Application of seafarers' earnings deduction scheme

The taxpayer claimed that his earnings were subject to the seafarers’ earnings deduction scheme (ITEPA 2003 s 378). HMRC disagreed. It said ITTOIA 2005 s 15 required his occupation working as a diver on the UK continental shelf as a trade and therefore ineligible for the deduction. In relation to his work as a diver outside the UK continental shelf is treated as employment income. It raised TMA 1970 s 29 assessments to collect the tax. The taxpayer appealed.

The First-tier Tribunal found there was no doubt the taxpayer worked as a diver in areas on and off the UK continental shelf and was engaged under a contract of employment throughout the period. The question was which applied first: s 15 or the seafarers’ earnings deduction? The tribunal decided that in relation to his employment as a diver on the UK continental shelf ITTOIA 2005 s...