Michael King v The Commissioners for HMRC [2026] UKFTT 1163 (TC)

[2026] UKFTT 01163 (TC)Case No TC 09982
FIRST-TIER TRIBUNAL
TAX CHAMBER
Hearing Heard on: 15 May 2026Date Judgment date: 12 August 2026
Taylor House, London
Appeal reference: TC/2025/01430
INCOME TAX– Seafarers’ Earnings Deduction – whether a vessel is an offshore installation
Before
TRIBUNAL JUDGE JUDITH HARRISON
Between
MICHAEL KINGAppellantTHE COMMISSIONERS FOR HIS MAJESTY’S REVENUE AND CUSTOMSRespondentMr Steve Harney for AppellantMs Lydiane Lees and Ms Harding, each a Litigator of HM Revenue and Customs (“HMRC”) for RespondentsDECISION

BACKGROUND

[1]This appeal concerns the Appellant’s (“Mr King”) entitlement to Seafarers’ Earnings Deduction (“SED”) for the tax years ending 5 April 2020, 2021, and 2022.[2]By closure notices dated 1 October 2024, HMRC disallowed Mr King’s claims to SED and amended his tax liabilities for those years.[3]Mr King appeals those decisions.[4]The central issue is whether the vessel on which Mr King worked, and continues to work, the Q7000, was a “ship” for the purposes of Chapter 6 Part 5 ITEPA 2003, or whether it was an “offshore installation” within the meaning of section 1001 ITA 2007. Both parties accept that the Q7000 was a ship as a matter of general law. However, the parties did not agree whether the Q7000 was put to a relevant use or whether it was put to use whilst standing or stationed in any waters.[5]The Tribunal was provided with a hearing bundle of 525 pages, an authorities bundle of 106 pages (which included the HMRC’s skeleton argument which was 17 pages), Mr King’s skeleton argument of 17 pages and a further 2 pages of additional information on the Q7000 provided by Mr King.[6]Mr King appeared as a witness over video link and was cross-examined by HMRC. The Tribunal considers that Mr King was an honest and reliable witness.

Findings of fact

[7]Findings of fact The Tribunal finds the facts set out below, which were not disputed by the parties during the hearing.[8]Mr King was employed by Helix Offshore Crewing Services Ltd as a services/intervention co-ordinator during the relevant tax years and he carried out all of his duties on board the Q7000. Mr King continues to work on board the Q7000 to the present day.[9]The closure notices have been validly issued for the tax years ending 5 April 2020, 2021, and 2022.

