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Seafarer's Earnings Deduction - Applying EIM33032

Seafarer's Earnings Deduction - Applying EIM33032

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Where the other SED qualifications apply, a client correctly used HMRC's Helpsheet 205 to calculate the eligible period showing that at midnight he was absent from the UK because he was outwith the UK territorial 12-mile limit (effect of S.41 ITEPA 2003). His shipmates then, apparently, claimed SED for all the days outwith the 12-mile limit. However, my understanding is that the SED only applies to "overseas" earnings. The actual SED to be allowed is a separate calculation AFTER establishing the eligibility (the chart in HS 205). This SED calculation must therefore be restricted to relieving pay for employment duties undertaken outwith the Continental Shelf Act 1964 (as extended by designated areas) i.e. effectively the so-called 200 mile limit. Therefore, SED cannot be given to pay between the 12 and 200(sic) mile limits. I believe this is a common misconception as the HMRC examples don't make this at all clear. Am I right?   

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By ccassociates
07th Nov 2013 14:12

Foreign Port

Your question is not clear, you seem to be suggesting that leaving UK territorial waters mid voyage is leaving the UK for SED purposes.

In order to claim SED a seafarer must sail from a foreign port so if the voyage commenced and returned to a UK port no claim can be made as all income is deemed to arise in UK.

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Replying to lionofludesch:
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By rjwaberuk
07th Nov 2013 15:52

Seafarers Earnings Deduction

Tried to limit the data - take is as read that all conditions re SED are met/foreign ports et al - it is the calculation of the actual SED itself (not eligibility) which is the query i.e. having established SED is due, what then are the overseas earnings i.e. the SED due - shipmates have included all the eligible days used in the HS205 model but the "The designated areas" paragraph of HMRC manuals EIM33032 states, I think, otherwise i.e. those days in the eligible version of non-UK days which are outwith the 12 mile limit but inside the Continental Shelf do not count as overseas day when actually calculating the SED deduction as they are not "overseas" days....am I correct? 

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By Steve Kesby
07th Nov 2013 16:11

If the voyage starts or ends outside the UK...

... then S. 382(1) deems all duties performed on the ship to be performed outside the UK.

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By ccassociates
07th Nov 2013 16:22

EIM33033

If all other conditions are met then he qualifies for SED on all income from that voyage see EIM33033

Edit Crossed with Steves comment above

 

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Replying to Blackfalcon:
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By rjwaberuk
07th Nov 2013 16:57

Calculation

Many thanks, gents. Would be more helpful (to me) if EIM33032 therefore went on to say in its "Effect of Section 41....calculating an eligible period" not just "eligible period" but also "and for calculating the SED itself - see EIM33033"  i.e. made it clearer that "The designated areas" paragraph is not only dis-applied by S.41 for counting eligible days but also the SED calc - or am I being a bit too pedantic...... 

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By alaurie
10th Apr 2014 12:01

SED - Voyages

I have a separate case where a client works on a ship that departs from a foreign port but makes stops at several UK ports and oil rigs.

 

The clients voyages are as follows (same qualifying ship throughout):

9 May to 10 May - Joins ship in Holland and voyages to a UK port.

11 May – Day off in the UK (client lives in the UK).

12 May to 02 June – Ship leaves UK port and docks at an oil rig from 15 May to 31 May. The oil rig is outside the UK 12 mile limit but within the UK Continental Shelf. The ship remains at the oil rig before returning to a UK port.

03 June to 09 June – Ship leaves UK port and docks at an oil rig from 06 June to 08 June. The oil rig is outside the UK 12 mile limit but within the UK Continental Shelf. The ship then leaves the oil rig and returns to a UK port.

09 June to 13 June – Ship leaves UK port and docks at an oil rig on 10 June. It then leaves this oil rig and docks at another oil rig on 11 June before returning to a UK port on 13 June. Both oil rigs are outside the UK 12 mile limit but within the UK Continental Shelf.

14 June – Day off in the UK (client lives in the UK). 15 June to 26 June – Ship leaves UK port and docks at oil rig from 16 June to 25 June. The oil rig is outside the UK 12 mile limit but within the UK Continental Shelf. The ship then leaves the oil rig and returns to a UK port.

 

The client thinks that the above voyage represents a single voyage beginning at a foreign port (Holland) and ending at a UK port. Several of his shipmates have made a SED claim on this basis. Can anyone confirm if the above represents a single voyage or several different voyages?

 

Assuming that the above is not a single voyage do the voyages to the oils rigs which are outside the UK 12 mile limit but included within the UK continental shelf qualify for SED and are these days included in the calculation (viz using the above example 48 qualifying days equals £1,000 pay and the pay for each of these days is excluded by the SED from UK tax i.e. £1,000 – SED £1,000 = £nil)?

 

The alternative view is that, on the assumption that this is one single voyage, whilst S. 382(1) excludes the 48 days in working out whether the continuous 1/6th is satisfied, because all of the work is undertaken within the UK Continental Shelf the related pay does not qualify for SED.

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