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HMRC internal manual

Employment Income Manual

Seafarers’ Earnings Deduction: anti avoidance legislation: eligible period that straddles tax years

Section 380 ITEPA 2003

A seafarer with a single employment may be required to work overseas for a period of time. The eligible period may start and end at any time in the tax year. It is not uncommon for eligible periods to straddle tax years.

The employee may persuade the employer to inflate the emoluments attributable to the eligible period. This may be done by inflating the rate of pay or by paying inflated bonuses.

Section 380 sets out factors to consider. These are listed as EIM33070. Do not challenge only on the grounds that earnings paid in respect of the eligible period are higher. There may be a good commercial reason for rewarding an employee at a higher rate for working part or all of the time abroad.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)