The Q7000

[10]The Q7000 The Q7000 is a semi-submersible, dynamically positioned vessel described as a well intervention unit. It was manufactured in Singapore and following the completion of sea trials, set sail for Nigeria where its operations began. Its operations began during the tax year 2019/2020.[11]The Q7000 is owned and operated by companies in the same group as Mr King’s employer, Helix Offshore Crewing Services Ltd.[12]The Q7000 is self-propelled and capable of travelling significant distances. The Q7000 travelled (using its own engines) between wellheads and around wells when undertaking seabed clearance as part of its activities of decommissioning and well intervention.[13]The Q7000 is capable of carrying out a wide range of functions in the offshore oil and gas market. It was accepted that those functions included the capability to carry out activities that would be a “relevant use”, such that if the Q7000 carried out those activities it would be an offshore installation.[14]The Q7000 is not capable of exploiting minerals itself.[15]The only activities that the Q7000 has carried out to date are decommissioning (including restoring the seabed) and well intervention. The Q7000 has only carried out its activities to date at wells that have permanently ceased production and where the production platform or FPSO had been removed from the well before the Q7000 arrived.[16]It is understood that well intervention can take place both during and at the end of a well’s productive life. Mr King’s evidence (that the Tribunal accepts) is that the only well intervention carried out by the Q7000 was after a well had ceased production, and the relevant production platform or FPSO had been removed from the location.[17]No well that the Q7000 worked on was ever returned to production. The purpose of the Q7000’s work was to enable a well to be safely abandoned following production ceasing, to remove the associated infrastructure and to return the seabed to its original state.[18]The Q7000 activities of decommissioning (including restoring the seabed) and well intervention involve the following activities:a. The Q7000 arrives at a well that has ceased production after the relevant platform or FPSO has been towed or sailed away. Before the Q7000 arrives the well has been capped and production has permanently ceased.b. The Q7000 clears the subsea infrastructure by deploying its own equipment on top of the capped well, decommissioning the subsea equipment and removing it.c. In order to undertake this activity, the first step is to remove the well cap, latch the equipment to the well head and inject brine into the well to “kill the well”.d. Once the well has been “killed” concrete will be poured into the well to plug the well.e. Where required the seabed will be returned to the condition it was in prior to the oil exploration (so for example, pipes and other equipment will be removed and general seabed clearance will be undertaken).f. Where well intervention is taking place, steps will be taken to ensure that the well is not unsafe.[19]Although it is possible for a well that has been injected with brine to be brought back into operation, in practice no well that the Q7000 has injected with brine has been brought back into operation.[20]When conducting its decommissioning and well intervention activities, the Q7000 regularly latched onto a wellhead for between 1 and 37 days.[21]When conducting its decommissioning and well intervention activities, the Q7000 maintains its position over a well using a class 3 dynamic positioning system rather than fixed anchoring. This was described by Mr King as the Q7000 constantly moving to maintain its position at the wellhead. Where the seabed is being cleared there will be some movement by the vessel over a small area (which will be controlled by dynamic positioning).[22]There are no plans to change the activities carried out by the Q7000.[23]The Tribunal was provided with Daily Progress Reports showing the activities of the Q7000 in considerable detail. The Tribunal accepts the Daily Progress Reports contain repeated references to equipment and processes associated with oil and gas wells. However, those documents must be read in context. The evidence establishes that such equipment was being used as part of abandonment, decommissioning and well-safety operations after production had ceased rather than for extraction or production of mineral resources.[24]There was insufficient evidence to establish whether decommissioning was required by licence terms in the relevant jurisdictions.[25]Although HMRC at an earlier stage suggested that the activities fell within section 1001(3)(b) (exploration with a view to exploiting mineral resources), no exploration activity was identified in the evidence. The Tribunal finds that the Q7000's activities were decommissioning and post-production intervention only and were not undertaken with a view to exploiting mineral resources.

The relevant law

[26]The relevant law The legislation Part 5 Chapter 6, Income Tax (Earnings and Pensions) Act 2003 (“ITEPA 2003”) provides a tax deduction in respect of relevant general earnings for seafarers who are ordinarily resident in the UK. Section 384(1) ITEPA provides that a person is only employed as a seafarer if their duties are “on a ship” or incidental to duties on a ship.[27]Section 385 ITEPA 2003 provides that: “In this Chapter “ship” does not include an offshore installation”.[28]Section 1001 Income Tax Act 2007 (“ITA 2007”) provides a definition of an offshore installation:
“(1) In the Income Tax Acts “offshore installation” means a structure which is, is to be, or has been, put to a relevant use while in water (see subsections (3) and (4)). (2) But a structure is not an offshore installation if— (a) it has permanently ceased to be put to a relevant use, (b) it is not, and is not to be, put to any other relevant use, and (c) since permanently ceasing to be put to a relevant use, it has been put to a use which is not relevant. (3) A use is a relevant use if it is— (a) for the purposes of exploiting mineral resources by means of a well, (b) for the purposes of exploration with a view to exploiting mineral resources by means of a well, (c) for the storage of gas in or under the shore or the bed of any waters, (d) for the recovery of gas so stored, (e) for the conveyance of things by means of a pipe, or (f) mainly for the provision of accommodation for individuals who work on or from a structure which is, is to be, or has been, put to any of the above uses while in water. (4) For the purposes of this section references to a structure being put to a use while in water are to the structure being put to a use while— (a) standing in any waters, (b) stationed (by whatever means) in any waters, or (c) standing on the foreshore or other land intermittently covered with water. (5) In this section “structure” includes a ship or other vessel.”

