Seaman’s tax rules appear to be changing for the worse!

[James McLauchlan]

Below is an extract from an email sent to an ROV guys offshore by his accountant. You can see why the accountant, and no doubt the recipient, are somewhat concerned about this new development. In a nutshell the tax authorities are suggesting that a vessel on DP inside a 500m zone will cause that vessel to be viewed , by the tax authorities, as a fixed installation whether it is fixed or not!

I have forwarded this on to the RMT/OILC for clarification but in the meantime see no reason why not to discuss the matter here.
Maybe someone has direct experience of this and can shed some light on it.

I think the summery I received covered two emails so I have split them as quoted sections.

All reference to names etc. have been stripped from the quote so as to protect private information.

The accountant wrote:

I thought I had better make you aware of a recent Tax Case decision which could cause a problem for anyone working in the oil/gas industry wanting to claim Seafarers’ Relief. The ruling looked at the definition of an offshore installation, and concluded that ANY vessel stationary whilst working on a well installation, or the pipeline within 500m of it, was also an installation. The Case actually involved a semi-sub using dynamic positioning to remain in position whilst repairing a well head, and it was initially thought it would have no implication for ‘proper’ vessels. I telephoned one of the tax offices that handle Seafarers, and their opinion was that this would be the case. However, we now have an enquiry into one of our other clients, who was on what are clearly vessels, but the Inspector has said he needs to consider whether they are caught by this ruling or not.

I have spoken again to the tax office, and they are concerned about the issue, because it is going to make the job really difficult for all concerned. The individual making the claim will have to keep records of what work the vessel was engaged in, whether it was stationary, and if working on a pipeline, whether it was within 500m of an installation, and they (or their accountant) will then have to make detailed calculations of the qualifying and non-qualifying earnings, based on this information. The problem is the tax office will want third party evidence to support the claim, so presumably the individual will have to get letters from their employer detailing the work, and also the co-ordinates of where they were working at any given time. Do vessels keep this sort of information, or just their midnight positions? Then of course you will get the issue of the 500m limit; the vessel may be positioned at 498m, but presumably a diver could be inspecting a pipeline from 490m to 505m. How do you obtain evidence regarding this? Apparently, a meeting is scheduled for September with someone from their Technical Legal Department to discuss this issue. We now just have to wait for their decision.

[James McLauchlan]

If there is any truth in this I personally I think they (Tax authority) are well out of line and this is a half baked idea to get more revenue.

I am not surprised that they are trying to find ways of shutting this loophole down but I have one very obvious question:

How on earth will the tax man define Stationary or Fixed?

Each and evey DP vessel is never stationary because there is always a footprint. In 24hrs a vessel can carry out a mass of moves including heading changes. Some can be as small as 1m some can be 10m some 100.. etc etc.
So what is meant by stationary then?

So here we are thinking how this may affect your everage ROV income and yet what about the seamen on the same vessel? In the instance mentioned by the accountant they have suddenly become energy workers on a ‘stationary’ vessel! How silly is that?

[bt]

seems a bit strange?
you would have to find out what type of ships this person was working on ???
it` sounds as though he must of been on a well work over ship or a type of drilling ship, where you could see where things might be investigated.
but thanks for the warning.

[Ray Shields]

I’m constantly surprised why the Taxman just does not turn round and state that a person has to sign onto ships articles to be classed as a Seafarer and qualify.

That would then only allow the vessels crew to claim the tax, it would save them a fortune.

[bt]

so why do you want ships crews to get tax relief, but not project crews who most likley do a lot more time at sea?? unless they are on a straight 4 and 4 off course.

[ROV_Monkey]

Maybe someone has direct experience of this and can shed some light on it.

Not quite direct experience but that email being quoted was from my accountant, which I forwarded to a couple of guys to give them a heads up.
If / when I hear the outcome of the September meetings I’ll let you know.

Monkey

[Ray Shields]

so why do you want ships crews to get tax relief, but not project crews who most likley do a lot more time at sea?? unless they are on a straight 4 and 4 off course.

I dont, I’m just surprised that the Tax man hasn’t done it. They could save a fortune.

[luckyjim37]

Places like Nutec as we would all end up having to do the STCW 95 courses to be classed as ships crew as most of the guys down in India have had to.

Currently on the POB most ROV crews are listed as passengers/project. To be classed as crew even for tax reasons we would need to be qualified to be crew, at least on paper anyway.

I even bet to be classed at Seamen we would also need the department of transport medical as well as the normal offshore one we currently hold.

Happy days!!

[James McLauchlan]

………………
If / when I hear the outcome of the September meetings I’ll let you know.

Monkey

I think there might be a lot of interested parties on that front. We’d appreciate the feedback when it comes your way.

[Bacaruda]

Do you think this is the type of work they are referring to.

http://energy.pressandjournal.co.uk/Article.aspx/555290

[pipetracker]

Do you think this is the type of work they are referring to.

http://energy.pressandjournal.co.uk/Article.aspx/555290

It certainly looks like it. The system is a Subsea Wireline system pre-loaded with a rotary magazine of intervention tools and was going to be controlled by a Schilling Robotics Control System. Even though the vessel will be on DP it will still effectively be anchored to the seabed through the Intervention System. Watch out for the Well Abandonment work as well!!

[bt]

would still be worth while doing these course if that`s what they wanted. But your claiming a seafarers tax relief not a seamans tax relief.

[James McLauchlan]

This is a known issue. Having attended an OIM legislation course this year it became very apparent to me that a well intervention vessel, such as those being built for TSMarine, will in fact fall foul of this and would most likely be classed as an installation no matter if she was attached or not.

In future if you are ROV and being offered well intervention work on a DP vessel you can probably kiss all notion of Seafarers tax goodbye anyway.

This leads me on to what happens to a vessel that is carrying out pipeline installation, inspection, etc. At which point would the tax man concede that the vessel is not an installation for tax purposes?

Lets say that they now view a vessel as an installation when carrying out well servicing. What is the difference if that same vessel, or another vessel not capable of carrying out well servicing, then moves on to other subsea ‘Energy’ assets. I feel that once they have a taste of this it is only a short step to including all sub-sea energy related activities as taxable from a personal standpoint.

[bt]

surely it would just come under the same rules as a jack-up. The role of the vessel would have to be changed, so if you were working on that type of ship the days would count but no tax back for it.
can see what your saying :- "might".

http://.hmrc.gov.uk/manuals/eimanual/eim33101.htm

cheers

[Rovned]

I know from experience that lads working on well intervention vessels such as the Seawell were entitled to tax back, and that well intervention vessels are (or were) specifically mentioned in the tax office guidelines.

Someone from Seatax got a bit keen whilst processing a mates’ tax claim last year and told him that he wasn’t eligible. A bit of investigation proved otherwise and his claim went through, as did everyone else’s on the vessel.

Check this:

http://www.hmcr.eu/manuals/senew/se33223.htm.

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