HM Revenue & Customs (appellant) v Dolphin Drilling Ltd (respondent)

Thursday 14 December 2023

By appellant’s notice filed on 26 October 2022, the Appellant, HMRC, appeal the Upper Tribunal (Tax and Chancery Chamber) Decision of 4 August 2022, which upheld a decision of the First-tier Tribunal released on 16 November 2020.

Background – The Respondent entered into a contract to provided oil field services to Total E&P (UK) Limited in connection with drilling activities at the Dunbar oil platform. The services involved the provision of a semi-submersible tender support vessel. In order to fulfil the contract with Total, the Respondent acquired a vessel, the Borgsten Dolphin, from an associated, non-UK company by way of a bareboat charter.

The Appellant concluded that the deductions claimed by the Respondent in respect of amounts paid for the hire of the Borgsten, in calculating its profits for corporation tax purposes should be capped as the Borgsten was a “relevant asset” within the meaning of Part 8ZA of the Corporation Tax Act 2021 on the basis that it:
“…is a structure that … can be used to … provide accommodation for individuals who work…in connection with, exploration or exploitation activities” (s.356LA(2)(b)(ii)).

The Appellant issued closure notices in relation to the Respondent’s tax liability.

The Respondent appealed to the FTT against the closure notices on the basis that the Borgsten was not a “relevant asset” as it fell under the exception within s356LA(3) of the Act.

The FTT found that, on the facts, the Borgsten fell within the exception and found for the Respondent. That finding was upheld on appeal to the UT. The Appellant now appeals the UT decision.

View hearing:

Part 1

Part 2