

The simple fact is the writing has been on the wall for SED for some time now. Yes retrospective taxing is wrong and proabably even illegal through some loophole or other.

I strongly disagree with the idea of getting taxed again on a previous year but as for the 2007/2008 year which will be affected and due in January you would be a fool to not have the tax for that year still in the bank just in case. Once it is paid/rebated and letters confirming the taxes are in order have been received then that is a different matter altogether.

As for my views being quite the opposite of helping I think that there are far to many hot headed responses to this problem which could be detremental to the cause especailly as most of the people writting letters to MP’s/tax offices will be doing so without all of the facts and having heard about this issue third or fourth hand off a mate.

I am sure that there will be an equal amount of eloquently worded letters with the facts written to the correct people but I know I would not like to bring myself to the attention of the taxman until I was absolutely 100% sure of what his wording will be when the guidlines come out in a couple of months.

But before totally writing off my original statement it would be interesting to know if anyone has the actual figures of how many non-expat workers would be directly affected by this from the ROV industry because as selfish as may seem I really could not care less what wages, tax breaks or conditions a surveyor/diver or DPO got as they are not paying my mortgage.

The other thing that is still I still find amazing is how this information has only come to light now as I understand it the start date was Jan 08 and the information on the new rules is not due out till Dec 08. I would say there is enough ground there to mount a legal challenge a claim if rejected by the nice taxman.

The other problem this may bring up for all the guys who work as Ltd companies is if the companies significantly raise rates to compensate guys you very easily could end up having to deal with the VAT man as well which will add to the fun of everyday life no end.

[Kalbo]

Below is the latest letter I have received from my accountant regarding this subject.

Kalbo.

I have spoken at length with the Revenue this morning and it appears that the date from which the new rulings will be operated may be brought forward to 06/04/08. From my conversation with the Revenue it appears that are still very many "grey" areas regarding the "new rules" and at this stage I am unable to give concrete advice to any of my clients. The only thing I can say is that as soon as I have any further information I will ensure that it is passed on immediately.

[taffrov]

I urge all UK offshore personell to contact their local MP, and either protest in the strongest terms or better still make an appointment and see them>
MP’s always want to be seen to be championing a cause, and the way the terms are set out at the moment is unfair. Do it and do it today. If you sit back anf do nothing, then you are not only letting yourself down, but those of us who have singed the 10 Downing St petition and have seen their MP’s.
We all work for companies who are contracted by huge conglomerates, and they can and will put pressure on governments if they see that a particular point (or whatever) is not in their interests then they step in with the big guns. Which can only help.
Lets not take this laying down and try and do something.
Contact all the offshore people you know and urge them to contact their MP’s, even if it is only an email, and all MP’s are contactable, just google them.
Do it and do it NOW.

[James McLauchlan]

The below news item (it was news when posted on 25th Sep 2008) was brought to my attention by the representative of the company that own the website on which the news was posted.

The original message I received was:

Sender’s Email: ****@blueribandtax.co.uk
Subject: ROVworld Subsea Information Portal – Feedback: Inland Revenue ruling

Message: I am a Chartered Tax Adviser and was referred to your website by a client. It may interest your members to know that we believe this decision to be wrong in law and will be contesting it. Please refer to http://www.blueribandtax.co.uk/news/view/pride-south-america-case

Thanks

I have their permission to reproduce the article here at ROVworld.com

The company is:
Blue Riband – Chartered Tax Advisers

For further information you may visit their website at: http://www.blueribandtax.co.uk/

I feel that the content, below, is of interest in relation to this topic.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Pride South America case

As you may have heard the tax payer was recently defeated in a case concerning seafarer claims for a support vessel.

