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HMRC internal manual

Employment Income Manual

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HM Revenue & Customs
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Seafarers’ Earnings Deduction: offshore installations and ships: years up to and including 2007/08: examples

For 2008/09 onwards, the lists remain relevant but the implications of the decisions in Torr and Others v CIR (EIM33111) and Spowage and Others v CIR (EIM33112) must be taken into account as well, to determine whether a vessel is classed as an offshore installation or as a ship. See EIM33105 and EIM33106.

Section 1001 ITA2007

Whether a vessel is classed for the purposes of SED as either an offshore installation or as a ship, depends in the first instance on its design and capability. Where a vessel is designed to have dual or multiple uses see EIM33107.

The definition of an offshore installation requires, firstly, a vessel to perform a “relevant use” (EIM33103) whilst, secondly, it is “standing or stationed” in any waters (see EIM33108). Both legs of the definition must be satisfied to classify a vessel as an offshore installation. If a vessel performs a relevant use in a transient manner (i.e. whilst not standing or stationed) the second leg of this definition is not satisfied. It follows that if a vessel capable of (and actually undergoing) movement across water is not an offshore installation, it must be a ship for the purposes of SED.

While some structures are clearly identifiable as offshore installations and others as ships, there are some structures that are more difficult to categorise as one or the other.

Consequently whether a vessel is an offshore installation or a ship depends on the facts of each case.

Vessels working in the offshore oil and gas industry that are offshore installations

The following structures are offshore installations and are not accepted as ships for the purposes of Seafarers’ Earnings Deduction (SED):

  • floating production platforms
  • floating production storage and offloading vessels (FPSOs)
  • floating storage units (FSUs)
  • mobile offshore drilling units (MODU) including drillships, semi-submersible and jack-up rigs and tension leg platforms
  • flotels (floating accommodation units).

Vessels working in the offshore oil and gas industry that may be accepted as ships

The following vessels may be accepted as ships for the purposes of SED if they satisfy the general conditions described at EIM33101 and they perform their duties whilst not standing or stationed (EIM33108):

  • anchor handling vessels
  • construction and maintenance vessels
  • diving support vessels
  • heavy lifting vessels
  • pipe laying barges
  • platform support vessels
  • safety standby vessels
  • seismic survey vessels
  • shuttle tankers
  • well service vessels

But if one of these vessels is engaged in a relevant use (EIM33103), whilst standing or stationed (EIM33108), it will be classed as an offshore installation.

2008/09 onwards

For 2008/09 onwards, the decisions in Torr and Others v CIR (EIM33111) and Spowage and Others v CIR (EIM33112) must be taken into account when deciding whether a vessel is an offshore installation or a ship. See EIM33105 and EIM33106.