TaxPersonal TaxOil rig ruling hits Revenue for £100m

Oil rig ruling hits Revenue for £100m

The Inland Revenue has lost £100m in tax after it was defeated at the Court of Appeal over the definition of an oil rig.

The court ruled that so-called jack-up rigs – which are towed into position and then raised on legs from the seabed – should be categorised as ships. As many as 20,000 oil rig workers can now claim they are ‘seafarers’ for tax purposes, meaning they are now entitled to 100% tax rebates, according to a report in the Times.

In the 1970s, the Callaghan government introduced the lucrative concessions in an effort to boost the number of merchant seaman working in North Sea oil exploration. But Mr Justice Carnwarth found the word ‘ship’ was not defined in the tax legislation of the time.

The ruling, however, only applies to tax claims before 1998 when the law on the concession was changed.

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