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HMRC internal manual

Employment Income Manual

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Tax treatment of offshore oil and gas workers: offshore rigs and platforms: travel costs

Sections 305, 337 and 338 ITEPA 2003The cost of the journey between the employee’s home and the mainland departure point will be deductible under Section 338 ITEPA 2003 where the rig is a temporary workplace, see

EIM32075.

Where a change in the employee’s place of work from one rig to another does not have any substantial effect on his or her ordinary commuting journey, the two rigs are treated as a single workplace, see EIM32280. This may result in the two rigs being treated as a permanent workplace where they would each otherwise have been treated as temporary workplaces. This is illustrated by example EIM32281. See also the guidance below.

Sections 305 ITEPA 2003 replaced Extra-Statutory Concession A65 with effect from 6 April 2003. It removes any tax charge on provided transport between the mainland departure point and the rig, together with related costs, see EIM34110.

Employee transfers to a rig in a different fieldWe accept that the change of workplace rule does

not apply when an employee stops working at a rig in one field and begins work at a rig in a different field. In that case, we accept that the two rigs are different workplaces. The two rigs can therefore be considered separately, for the purpose of the 24 month rule, in deciding if either or both of them is a temporary workplace. If the rig to which the employee is travelling is a temporary workplace, he or she will be able to deduct the expenses of travelling from home to the mainland departure point

Employee transfers to a rig in the same fieldThe situation is different when an employee is transferred from one rig to another within the same field. If the employee lives at or near the mainland departure point it is likely that the employee’s journey from home to one rig will be substantially different from his or her journey to another rig, even when the two rigs are within the same field. So the change of workplace rule will not apply. However if the employee lives a long way from the departure point the journey from there to the rig may be a relatively small part of the overall journey. In that case, a transfer from one rig to another within the same field will not have a substantial effect on the overall journey. The change of workplace rule will then apply to treat the two rigs as a single workplace for the purpose of the 24 month rule.

Employee transfers to a rig in the same field - 75 mile “rule of thumb”In order to simplify the operation of the 24 month and change of workplace rules in these cases we have agreed that the change of workplace rule will not apply where an employee transfers between rigs in the same field and he or she lives no more than 75 miles from the mainland departure point. The two rigs will then be treated as separate workplaces for the purpose of the 24 month rule.

If the employee lives more than 75 miles from the departure point our presumption will be that a transfer from one rig to another within a single field will not have a substantial effect on the employee’s overall journey. The change of workplace rule will apply and the two rigs will therefore be treated as a single workplace for the purpose of the 24 month rule.

Operative dateThe approach outlined above was discussed with industry representatives in March 2004. You should apply it in all open cases. However, settled liabilities should not be re-opened.

Employee living more than 75 miles from mainland departure point – disputed casesEmployees who live more than 75 miles from the mainland departure point may still argue that, in their particular case, a transfer from one rig to another within a single field is not affected by the change of workplace rule. Such cases should be dealt with on their merits. If, when you have obtained full details of the employee’s journeys, you are unable to reach agreement you should arrange for the matter to be brought before the First-tier Tribunal (see

EIM31705). At the appeal hearing the HMRC case will simply be that, in the circumstances of the case, the change of workplace did not have any substantial effect on the employee’s journey or expenses. The 75 mile “rule of thumb” has no standing in law and you should therefore not mention it in proceedings before the First-tier Tribunal.