Oil-rig workers are seafarers, court rules, forcing £100m tax rebate

The Court of Appeal has ordered the Inland Revenue to return £100 million in taxes after it ruled that 'jack-up' oil rigs are 'ships' and that the people who work on them are 'seafarers.'

Appellants James Perks, David Newrick and James Grainger successfully fought the Inland Revenue appeal with a fund collected from fellow North Sea oil workers after several General Commissioners previously ruled the men were 'seafarers working on a ship.'

When the Court of Appeal agreed with the Commissioners' previous findings it ruled that workers' earnings aboard the two rigs, named 'Santa Fe Magellan' and 'Santa Fe Monarch', were 'emoluments from employment as a seafarer.'

This means that anyone working on the rigs can take advantage of more generous provisions in relation to exemption from income tax for work performed abroad. A total of about 20,000 workers are now due a 100 per cent tax rebate or will not have to pay tax demands.

Estimates put the cost to the Revenue at £100 million.

The Judge, Justice Carnwath, found that the expression 'employment as a seafarer' is defined as:

"employment consisting of the performance of duties on a ship (or of such duties and others incidental to them)".

As the word 'ship' is not defined in the 1988 Act, reliance was placed on the definition in the Merchant Shipping Act 1894:

"'ship' includes every description of vessel used in navigation not propelled by oars."

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Richard Powell, UKTECH