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Seafarers may be entitled to a 100% relief from income tax on their earnings under seafarer’s earnings deduction if they work wholly or partly abroad on a ship, provided they are absent from the UK for an eligible period. See ITEPA 2003, ss 378 to 385.
In a recent Special Commissioners’ decision (Torr and others SpC 679), concerning five individuals who had been employed on the Pride South America, the Commissioner decided that the vessel was not a ship for the purposes of the deduction, and the appellants were therefore not entitled to relief.
HMRC are aware of the uncertainty that this decision has caused. However, given the technical nature of the ruling, the department wants to work with representatives’ bodies, including Nautilus and the National Union of Rail Maritime and Transport Workers, before issuing revised guidance (due for publication in February 2009).
This may affect taxpayers who need to file 2007-08 tax returns. HMRC confirm that all 2007-08 returns must be filed on time, regardless of whether this is before the relevant guidance is published.
Taxpayers who would rather see the Revenue's revised guidance before deciding that they are entitled to claim the deduction or not, can submit their return without a relevant claim.
They can amend the return in the usual way to include a claim to SED.
