NATIONAL UNION OF RAIL MARITIME AND TRANSPORT WORKERS.PORTSMOUTH BRANCH
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NATIONAL UNION OF RAIL MARITIME AND TRANSPORT WORKERS.PORTSMOUTH BRANCH |
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Also on this page; SEAFARERS’ Earnings Deduction (SED) definition of offshore installation,for
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SEAFARERS JobsThe United Kingdom is an island nation heavily dependent upon ships for our trade yet numbers of SEAFARERS have declined dramatically in recent years.UK seafaring ratings numbers have fallen from 30,000 in 1980 to less than 10,000 today. In response, the government published a policy document on UK shipping in December 1998, Charting a New Course. One of the key objectives was to increase the training and employment of UK SEAFARERS. The centrepiece of these measures was the UK tonnage tax. However the replacement of UK SEAFEARERS by low cost foreign nationals has continued. Shipowners can continue to replace UK SEAFARERS due to the lack of employment protection for workers in the industry. They continue to enjoy an exemption from the provisions of the 1976 Race Relations Act which allows them to pay exploitative rates to foreign national SEAFARERS recruited abroad. RMT have no objections to the employment of foreign nationals so long as they are receive legitimate rates of pay, and equivalent periods of leave to UK SEAFARERS, for undertaking the work in UK workplaces. It has also emerged that the national minimum wage does not apply to UK SEAFARERS on board UK ships whilst in UK territorial waters; the legislation only applies whilst the ship is in port or UK internal waters. The lack of regulation and social protection for UK SEAFARERS has seen their continued replacement by low cost foreign national SEAFARERS. In addition other cut backs have recently occurred in the UK ferry sector. In recent years P&O Ferries have dismissed 1,500 UK SEAFARERS involving the closure of a number of key ferry routes, and there have been further dismissals elsewhere in the industry.
Rates of Pay & Conditions of Service 2009 – HovertravelAfter a hard fight to gain recognition with this company, the following offer has been accepted by the GGC. Full credit must be given to the local reps and the Regional Organiser for all their hard work in this matter. The offer is as follows:- A 4.5% increase in rates of pay with the lowest paid staff receiving a £600 lump sum. Paternity pay will be enhanced to two weeks at full pay and Maternity Pay will be increased to 8 weeks at 90% of pay. Overtime will be amended so that staff taking leave or lieu days within the working week will receive payment for any extra duties worked within that week over and above their normal duties at the current overtime rate. It was agreed that the pension contribution of new joiners or staff new to the pension scheme will be 5%. A time and attendance system will be introduced when a suitable system is identified. Discussions regarding a possible move to monthly pay will be deferred to a later date. This is an excellent starting point for future industrial relations with the company and we have requested that the increase is implemented at the earliest opportunity. Rates of Pay & Conditions of Service 2009 – Wightlink LtdThe following offer has been accepted by the GGC:- Year One;An increase of 4.2% on rates of pay Year Two;An increase of 2.5% or RPI plus half a percent, whichever is the highest. In addition, a lump sum minimum payment of £450 for anyone earning under £18,000. EIM33103 - SEAFARERS' Earnings Deduction: meaning of offshore installation: 2004-05 onwards ------------------------------------------------ Section 385 ITEPA 2003 and Section 1001 ITA 2007 SEAFARERS’ Earnings Deduction (SED) is available to a “seafarer” who performs duties of employment on a “ship” if various conditions are satisfied (EIM33101). From 6 April 2007 Section 1001 ITA 2007 provides a free-standing definition of offshore installation for the purposes of the Taxes Acts including SED. Between 6 April 2004 and 5 April 2007, the equivalent rules were found in Section 837C ICTA 1988.Definition of offshore installation - Section 1001 ITA 2007The definition of a ship excludes an offshore installation (EIM33101).An offshore installation is a structure (a term which includes a ship or other vessel) which is, is to be, or has been, put to a “relevant use” while standing or stationed in any waters. The definition will therefore include any floating structure that maintains its position while being used for the relevant activities regardless of whether it anchors or keeps on station by dynamic positioning (see EIM33108). The reference to “any waters” means that structures of this nature that are, are to be or have been used for a relevant use anywhere in the world, should not be accepted as ships for the purposes of the deduction.Relevant use,A structure is an offshore installation if it is, is to be or has been put to a