The following letter was received from the Inland Revenue this week:
Following representations, I want to clarify what we are doing in revising our guidance and the treatment of claims.
SED has never been available for people working on ‘offshore installations’ rather than ships. Broadly, the legislation provides that there are two tests both of which must be met for a vessel to be an ‘offshore installation’. A vessel must be involved in the exploration or exploitation of mineral resources and standing or stationary whilst doing so. Construction, construction support, well service and dive support vessels that do not meet either of these tests will continue to be ships for the purposes of SED.
HMRC’s revised guidance will reflect discussion with stakeholders about the interpretation of the Pride South America decision to ensure that it is implement in a clear and practical manner. HMRC will publish revised guidance in February 2008.
HMRC appreciates that some people may wonder whether they must submit their 2007-08 tax returns before we publish our revised guidance. All 2007-08 tax returns must be filed within the relevant deadlines.
Anyone who decides that they want to see HMRC’s revised guidance before deciding whether they are entitled to claim SED can submit their return without a claim to SED. They can then amend their 2007-08 tax return in the usual way to include a claim to SED. People have 12 months from 31 January after the end of the tax year to correct their tax return. For the 2007-08 return, people have until 31 January 2010 to make an amendment.
If someone wishes to consider making a claim to SED for 2007-08 before the guidance is revised they can refer to the legislation on which HMRC’s guidance for SED is based. It is publicly available as follows:
- The legislation for SED is in sections 378 to 385 of the Income Tax (Earnings and Pensions) Act 2003
- The definition of ‘offshore installation’ is in section 1001 of the Income Tax Act 2007
- The Special Commissioner’s decision in the Pride South America case is available on the Finance and Tax Tribunals website