The case law

[29]The question of whether a vessel is a ship or an offshore installation has been considered by the courts on a number of occasions.[30]In Torr v HMRC ([2008] S.T.C. (S.C.D.) 772) the Special Commissioners held that a ship contracted to carry out low risk oil well support and maintenance operations, which was dynamically positioned whilst carrying out such works, was an "offshore installation." In reaching this conclusion, the Special Commissioner said:
“[43] exploitation” clearly refers to physical rather than economic exploitation, particularly since the exploitation is “by means of a well”
. It does not cover sale of mineral rights for a capital sum or royalties. It clearly involves extraction of the crude oil from under the seabed. … [48] In my judgment the mineral resources do not cease to be exploited merely because a well is killed to enable corrective action to be taken. While I do not accept the submission of Mr Williams that exploitation encompasses work after the oilfield has ceased production, I hold that it does cover repair work when the field is in production notwithstanding the fact that the field has to be temporarily killed. … [50] I have no hesitation in deciding that the use was while standing or stationed. The New Shorter Oxford English Dictionary gives the following meaning for “station”:
“1.Assign a post, position or station to (a person, troops, ships, etc); place, post. 2. To take up one's station, post oneself.”
It would be absurd to suggest that a ship can only be stationed if it is either secured by anchors or hawsers. A ship can clearly be stationed in deep water. While the context in which the word “stationed” is used is as alternative to “standing”, the word clearly envisages the ship being substantially stationary, I am satisfied that when dynamically positioned the Pride South America was stationed.”[31]In Spowage v HMRC ([2009] UKFTT 142 (TC))the First-tier Tribunal considered whether semi-submersible units had ceased to be put to a relevant use. The Tribunal commented that:
“[30] There are three aspects to the interpretation of this phrase, namely use, exploitation and by means of a well. The word use connotes a physical activity in which the structure is engaged. Sub paragraphs (b) and (c) also focus on physical use. The word exploitation seems to have in mind the productive working of the structure, that is to say use in a manner which it is hoped will be profitable. By means of a well emphasises the manner of exploitation of the mineral resource. It would extend to extraction, storage and processing of the oil or gas but not to conveying it away by means of a pipe which is dealt with in Regulation 3(1)(c) (the conveyance of things by means of a pipe ). Nor does it extend to the activities of maintenance and repair. To include those activities would be to substitute in connection with for the word for i.e . the indirect for the direct (c.f. regulation 2 of the 1995 Regulations where that phrase is used in the definition of associated structure). [31] The fifth issue of interpretation relates to the phrase standing or stationed. This issue hardly arises given the findings of fact in relation to and the roving nature of the activities of the Safe Lancia and the Safe Britannia. Standing suggests something different from floating, such as relying for stability to a material extent on the sea-bed. Stationed suggests that the structure is largely static. The definition of installation in the Oil and Gas (Enterprise) Act 2002 section 24 (substituting a new section 1 of the Mineral Workings (Offshore Installations) Act 1971 ), which refers to a floating structure maintained on a station, is at least consistent with this. The HSE Guide, first edition, paragraph 17 refers to a degree of permanence which is again consistent with the structure being largely static. To interpret the phrase as meaning substantially stationary (as was done in Torr - see below) focuses on the static nature of the structure; one might ask is the structure in substance stationary? However, in substance and substantially are flexible words and leave much scope for divergence of view. Ultimately, the question must be one of fact and degree. Here, on the facts agreed and found, the answer to the question is not borderline at all. It is therefore perhaps unwise to introduce additional vague words into the statutory language.”
[32]In Gouldson v HMRC ([2011] UKUT 238 (TCC)) the Upper Tribunal held that a vessel which was used to house workers engaged in constructing oil tanks, and remained in a near-geostationary location by means of dynamic positioning was held to be an offshore installation. “[14] There can in our judgment be no doubt that, when the Edda Fjord was in position close to the Bonga and the Thunderhorse it was “stationed (by whatever means) in any waters”: on that point we agree with the Special Commissioner in Torr, and with his reasons:
“stationed” does not require a vessel to be fixed rigidly in one immoveable position, but allows of minor movement in relation to a fixed point. … [15] It is, we think, illustrative and helpful to examine the purpose of the restriction on the availability of SED which the legislative provisions we have set out imports. In our judgment the objective is to deny relief to those who are working on essentially fixed installations used, directly or indirectly, for mineral exploitation. The use of the phrase “is, is to be, or has been” makes it clear that an immediate temporal connection with mineral exploitation is unnecessary: the plain purpose of the legislation is to bring within the net of the exclusion any structure with a connection to such exploitation.”

