Taxation

Employment - foreign earnings relief - workers on North Sea drilling rig - not employed on shipClarke (Inspector of Taxes v Perks: Macleod (Inspector of Taxes) v Same: Guild (Inspector of Taxes v Newrick and another ChD: Ferris J: 19 April 2000

The employees who were liable to Schedule E income tax worked on two North Sea jack-up drilling rigs.

The rigs had floating hulls and retractable legs but no rudders or motive power.

They were moved by towing barges.

Under s.193 of the Income and Corporation Taxes Act 1988 the employees could be eligible for foreign earnings deductions.

By Sch.12 to the act, as amended by s.67 of the Finance Act 1988, those employed as 'seafarers' were placed in a favourable position, qualifying to make claims even though present in the United Kingdom for longer periods than other employed persons who might be entitled to relief.

'Employment as a seafarer' was defined in para 3(2A) of Sch.12 as 'employment consisting of the performance of duties on a ship'.

General commissioners concluded that the employees performed duties on a 'ship' and upheld their claims to relief.

The Crown appealed.Timothy Brennan (Solicitor of Inland Revenue) for the Crown; Michael Davey (instructed by Andrew M Jackson & Co, Hull) for the employees.Held, allowing the appeal, that the term 'ship' was not defined in the 1988 Act but in s.742 of the Merchant Shipping Act 1906 was to include 'every description of vessel used in navigation not propelled by oars'; that applying guidance from the decided cases, emphasis was on the need for a vessel to be capable of, and used in, navigation; that the function of the rigs was to provide a firm base to enable the drilling parts to operate and overall it could not be said that they had sufficient characteristics of ships to be within the statutory definition.