relevant use whilst in water. A relevant use is use for - exploiting mineral resources by means of a well; exploration with a view to exploiting mineral resources by means of a well; storage of gas in or under the shore or the bed of any waters;recovery of gas so stored; conveyance of things by means of a pipe; mainly for the provision of accommodation for persons who work on or from a structure which is, is to be, or has been, put to a use specified above. EIM33104 lists different categories of vessel and structure used in the offshore oil and gas industry and indicates whether they are regarded as ships or offshore installations for the purposes of SED. Changes in use Section 1001(2) provides that a structure is not an offshore installation if –it has ceased permanently to be put to a relevant use, it is not, and is not to be, put to any other relevant use, and since ceasing permanently to be put to a relevant use, it has been put to a use which is not relevant. The effect of this provision is that a structure that satisfies the definition of offshore installation will remain within the definition unless it has permanently ceased to be used as an offshore installation with no prospect of resuming such use and it has been put to an entirely new use.See EIM33107 for vessels designed to be capable of more than one use.ExampleThe following example illustrates how the legislation works. On 6 April 2007, a mobile drilling rig in port in Rotterdam obtained a contract for work in the Dutch sector of the North Sea from 1 May. It left Rotterdam on 30 April and carried out exploration drilling for gas until 31 July. On completion of its contract, it returned to Rotterdam and remained idle until 31 December. On 1 January 2008, it obtained a new drilling contract in the Gulf of Mexico and left Rotterdam on 1 February arriving in Mexican waters on 28 February where it drilled for oil between 1 March and 5 April.The rig was an offshore installation throughout 2007-08. At any one time, it was either in use, to be used or it had been used for “exploration with a view to exploiting mineral resources by means of a well”. This includes all periods in transit between locations and the periods when the rig was not used. Therefore, earnings attributable to any duties performed on the rig in 2007-08 are not eligible for SED. Definition of offshore installation before 6 April 2007 - Section 837C ICTA 1988 The definition of an offshore installation in section 837C ICTA 1988 that applied until 5 April 2007 had the same effect as section 1001 ITA 2007. The only significant difference in wording was the reference to a “specified” use in section 837C instead of a “relevant” use in section1001. --------------------------- keywords: deduction, drilliing rigs, fed, foreign earnings deduction, icta1988/s837C, installation, ita2007/s1001, offshore installation, mariner, navigation, oil rigs, seafarer, SEAFARERS, ship, ships versionDate: 28/03/2008 ---------------------------------------------------------------- EIM33104 - SEAFARERS’ Earnings Deduction: offshore installations and ships: examples------------------ Offshore installations and therefore not ships.The following are not accepted as ships for the purposes of SEAFARERS’ Earnings Deduction (SED): Fixed production platforms .floating production platforms.floating production storage and offloading vessels(FPSOs)floating storage units (FSUs)mobile offshore drilling units (MODU) including drillships, semisubmersible and jack-up rigs flotels (floating accommodation units).Following the decision in Torr and Others v CIR (see EIM33106) published in January 2008, HMRC has reviewed the position with regard to the classification of some other vessels as offshore installations. Before the Torr decision was published HMRC regarded some types of vessel as ships for the purpose of SED because it understood these vessels always performed their duties in a transient manner (see EIM33109). The following are examples of the vessels concerned: diving support vessels heavy lifting and construction vessels well service vessels.But the Torr decision required HMRC to change that view in some circumstances. The definition of an offshore installation requires a vessel to perform a “relevant use” (EIM33103) whilst “standing or stationed” in any waters (see EIM33108). 