The Parties’ Positions

[33]HMRC contend that the Q7000 was an offshore installation throughout the relevant period because:a. It is a structure due to the definition in section 1001(5) ITEPA.b. It was put to a “relevant use” falling within section 1001(3)(a) ITA 2007, namely that the Q7000 has been exploiting mineral resources by means of a well. This is because the Q7000’s work was carried out at or need the well head and/or associated sub-sea equipment and was closely associated with the production process of exploiting mineral resources by means of a well.c. It was “stationed” or “standing” in waters when performing those activities due to the Q7000’s dynamic positioning.[34]Mr King contends that:a. The Q7000 is not a structure, as it moves about and does not spend significant time in one place.b. The Q7000 has not been exploiting mineral resources by means of a well. This is because decommissioning and well intervention work, take place after the well has ceased production, and so are not the exploitation of mineral resources by means of a well. A well that has ceased production is no longer a well for the purpose of section 1001 ITA 2007.c. Although in Torr a ship which was kept in place by means of dynamic positioning was held to be stationed in water, the technology has evolved such that dynamic position should be seem as a navigation system rather than a way to keep a vessel stationary.[35]As a result, the issues for determination by the Tribunal were:a. Whether the Q7000 is a structure.b. Whether the activities of the Q7000 are exploiting mineral resources by means of a well.c. Whether the Q7000 was stationed or standing in waters when performing its decommissioning and well intervention activities. Discussion and Reasoning Whether the Q7000 is a structure

Discussion and Reasoning

[36]Section 1001(5) expressly provides that "structure" includes a ship or other vessel. As both parties accept that the Q7000 is a ship, it follows that it is a structure for the purposes of s1001.