We have been contacted by many seafarers on this issue who are all of the opinion that this will have a devastating effect on the UK Seafaring Industry. In terms of net pay many will no longer be able to afford to compete with other seafarers from different countries. The Seafarer employment industry is completely different from any other industry sector, in that UK workers are competing in the labour market alongisde others from different countries who do not have the additional tax cost. Hence to maintain the competitiveness of UK workers, the 100% tax relief was introduced, to ensure that this vital skill base was not lost. It is also true that maintaining the Seafarer skill base is vital to our national defence as commercial vessels have always been used in times of conflict e.g Falklands war. This was the purpose of the original legislation and this has not changed.

For our part we are somewhat amazed by the decision and the rational in this case and have completed a detailed representation against it which has now been submitted to the Revenue. We await their response.

In summary:

* the Defence in this case representing the tax payer concentrated on whether the vessel was stationary which is not a significant factor
* the Commissioner remarked that no cases had been put to him on the interpretation of regulation 3 which is astonishing as that is the key point
* there is ample case law to support the proposition that this vessel is not an Offshore Installation
* a more purposive approach should also be taken in interpreting this statute which was not even mentioned.

Also, just to clarify that this was a Special Commissioners decision and it is not law. The law has not changed and we will be submitting claims as usual with full disclosure and then if the Revenue still reject the argument we will take a test case to the Commissioners and put forward the arguments that were missed and should have been put foward in the first place. Again we do not think that all of the relevant arguments were put forward on behalf of the taxpayers and so a separate hearing should take place.

We will keep you updated!

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

[marcfromleeds]

Hi Guys
I have been reading your Forum with interest over the past week or so since this news broke!
I hope you dont mind me intruding, but I am a surveyor not a ROVer! 🙂

I sent an email to my local MP in Leeds, Paul Trusswell, after reading this forum who wrote back to me saying he had already written to ministers about the issue.
While I was at it I thought I might as well send the same email to David Cameron and a few other tories and newspapers etc to see if I got a response!
Anyway I thought you might be intersted in the reply from David Cameron’s office:

Dear Mr ***,

I am writing on behalf of David Cameron to thank you for your recent e-mail, regarding Seafarers’ Earnings Deductions.

We do understand your concerns on this matter and sympathise. At a time of economic crisis when people are worried about their jobs and the cost of living, the decision has come as an unwelcome and untimely shock to many.

As you may know, the problem arises from a verdict by the Special Commission in the Pride South America case, in which it was decided that seafarers on a self propelled, dynamically positioned, semi-submersible rig in the southern Atlantic Ocean were not entitled to claim the Seafarers’ earnings deduction from Income Tax. It is the view of the Chamber of Shipping that HM Revenue and Customs’ interpretation of the Special Commissioner’s verdict will cause serious crewing issues in the offshore sector among companies operating worldwide.

The Maritime Professionals Union, Nautilus, believes the Inland Revenues changes will affect crew on construction support, well service and dive support vessels, even extending to pipe-laying and seismic survey ships. What is particularly worrying is that the Government wants to make the changes retrospective. Some of those affected are already being pursued.

The Shadow Shipping Minister, Julian Brazier and Shadow Treasury Minister, David Gauke, have arranged to meet with members of the shipping industry to discuss the issue further. They are fully aware of the strong feeling this issue aroused in the seafaring community and are keen to have the voices of those affected heard by the Government.

Thank you for taking the time to get in touch about this issue.