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. The Torr case concerned duties performed on the Pride South America (PSA), a vessel designed as a MODU. As the PSA was designed to perform a relevant use (EIM33103) it was classed as an offshore installation, based on its original design. A vessel only ceases to be an offshore installation if it ceases permanently to be put to a relevant use. During the period under appeal (2002 – 2005), the PSA had performed its duties entirely as a well workover and support vessel (WSV), but the Torr case established that a vessel engaged in well workover and support duties is also involved in a relevant use by exploiting mineral resources by means of a well. As the PSA was designed as a MODU, and it had not ceased permanently to be capable of operating as a MODU, in HMRC’s view it remained an offshore installation regardless of its actual use in the years under appeal in Torr. But even if one sets aside the previous classification as an offshore installation, based solely on its operations between 2002 -2005 the PSA was an offshore installation because the Special Commissioner found that well workover and support services constituted a relevant use (EIM33103) and that it did so whilst standing or stationed in any waters (EIM33108). Consequently the PSA was an offshore installation during the period 2002 - 2005, regardless of its earlier classification as an offshore installation based on its design as a MODU. The PSA decision applies equally to any vessel engaged in exploiting mineral resources by means of a well whilst standing or stationed. For example, this may apply equally to diving support vessels and heavy lifting/construction vessels as for WSVs. Whether a vessel should be classed as either an offshore installation or as a ship, for the purposes of SED, depends in the first instance on its design and capability. But see EIM33107 where a vessel is designed to have dual or multiple uses. Which category applies to a vessel depends on the facts of each case and in particular the nature of the operations performed by the vessel and whether they were carried out whilst it was standing or stationed in any waters, or not. Vessels working in the offshore oil and gas industry that may be accepted as ships.The following may be accepted as ships for the purposes of the deduction if they satisfy the general conditions described at EIM33101 and do so whilst not standing or stationed: anchor handling vessels ,diving support vessels ,heavy lifting vessels pipe laying barges ,platform support vessels ,safety standby vessels seismic survey vessels ,shuttle tankers ,well service vessels .If one of these vessels is engaged in a relevant use whilst standing or stationed, it will be classed as an offshore installation.The above lists do not cover all of the structures and vessels used in the oil and gas industry. Difficult cases should be submitted to PAYE Technical. description: SEAFARERS' deduction: offshore oil and gas industry - examples of ships and offshore installations keywords: anchor handling, deduction, diving support, drilling rigs, drillship, fed, foreign earnings deduction, heavy lift, installation, jack ups, offshore installation, mariner, navigation, oil rigs, pipe laying, platform support, safety standby, seismic, seismic survey, semisubmersible, standby, seafarer, SEAFARERS, ship, ships, tankers, well service, vessels versionDate: 29/03/2007 ---------------------------------------------------------- EIM33105 – SEAFARERS’ Earnings Deduction: Langley v CIR Two decisions of the Special Commissioners published in late 2007 and early 2008 provide useful guidance in relation to the meaning of offshore installation in the context of SEAFARERS’ earnings deduction (SED). Details concerning Torr and Others v CIR are at EIM33106.Decisions of the Commissioners do not establish a legal precedent but in the absence of a decision of the Courts on the same or a similar point, a decision by the Special Commissioners may be regarded as an useful indicator of the way in which the Courts might interpret the legislation. CIR v Langley (SpC00642)This decision was published in October 2007.Between 1999 - 2004 the appellant carried out duties on a self propelled oil drilling rig. In that period the rig was constructed in a shipyard in France and subsequently underwent sea trials, before moving to its first working site off Egypt, where it commenced a period of drilling for oil. Finally it was renovated whilst there was no immediate contract for further drilling.The appellant argued that once the vessel was floated from the dry dock in the shipyard it became a ship, as it was capable of navigation (it could not power itself at this point). The appellant also contended that this status continued throughout its sea trials and when it was in transit to its first drilling site. Once drilling commenced the appellant accepted that it became an offshore installation.The Special Commissioner decided that the rig was a structure which was to be used while standing in any waters for the purpose of exploitation of mineral resources by means of a well. As its sole use once in operation was to perform a relevant use (see EIM33103) it was intended to be put to this use from the outset of its construction. Consequently the vessel was an offshore installation, and therefore precluded from being a ship, for the entire period of its construction, sea trials, transit to drilling site and drilling operations, until it was taken out of use for refurbishment. During the refit it was not put to a relevant use and, as it was otherwise capable of movement across water, it became a ship for the purposes of SED. ----------------------------------------------------------- keywords: dry dock, langley, SEAFARERS earnings deduction, sed, self propelled drilling rig, sea trials, ship versionDate: 18/12/2008 ------------------------------------------------------------