Whether the Q7000 is exploiting mineral resources by means of a well

[37]Whether the Q7000 is exploiting mineral resources by means of a well Section 1001 ITEPA provides that a ship is an “offshore installation” if it is a “structure which is, is to be, or has been put a relevant use while in water”. This requires the Tribunal to look at the historic, current and future use of a ship to determine whether it is an offshore installation.[38]Where a ship is put to both a relevant use and a use that is not a relevant use (for example, travelling between locations), the fact that it is used in part for a relevant use means that it is an offshore installation. So, the question for the Tribunal is whether the Q7000 is, is to be or has ever been put to a relevant use.[39]A ship that has historically been put to a relevant use, will cease to be an offshore installation if it has permanently ceased being used for any relevant use and has been put to a use that is not a relevant use (section 1001(2) ITA 2007). That provision is not in dispute here.[40]The Tribunal considers that the wording in section 1001 looks at the actual use of the Q7000. Both parties agreed that the Q7000 has the functionality to carry out activities that would be a relevant use. Having that functionality is not of itself sufficient to mean that the Q7000 is, has or will be put to a relevant use. What is important is how the vessel has been, is or will be actually used.[41]The Tribunal understands that some forms of well intervention are capable of facilitating extraction. The Tribunal's approach is based upon the activities actually undertaken by the Q7000 rather than the description of the activity. Although some forms of well intervention may be carried out during the productive life of a well, the intervention activities undertaken by the Q7000 were performed only after permanent cessation of production and as part of abandonment and decommissioning operations. So, in testing whether well intervention is a relevant activity, the Tribunal has looked at what the ship actually did. In taking this approach, the Tribunal is not deciding whether all forms of well intervention fall outside section 1001(3)(a). It is deciding only that the particular intervention activities carried out by the Q7000 on wells after permanent cessation of production do so.[42]Since Mr King has worked on the Q7000 since it was first brought into use, the Tribunal accepts that he has good knowledge of its activities to date.[43]Mr King confirmed he was not aware of any plans to change how the Q7000 is used and explained that in his view there was no reason for the Q7000 to change its activities. The Tribunal was not provided with any evidence of any plan for the Q7000 to change its activities or be put to a relevant use in the future. In the absence of any evidence of any change in the planned future use of the Q7000, the Tribunal finds on the balance of probabilities, that there is no plan for the activities of the Q7000 to change.[44]The Tribunal notes that the effect of the future looking limb of the relevant use test is that ships that are intended to be put to a relevant use are always treated as offshore installations. For example, in Langley v HMRC ([2007] SpC 642) the Special Commissioners held that a self-propelled drilling rig was to be used for the exploitation or exploration of mineral resources from the date when most of its assembly (bar final fitting out) had been completed at the shipyard. The Tribunal does not consider that the future looking limb of the relevant use limb test is wide enough to cover the theoretical possibility that a ship could one day be put to a relevant use.[45]As a result, the only question for the Tribunal is whether the decommissioning and well intervention activities carried out by the Q7000 are a relevant use.[46]In Torr, the Special Commissioner found that “exploitation” refers to physical rather than economic exploitation of mineral resources involving the use of a structure. The real question in this case is how far the concept of use of a structure for exploitation of mineral resources by means of a well extends. The Tribunal accepts that relevant use extends beyond direct extraction of mineral resources. However, some connection with the exploitation of mineral resources remains necessary. In the view of the Tribunal, on the facts of this case, the activities undertaken by the Q7000 after permanent cessation of production were not the exploitation of mineral resources. Instead they were directed towards abandonment and preventing future extraction from wells that had permanently ceased producing.[47]In Torr, the Special Commissioner differentiated between repair and maintenance work, which he considered fell within this concept and “work after the oilfield has ceased production” which he considered was not part of the exploitation of mineral resources.[48]HMRC submitted that in Torr the Special Commissioner was referring to work done after a whole field has ceased production, whereas the work undertaken by the Q7000 was, at least some of the time, undertaken when a single well ceased production, such that the wider field in which that well was located was continuing to produce mineral resources.[49]When asked, HMRC explained that some jurisdictions require decommissioning to be undertaken when production ceases, as a condition for granting a licence to exploit mineral resources. It is not clear from the evidence whether any of the decommissioning and well intervention undertaken by the Q7000 was mandated by the relevant production licences. It is unnecessary for the Tribunal to determine that factual issue because HMRC's argument fails even on the assumption that decommissioning was licence mandated.