Yours sincerely,

Lara Moreno Perez
Office of the Leader of the Opposition
House of Commons
London

~~~~~~~~~~~~~~~

This plus the news from the tax account above is giving me some hope 🙂

[ROV_VALLEY_COMMANDO]

Follow link for the proper SED petition,

http://petitions.pm.gov.uk/MerchantSED/

[James McLauchlan]

Been there, done that.

What I do find refreshing is the way people have written to MP’s, contacted Uni0n’s, signed petitions and debated the issue here. Obviously this thread has been of some interest with over 13,500 views so far.

It does show that when people start acting together things can be brought to the attention of those that may be able to make a difference. In this case, I feel, that marcfromleeds did a neat thing by sending a mail to David Camerons office. Well done survey! 🙂 Not often you hear that said by ROV 😉

If anything this thread will be a historical record enabling people joining at a later date to catch up on what happened and the progress (or not) made thereafter.

[stu83]

Hello ROVers

Another intrusion by survey i’m afraid but as this affects us all thought you might be intrested in the reply i got from Alex Salmond’s office.

Dear Mr

Thank you for your email, to which Mr Salmond has asked me to respond.

The SNP Treasury Spokesman, Stewart Hosie MP, has taken up this very issue with the Chancellor of the Exchequer this week. I attach a copy of the text of Mr Hosie’s letter, which I hope you will find to be of interest.

I will let you know as soon as Mr Hosie receives a response from the Chancellor, and forward on a copy of his reply to you.

Yours sincerely,

Richard Thomson
Parliamentary Assistant to Rt Hon Alex Salmond MP MSP

Rt Hon Alistair Darling MP
Chancellor of the Exchequer
HM Treasury
1 Horse Guards Road
London
SW1A 2HQ

7 October 2008

Dear Alistair,

I have been contacted separately by a large number of seafarers who work on supply
vessels in the North Sea hydrocarbons industry. Without exception, each individual
has expressed grave concern about the impact of a recent decision by HMRC to
reclassify certain offshore support vessels as ‘offshore installations’ for tax purposes.
Accordingly, I am asking you to review this state of affairs as a matter of urgency.

This situation has arisen following a decision by Special Commissioners in the case of
the Pride South America, regarding five men who wished to claim the Seafarers
Earnings Deduction (SED). The Commissioner found against the men, on the basis
that the vessel was ‘stationed’ throughout its operations and was being used for
“exploiting mineral resources by means of a well”.

While not wishing to make any comment on the merits or otherwise of this individual
decision, I am concerned that HMRC has now seized the opportunity to reclassify
many vessels as ‘offshore installations’, on the sole basis that they support operations
whereby others may exploit mineral resources “by means of a well”.

If the original guidance on what constituted an offshore installation in respect of SED
was intended to encompass offshore support vessels, then there can be no doubt that
this is precisely what would have happened from the outset. As you know, this is not
what was done. Since Parliament has not altered the relevant legislation to encompass
specifically such vessels, this change in approach comes solely as a consequence of
HMRC choosing to take advantage of the Pride South America ruling to interpret
existing, well-understood and widely observed guidance in the loosest sense possible.

Leaving aside for a moment the manner in which this fresh interpretation arose, I have
concerns as to the way in which it is to be applied, and the impact this may have on
the industry.

I’m sure we can agree that given the importance of the sea to the various nations of
our islands, there is a huge strategic importance in having a strong domestic maritime
skills base. This is what the SED was introduced to, in part, help maintain. For the
SED to be removed from those seafarers who operate in support of the North Sea oil
and gas industry would be absolutely inexplicable, and would run counter to the
efforts of other departments in your government to help maintain and expand that
skills base.
In particular, this removal of SED from many of those previously in receipt of the
benefit, risks having unforeseen consequences. Many offshore operators, I am sure,
take account of the SED in determining compensation packages for their seafaring
crew. Were this to be removed, it would likely lead to an upward pressure on labour
costs as seafarers seek to replace the SED with additional income after tax.

I understand that HMRC is likely to apply this fresh interpretation retrospectively on
all claims submitted after 14 January 2008. The retrospective implementation of this
ruling may have a very serious implication for household incomes at what is already a
difficult and uncertain time for many people.

If this re-interpretation of existing guidelines is to be allowed to stand, it must not be
allowed to be retrospective. I trust that you will give these matters your most full and
urgent attentions, and look forward to an early response.

Yours sincerely,

Stewart Hosie MP
SNP Treasury Spokesman

[Gina McLauchlan]

Just received this in from someone who has an active accountant…

Might help a bit…

[Author]

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