EIM33106 – SEAFARERS’ Earnings Deduction: Torr and others v CIR (Pride South America) Two decisions of the Special Commissioners published in late 2007 and early 2008 provide useful guidance relating to the meaning of offshore installation in the context of SEAFARERS’ earnings deduction (SED). See EIM33105 for details concerning the case of Langley v CIR.Decisions of the Commissioners do not establish a legal precedent but in the absence of a decision of the Courts on the same or a similar point, a decision of the Special Commissioners may be regarded as an useful indicator of the way in which the Courts might interpret the legislation. Torr and Others v CIR (SpC00679)This decision was published on 14 January 2008.Mr Torr and four other appellants worked on the Pride South America (PSA), a self propelled, dynamically positioned, semi-submersible vessel designed as a mobile offshore drilling unit (MODU). In the period under appeal between 2002 - 2005 the PSA had been involved only in well workover and support operations. It had not carried out any drilling operations. Lloyd’s Register of Shipping defines a “workover” vessel as a vessel that worked over a well to install, refurbish and perform sub-sea completion work on wells but could not enter the well for extraction purposes. A “support vessel” is defined as one involved in operations other than workover, such as diving, crane operations, heavy lifts and construction.In broad terms, the Special Commissioner found that the activities of the PSA could be described as the repair of non functioning equipment. A well had to be killed (temporarily shut down) when the PSA carried out its operations. In the years under appeal, the PSA carried out its workover and support operations at between 18 - 26 different locations in each year.The appellant put forward two main contentions to demonstrate that the PSA was not an offshore installation (EIM33102) and, as it was capable of movement across water (EIM33101), it must therefore be a ship –the PSA was not involved in the exploitation of mineral resources by means of a well as it did not extract oil from below the sea bed because when it performed its operations the well had to be temporarily shut down, and when the PSA performed its operations it was not standing or stationed because it was not wholly static or anchored – it was held in place by dynamic positioning which allowed for some limited movement.The Commissioner held on the first point that mineral resources do not cease to be exploited when a well has to be temporarily shut down for repairs. The well workover and support operations formed part of the process of exploiting mineral resources.On the second point, the Commissioner held that it was “absurd” to suggest a vessel can be stationed only by anchors or hawsers, neither of which can be used in deep waters. He found that a vessel can be clearly “stationed” in deep waters if held in position by dvnamic positioning, which at least has the effect of making the ship “substantially stationary”, which is sufficient to meet the statutory definition of “standing or stationed” for an offshore installation.Consequently as the PSA was involved in exploitation of mineral resources by means of a well whilst standing or stationed in any waters, the Special Commissioner held that the PSA was an offshore installation. As it was not a ship the claims to SED failed. The decision was not appealed. ---------------------------------------------- keywords: dynamic positioning, exploitation, mineral resources, offshore installation, pride south america, psa, SEAFARERS earnings deduction, torr, workover versionDate: 18/12/2008 ------------------------------------ EIM33107 – SEAFARERS’ Earnings Deduction: current issues: dual or multi use vessels Section 1001 (3) ITA 2007 For the purposes of a claim to SEAFARERS’ earnings deduction (SED), a seafarer must perform duties of an employment on a ship. The definition of a ship excludes an offshore installation (see EIM33103).An offshore installation is defined primarily in respect of the relevant use that the structure performs (EIM33103), although there are other conditions that must be satisfied as well which are considered elsewhere in this guidance (see EIM33108). Single use vessels In Perks v Clark and Others (74TC187), Carnwath, J. decided that the classification of a vessel as a ship or not, should be based on the original design of the vessel and not its use at any time:“… the categorisation of a structure, as a ship or not, should be governed by its design and capability, rather than its actual use at any time…”.Where a vessel is designed to operate for one purpose it should be straightforward to determine whether it should be classed as an offshore installation or as a ship.Once a structure is classed as an