[50]Even if we take HMRC’s case at its highest, such that the decommissioning and well intervention was required by the production licence and the Q7000’s activities relate to a single well that has ceased producing in a wider field that is still producing, this Tribunal considers the Q7000’s activities to be too far removed from the production of oil to be a relevant use. There is a clear difference between activities directed at making a well safe and abandoning it, to activities which are directed at repairing and maintaining a well so that it can continue to produce. At the time the Q7000 undertook its activities, mineral resources were no longer being extracted, recovered, explored for, produced or made available for production through the relevant well. The Q7000’s activities were part of the process of ensuring that no further exploitation could take place. As a result, the Tribunal does not agree with HMRC that decommissioning and well intervention after a well has ceased production is the final stage of the exploitation of mineral resources. In reaching this conclusion, the Tribunal derives assistance from the distinction drawn in Torr between repair work carried out in order to continue production and work undertaken after production has ceased. The activities of the Q7000 fall squarely within the latter category.[51]Section 1001(3)(a) expressly refers to exploitation of mineral resources "by means of a well”. The Tribunal accepts that other wells within the same field may have remained productive. However, section 1001(3)(a) refers to exploitation of mineral resources "by means of a well". The relevant use must therefore be tested by reference to the well on which the Q7000 was working rather than by looking at the productivity of other wells within the same field.[52]The Tribunal accepts that the Q7000 worked directly on wells and wellhead equipment. However, direct physical interaction with a well is not sufficient to make an activity a relevant use. The Tribunal also accepts that the Q7000's activities had a historical and operational connection with wells from which mineral resources had previously been extracted. However, that is not sufficient to mean all future activity is a relevant use. The statutory language is not "connected with", "associated with" or "arising from" the exploitation of mineral resources. Parliament chose the narrower formulation "for the purposes of exploiting mineral resources by means of a well". The Tribunal finds that the Q7000’s activities were undertaken only after production had ceased and for the purpose of abandonment and decommissioning. The Tribunal considers it significant that, by the time the Q7000 commenced its work, production had permanently ceased, the production platform or FPSO had been removed, and the objective of the operations was not to facilitate, continue or restore production but to secure and abandon the well. On the facts found, the activities were directed towards preventing any future exploitation rather than achieving or supporting exploitation.[53]Even if decommissioning is contractually, commercially or regulatorily required following production, that does not mean it is itself exploitation of mineral resources. The activity is directed toward the permanent cessation of extraction rather than the obtaining of mineral resources. The Tribunal considers there is a material distinction between activities intended to facilitate or continue extraction and activities intended permanently to terminate production.[54]The Tribunal finds that, by the time the Q7000 commenced work on a well, that well had ceased production permanently. The activities undertaken by the Q7000 were directed towards securing, abandoning and decommissioning the well and associated infrastructure. Those activities were not undertaken to obtain, recover, produce or facilitate the production of mineral resources by means of that well. Therefore, even if a well that has ceased production, remains a well for the purpose of section 1001 ITA, the Q7000 was not being used for the purposes of exploiting mineral resources within section 1001(3)(a).[55]The Tribunal accepts that Gouldson indicates that an immediate temporal connection with mineral exploitation is unnecessary. However, the statutory test remains whether the structure has been put to a "relevant use" as defined by section 1001(3). The Tribunal does not consider that activities directed solely to abandonment and permanent cessation of production amount to exploitation of mineral resources merely because they are historically connected with a well from which mineral resources were once extracted.[56]Given that production had permanently ceased before the Q7000 arrived, the platform or FPSO had been removed and the purpose of the Q7000’s work was to enable a well that had ceased production to be abandoned, the Tribunal finds as a fact that the purpose and effect of the Q7000’s activities was not the obtaining of mineral resources but the permanent abandonment of wells from which mineral extraction had already ceased. Therefore, the Tribunal does not accept that the Q7000 has, is or will be put to a relevant use.[57]The Tribunal is aware that similar definitions of offshore installation are contained in a number of places across UK tax legislation. Although not material to the Tribunal’s decision, which is based on the wording in ITA 2007, the Tribunal notes that the Social Security (Contributions) Regulations 2001/1005.

