Tax breaks may stay

FEARS seafarers could be hit with huge bills following changes to tax rules by the Inland Revenue have been put to rest.

Orkney and Shetland MP Alistair Carmichael held high level talks with financial secretary Stephen Timms this week, after warnings “significant numbers” of offshore workers could leave the industry if the changes went ahead.

Mr Carmichael led an all-party delegation on Wednesday against pro­posals for a seafarer earnings deduction scheme, which threatened to change seafarers’ incomes for the worse.

Currently offshore workers enjoy income tax concessions because they spend much of their time away from dry land.

The revenue and custom proposals threatened to take that concession away, leaving seafarers to foot the full tax bill.

Tax officials felt they could boost their income to the treasury by introducing changes to exactly which vessels are classified as ships, meaning the concession could – in many cases – be withdrawn.

That decision, said Mr Car­michael, was unfair to those working offshore.

Last week he called on the gov­ernment to issue an early statement regarding the tax proposals, which he warned would spark an exodus of offshore oil and gas workers from the industry.

Speaking after this week’s treasury meeting, Mr Carmichael said he was reassured the Inland Revenue would avoid using a heavy hand to enforce the rules.

“This was a very useful and productive meeting, and it is clear that revenue and customs have rather gone ahead of themselves in writing to accountants in the terms that they did.

“As a result there is a new consultation ongoing, and the min­ister assured us that most people who currently benefit from seafarers earning deduction will continue to do so.

“The minister also assured us that the revenue and customs interpreta­tions of the Inland Revenue com­mis­sioner’s decision should be done in such a way to have the smallest possible impact.”

That means seafarers working in the North Sea should continue to file tax returns as they have previously been doing.

Mr Carmichael said there should be “no question” of any changes which might be made being back dated.