offshore installation, it remains an offshore installation unless it ceases permanently to be put to that use (EIM33103). Dual or multi use vessels However, it is common for vessels to be designed to perform two or more types of duties. Where one of those activities relates to a relevant use (which would fall within the definition of an offshore installation) and the other to an activity which is not a relevant use (which would fall outside the definition of an offshore installation), and the two uses are of similar or equal importance, Carnwath’s comments do not help to determine the status of the vessel.In these circumstances it is reasonable to consider the different uses of the vessel during the period concerned. If there is a principal use and the other use(s) is/ are less significant, it is reasonable to determine the classification of the vessel according to the principal use.If it is impossible on initial examination to distinguish in importance between two or more uses, you should seek details of the nature of the operations performed by the vessel in the tax year to determine how to classify the vessel. Change of use On first principles, the purpose for which a vessel is intended to be used determines its classification as an offshore installation or a ship - see the comments above of Carnwath, J. in Clark v Perks. But a permanent change in use may change the classification of a vessel (EIM33103).Strictly if a vessel is designed to perform a relevant use, but it is put to use subsequently for a purpose which is not a relevant use, the vessel remains an offshore installation unless the original design use has ceased permanently to be possible for this vessel (e.g. the vessel is no longer capable of performing activities for the purpose for which it was designed as a result of a refurbishment or substantial refit). This point was considered in Langley v CIR (see EIM33105). This may seem unreasonable where the vessel has not been used at all for its original design purpose during a tax year. In these circumstances you should apply a fair and reasonable approach to determine the status of the vessel depending on the facts of each case. If its sole (or principal) use during a tax year was not a relevant use, it is reasonable to classify the vessel according to its use in the year and not according to its original design specification. Difficult cases should be submitted to PAYE Technical. -------------------------------------------------- keywords: clark v perks, dual use, multi use, offshore installation, SEAFARERS earnings deduction, ita2007/s1001 versionDate: 18/12/2008 --------------------------------------------- EIM33108 – SEAFARERS’ Earnings Deduction: current issues: standing or stationed in any waters: dynamic positioning Section 1001(4)(a) and (b) ITA 2007 For the purposes of a claim to SEAFARERS’ earnings deduction (SED), an individual must perform duties of an employment on a ship. The definition of a ship excludes an offshore installation (see EIM33103).An offshore installation is defined primarily in respect of the relevant use (EIM33107) that it performs, but the structure must also be put to use whilst “standing or stationed” in any waters (EIM33103) in order for it to be classed as an offshore installation. If a vessel does not satisfy both of these conditions it is not an offshore installation and, as long as it is capable of movement across water, it is a ship for the purposes of SED.The meaning of “standing” or “stationed” in any waters In Torr and Others v CIR (see EIM33106), one of the appellants’ arguments relied on the suggestion that the Pride South America (PSA) was not an offshore installation because it was neither standing nor stationed when carrying out its well workover and support duties. The appellants relied on the fact that as the PSA had operated in deep water it was not possible to fix the vessel to the sea floor by anchor or hawser. Instead it used dynamic positioning (DP) to maintain its position over a well whilst performing its operations.The Special Commissioner dismissed this contention as follows –“I have no hesitation in deciding that the use was while standing or stationed. The New Shorter Oxford Dictionary gives the following meaning for “station”: “1. assign a post, position or station to (a person, troops, ship, etc); place, post. 2. To take up one’s position, post oneself.” It would be absurd to suggest that a ship can only be stationed if it is either secured by anchors or hawsers. A ship can be stationed in deep water. While the context in which the word “stationed” is used is as an alternative to “standing”, the word clearly envisages the ship being substantially stationary, I am satisfied that when dynamically positioned the Pride South America was stationed.”Dynamic positioning.It follows that a vessel which is substantially stationary because of DP satisfies the requirement to be “standing or stationed” in the definition of an offshore installation. Of course a vessel positioned by DP may be