(D) defines an offshore installation as:

“(a) a structure which is, is to be, or has been, put to a relevant use while in water; … (c) a use is a relevant use if it is— (i) for the purposes of exploiting mineral resources, (ii) for the purposes of exploration with a view to exploiting mineral resources, (iii) for the storage of gas in or under the shore or the bed of any waters, (iv) for the recovery of gas so stored, (v) for the conveyance of things by means of a pipe, (vi) mainly for the provision of accommodation for individuals who work on or from a structure which is, is to be, or has been put to any of the above uses while in the water, (vii) for the purposes of decommissioning any structure which has been used for or in connection with any of the relevant uses above;”
[58]This definition has a number of similarities to the definition in section 1001 ITA 2007. Certain ships will be an offshore installation for the purpose of the Regulations if they are used for the purpose of exploiting mineral resources, albeit unlike section 1001 there is no requirement for that exploitation to be done by means of a well. Unlike section 1001, this definition expressly includes ships that are used for decommissioning purposes. The Tribunal does not treat the Regulations as determinative but regards them as providing limited contextual support for an interpretation already reached from the language of section 1001 itself.

Relevant use – stationed or standing in water

[59]Relevant use – stationed or standing in water The Q7000 is kept in position when undertaking decommissioning and well intervention with dynamic positioning. It was acknowledged by both parties that this involves continuous minor movement of the Q7000 to keep it in position.[60]HMRC submitted that the Q7000 is largely stationary, at or close to well heads when performing its activities, and that dynamic positioning is sufficient to satisfy the requirement for a vessel to be standing or stationary.[61]Mr King sought to distinguish the position from that in Torr by arguing that the technology has moved on significantly since Torr, and noting that dynamic positioning is an advanced aid to navigation which is used by a wide variety of ships for navigation (for example, cruise liners and yachts use it to enable them to navigate). In addition, when undertaking seabed clearance, Mr King submitted that the Q7000 covers a significant area. The Tribunal was told (and find as a fact) that during seabed clearance the Q7000 travels around the relevant well, albeit we were not provided with details of the distances travelled.[62]In the Tribunal’s view being stationed or standing in water does not require absolute immobility. The fact that the Q7000 is latched onto a well and needs to remain in close proximity to that well to enable it to carry out decommissioning and well intervention is sufficient for the Q7000 to be stationed or standing in water.[63]In Torr the First-tier tribunal considered a ship that was “substantially stationary” would meet the test of being stationed or standing in water. This was approved by the Upper Tribunal in Gouldson which noted that being stationed in water does not require a vessel to be fixed rigidly in one immoveable position, but allows of minor movement in relation to a fixed point. It is also clear from the case law that ships do not need to be physically attached by means of anchors and the like to be stationed or standing, such that a vessel that is kept substantially in one position by means of dynamic positioning can meet this test.[64]The question of when a vessel is sufficiently stationary to meet this test is one of fact and degree. However, on the facts the Q7000 is clearly sufficiently immobile when carrying on decommissioning activities to be stationed or standing in water. This is because the Q7000 was necessarily latched to the well whilst carrying out its decommissioning and well intervention activities (other than seabed clearance). Therefore any movement of the Q7000 was to keep it in position relative to the well to enable it to carry out its activities.[65]In terms of seabed clearance activities, the Q7000 travels around the well. Given that the Tribunal has concluded that the Q7000 has not been, is not, and will not be put to a relevant use, this question does not need to be determined. In any event, the Tribunal's conclusion is that the Q7000 was stationed or standing when latched to the well for the purpose of decommissioning and well intervention activities (other than seabed clearance). This is sufficient to conclude that, if (contrary to the decision of the Tribunal) the Q7000 were found to be put to a relevant use, that it would be carrying out that activity when stationary or standing in water.

Conclusion

[66]Conclusion The Tribunal finds that:(1) The Q7000 is a structure.(2) The Q7000 has not been, is not, and will not be put to a relevant use.(3) The Q7000 is stationed or standing in waters due to the dynamic positioning.(4) As a result of the above, the Q7000 is not an “offshore installation” within section 1001 ITA 2007. It therefore is not prevented from being a ship for the purposes of Chapter 6 Part 5 ITEPA 2003, with the result that Mr King was entitled to Seafarers’ Earnings Deduction for the years in issue.[67]Accordingly, the appeal is allowed.

Right to apply for permission to appeal

[68]Right to apply for permission to appeal This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice. Release date:12 August 2026