Oil rig workers and tax liabilities

Oil rig workers and tax liabilities

Didn't find your answer?

One of my clients has passed me a flyer from an unregulated tax advisor* to whom he has spoken, and who is putting forward claims for tax refunds for UK Resident oil rig workers, on the basis that "EU Rules" mean that earnings on rigs outside the 12-mile limit aren't liable to UK tax.  Or any other country's tax.  It's not a SED claim.

This agent claims to have £5-6m in refunds in progress, backdated over a number of years.  Almost inevitably, he's on a percentage of the refund.

My client thinks it is too good to be true, and is looking for my comments.

Am I missing something here before I tell him and his mates to avoid this? 

*Unknown qualification; mobile number only; hotmail address; works from his home.

Replies (2)

Please login or register to join the discussion.

avatar
By pauld
04th Nov 2011 09:51

contact details??

Definately looks a bit dodgy with just a mobile and hotmail address given as contaxt details. Could easily be a scam, but it does make you question yourself.

I  have a couple of clients that work on offshore rigs, usually two weeks on the rig and two weeks off. They remain UK resident and therefore taxable on their worldwide income.  For UK tax purposes, in addition to the 12 mile limit, designated areas of the continental shelf are also included as part of the UK and I quote from the revenue manuals;

'Broadly speaking the designated areas stretch from the outer edge of the UK Territorial Sea to median lines mutually agreed between the UK and neighbouring countries or (if further) out to the 200 mile limit. Such areas are identified in various maps of the UK, including those appearing on the Department of Energy and Climate Change website which can be found at http://www.og.decc.gov.uk/information/maps.'

If your client is non uk resident and workS in UK territorial waters then i guess you would need to look at the double tax treaty with the country they are resident with to see who has taxing rights.  If the rig is outside the 12 mile limit and a designated area, and they are not uk resident then they are outside the scope of UK tax. 

I probably have not answered your question as I am not aware of any 'EU rules' that may effect this and it too makes me question myself on whether there is some EU rule I am not aware of.

But anything that sound too good to be true usually is.

 

 

Thanks (0)
avatar
By frustratedwithhmrc
04th Nov 2011 11:51

This could possibly be a scam - it has plausible aspects

I believe that Pauld's interpretation of this is correct vis working on the continental shelf.

One way that this could be a scam is for the 'unregulated tax advisor' (or spiv as we used to call them), to do the following:

The spiv goes through the idiot clients tax paid for the previous year (or few years), to see if a claim is worthwhile - if it is then puts in a repayment claim on the basis of non-resident overseas work during said period.

Given the general uselessness of HMRC, what are the chances that the repayment would be paid? Equally, if the spiv was prepared to lie about the circumstances on the clients behalf (possibly without telling the idiot client), then the spiv could convince HMRC that the claim is genuine even though in reality it is not.

Spiv then takes his % cut of tax repayment and gives the rest to idiot client, who walks away smiling.

HMRC finally reviews the idiot clients 'non-resident overseas work' (probably 3-4 years later) and launches an investigation - resulting in idiot client being told "Nice try matey, cough up ££££££ in back taxes, interest and penalties".

In the meantime, spiv has done a runner with his % cut never to be seen again.

Call me cynical if you like... 

Thanks (0)