Deep Sea Diver - North Sea

[simpsonite]

Hi all,

My client is a North Sea Deep Sea Diver working off oil rigs.

He works for two companies and receives payslips.
Class 1 n.i is deducted from his pay but no tax is deducted.

Being a deep sea diver his earnings are assessable as trading income and not as employment income but he is exempt from class 4 n.i.

My query is whether he is also deemed self employed for vat purposes and should register for VAT now his earnings are well above the threshold limit?!

Thoughts much appreciated,
cheers

simpsonite

[Generix]

VAT status is generally dependent on employment status;

If he is an employee then his earnings are not within the scope of VAT.

If he is a contractor then his earnings are within the scope of VAT. (assuming UK resident - would need to check NSOM to see whether diving activity around a rig etc. qualifies as work related to land - else I guess would fall under basic rule which means only counts towards VAT threshold if your customer is UK established).

[simpsonite]

Hi Generix,

Yes agreed, if he is an employee then his earnings are not within the scope of VAT.

But whether he is an employee or self employed is not entirely clear & that is my query with regard to his potential VAT registration in this instance.

He receives payslips & they deduct class 1 n.i. So that would indicate a service of employment.

But, Revenue guidiance BIM53951 states that divers are assessable as trading income & not employment.

His employers also do not deduct any tax from his earnings in line with his "trading status".

The North Sea is deemed part of the Uk for tax purposes. My client is also UK domiciled.
What is NSOM & relevance of diving around a rig as related to land?

[Generix]

NSOM is the north sea oil memorandum - and is a tax guidance paper for oil and related activities taking place in the north sea.

I will endeavour to check it for you - unlikely to be today though

[simpsonite]

much appreciated!

regards

simpsonite

[simpsonite]

Hi all,

does anyone have any practical knowledge of this issue?

thoughts appreciated,

cheers

[Generix]

Hi all,

does anyone have any practical knowledge of this issue?

thoughts appreciated,

cheers

What is the nature of his diving activities? surveying seabed? engineering? Work on rig?

[Grahamstax]

Hi

Did you get any further info on this? My friend has asked me to have a look at his tax affairs. He is a deep sea diver, mainly north sea but some international jobs. The main company he works with deduct class 1 ni from his pay and issue payslips and p60s

I am led to believe that deep sea diving is generally classed as self employed trading income however if that's the case why is he paying class 1 and will he also be expected to pay class 2 and 4 and cam he reclaim the class 1 deducted at source

He has also just earned over the vat threshold for the first time so if he is classed as self employed would he automatically be liable for vat and would it be at full 20%

Sorry formally the questions but this seems to be a very grey area!!

[Generix]

Not sure about the employment status part.

Assuming they are self employed, then what is the nature of the service they are actually providing further to my previous question above.

If you google "North Sea Oil Memorandum" then you may find something useful for the VAT treatment in there.

Else you can revert back here and I will try to assist.

[Grahamstax]

Hi

He is based on a boat in the North Sea about 80% of the time and generally is involved in maintenance, construction and inspection of rigs

I will have a look at the nsom, thanks!