subject to some lateral and vertical motion in the water but that is no different from a vessel secured by hawser or anchor.A vessel may use DP when it is underway to maintain a compass heading that may not be in the direction of vessel motion. In these circumstances the DP helps the vessel maintain its progress and navigation but the DP is not intended to keep the vessel substantially stationed.In other circumstances, DP may be used to maintain a vessel on station within a work area, which may include some lateral movement, but HMRC regards a vessel in this situation as stationed in or over the work area. This may include movement around an offshore installation by a vessel that is providing services or supplies to that installation.See EIM33109 for guidance regarding the length of time that a vessel must spend “standing or stationed” to satisfy the definition of an offshore installation. Difficult cases should be submitted to PAYE Technical. -------------------------------------- keywords: dynamic positioning, ita2007/s1001, pride south america, SEAFARERS’ earnings deduction, standing, stationary, stationed, torr versionDate: 18/12/2008 ---------------------------------------------- EIM33109 – SEAFARERS’ Earnings Deduction: current issues: standing or stationed in any waters: duration of stay at work location Section 1001(4)(a) and (b) ITA 2007 For the purposes of a claim to SEAFARERS’ earnings deduction (SED), an individual must perform duties of an employment on a ship. The definition of a ship excludes an offshore installation (see EIM33103).To be classed as an offshore installation a vessel must perform a relevant use (EIM33103) whilst standing or stationed in any waters (EIM33108). How long does a vessel need to be standing or stationed There is no statutory rule to determine the duration of the period for which a vessel must be standing or stationed. Clearly a vessel which provides supplies to an offshore drilling rig will need to be standing and/or stationed for a short period whilst it offloads those supplies. But HMRC would not normally regard a stay of short duration whilst unloading supplies as falling within the statutory definition of standing or stationed in any waters, which implies a longer period of time without significant movement.The definition of an offshore installation derives from rules found previously in Health and Safety Executive (HSE) legislation in the 1990s. When applying that legislation there was a rule of thumb sometimes used by HSE that a vessel standing or stationed for more than three days was regarded as “standing or stationed” for the purpose of the definition of an offshore installation, whereas a vessel that was standing or stationed for three days or less did not satisfy the definition. In a small number of cases this rule of thumb has been used by some advisers who deal with SED and is known to HMRC.It has been suggested that this rule of thumb could be used in borderline cases to assist in deciding whether a vessel performed its duties whilst “standing or stationed”. As this is not a statutory rule, its application has no legal basis and cannot be used to determine a case one way or another but HMRC accepts that as a broad guide it may be helpful in some cases.It has been suggested that a rule of thumb based on three days is not always sufficient. For example, a vessel’s operations may be delayed for a couple of days due to bad weather, or when working in deep water it may take as long as one day to lower the necessary equipment to the sea floor before work can begin and another day to bring the equipment back to the surface, leaving only one day for the work to be carried out on the sea floor. Also imposition of very tight timetables may compromise safety which is of paramount concern in the seafaring industry. Consequently for 2008/09 onwards HMRC will accept, as a rule of thumb only, that a vessel that spends five days or less at a work location, will not be regarded as performing its duties whilst standing or stationed. On the other hand, a vessel that spends five days or more at a work location will be regarded as standing or stationed.Each case will depend on its facts and HMRC will apply this rule in a fair and reasonable manner. Vessels in transit In Langley v CIR (see EIM33105) it was held that when a vessel classified as an offshore installation transits to its next work location, it continues to be regarded as an offshore installation during the time spent in transit unless it has ceased permanently to be put to a relevant use.This decision confirmed HMRC’s view of vessel classification for time spent in transit – see EIM33102. Difficult cases should be submitted to PAYE Technical. -------------------------------------------------------- keywords: dynamic positioning,ita2007/s1001, langley, offshore installation, SEAFARERS’ earnings deduction, sed versionDate: 18/12/2008 ----------------------------------------------------------------------- |
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