Finance (Covid-19 and Miscellaneous Provisions) Act 2022

Tax treatment of certain payments to holders of sea-fishing boat licences

15. (1) The Act of 1997 is amended—

(a) by the insertion of the following Chapter after section 669K:

“Chapter 5

Tax treatment of certain payments to holders of sea-fishing boat licences

Definitions

669L. (1) In this Chapter—

‘Brexit compensation sum’ means sums arising to a licence holder made under a scheme to be established for that purpose by the Minister for Agriculture, Food and the Marine, pursuant to Regulation (EU) 2021/1755 in respect of a relevant vessel decommissioned during the period beginning on 1 January 2022 and ending on 31 December 2023, which may comprise one or more of the following:

(a) compensation for the destruction of a relevant vessel;

(b) a crew payment amount;

(c) the catch sum;

(d) compensation for the surrender of a sea-fishing boat licence;

‘catch sum’ means the portion of the Brexit compensation sum that is in respect of the annual gross tonnage of sea-fish stock landed over the periods beginning on 1 January 2018 and ending on 31 December 2018 and beginning on 1 January 2019 and ending on 31 December 2019 as adjusted for the age of the relevant vessel and which takes account of any amount previously paid to the licence holder as a temporary tie up payment;

‘chargeable period’ has the same meaning as in section 321(2) ;

‘crew member’ means an individual who has spent—

(a) at least 90 days at sea on board a relevant vessel in the period beginning on 1 January 2020 and ending on 31 December 2020, and

(b) at least 90 days at sea on board a relevant vessel in the period beginning on 1 January 2021 and ending on 31 December 2021;

‘crew payment amount’ means the portion of the Brexit compensation sum received by a licence holder in respect of crew members;

‘day at sea’ has the same meaning as in Chapter I of the Annex to the Commission Delegated Decision (EU) 2021/1167 of 27 April 20212 establishing the multiannual Union programme for the collection and management of biological, environmental, technical and socioeconomic data in the fisheries and aquaculture sectors from 2022;

‘decommissioned’ means, in respect of a sea-fishing boat, a sea-fishing boat which has been removed from the Register of Fishing Boats;

‘licence holder’ means the holder of a sea-fishing boat licence in respect of a relevant vessel;

‘Register of Fishing Boats’ means the Register of Fishing Boats maintained under section 74 of the Sea-Fisheries and Maritime Jurisdiction Act 2006 ;

‘Regulation (EU) 2021/1755’ means Regulation (EU) 2021/1755 of the European Parliament and of the Council of 6 October 20213 establishing the Brexit Adjustment Reserve;

‘relevant vessel’ means a sea-fishing boat entered in the Register of Fishing Boats and used in the polyvalent and beam trawl segments of the fishing fleet which—

(a) has spent at least 90 days at sea—

(i) in each year in the 2 years preceding the year in which the sea-fishing boat is decommissioned, or

(ii) during each of the periods beginning on 1 January 2018 and ending on 31 December 2018 and beginning on 1 January 2019 and ending on 31 December 2019,

and

(b) was constructed at least 10 years before the date of decommissioning;

‘sea-fishing boat licence’ means a licence granted under the Fisheries (Amendment) Act 2003 ;

‘sea-fish stocks’ means the stocks of sea-fish set out in Annexes 35 and 36 to the Trade and Cooperation Agreement between the European Union and the European Atomic Energy Community, of the one part, and the United Kingdom of Great Britain and Northern Ireland, of the other part, done at Brussels and London on 30 December 20204 ;

‘temporary tie up payment’ means a payment made to a person to temporarily cease all fishing activities and to retain the relevant vessel in port for at least one month during either or both of the following periods:

(a) the period beginning on 1 January 2021 and ending on 31 December 2021 under a scheme established for that purpose by the Minister for Agriculture, Food and the Marine pursuant to Regulation (EU) 2021/1755;

(b) the period beginning on 1 January 2022 and ending on 31 December 2022 under a scheme to be established for that purpose by the Minister for Agriculture, Food and the Marine pursuant to Regulation (EU) 2021/1755.

Exemption for licence holder in respect of certain crew payments

669M. (1) This section shall apply where a licence holder is chargeable to tax under Case IV of Schedule D in respect of the portion of the Brexit compensation sum which comprises the crew payment amount.

(2) Notwithstanding any provision of the Tax Acts, the total crew payment amount paid to the licence holder shall be exempt from income tax and corporation tax and shall not be reckoned in computing total income for the purposes of the Income Tax Acts.

(3) The crew payment amount paid to a licence holder shall not be deductible in computing the amounts of profits or gains chargeable to tax under Case IV of Schedule D.

(4) A licence holder shall not be entitled to an exemption under this section for the chargeable period concerned unless the crew payment amount is paid to the crew member concerned within 3 months of its receipt by the licence holder.

Balancing charges on relevant vessel

669N. (1) In this section, ‘balancing charge’ has the same meaning as in section 288.

(2) This section shall apply to the amount of the Brexit compensation sum which relates to compensation for the destruction of a relevant vessel.

(3) (a) Where, on account of the receipt by a licence holder of a payment or payments to which subsection (2) applies, a balancing charge is to be made on that licence holder for any chargeable period other than by virtue of paragraph (b), then, the amount on which the balancing charge is to be made for that chargeable period shall be an amount equal to one-fifth of the amount (in this subsection referred to as ‘the original amount’) on which the balancing charge would, but for this subsection, have been made.

(b) Notwithstanding paragraph (a), there shall be made on the licence holder for each of the 4 immediately succeeding chargeable periods a balancing charge, and the amount on which that charge is made for each of those periods shall be an amount equal to one-fifth of the original amount.

Exemption in respect of the catch sum

669O. (1) Subject to subsection (2), where a licence holder is chargeable to tax under Schedule D in respect of the portion of the Brexit compensation sum which relates to the catch sum, the profits or gains chargeable in the period concerned shall be reduced by an amount equal to 50 per cent of the catch sum and shall be treated as so reduced for the purpose of computing total income for the purposes of the Tax Acts.

(2) Where a temporary tie up payment is included in the portion of the Brexit compensation sum which relates to the catch sum a licence holder may elect by notice in writing to a Revenue officer to have a deduction equal to 50 per cent of that amount of the temporary tie up payment or a portion of that payment taken into account in determining the profits or gains charged to tax under Schedule D in the preceding chargeable period, and such deduction shall be taken into account for the purpose of computing total income for the Tax Acts.

(3) The total amount of the reduction claimed under subsection (1) and the deduction claimed under subsection (2) shall not in aggregate exceed an amount equal to 50 per cent of the catch sum.”,

and

(b) in section 598, by the insertion of the following subsection after subsection (3A):

“(3B) (a) In this subsection—

‘Brexit compensation sum’, ‘relevant vessel’ and ‘sea-fishing boat licence’ have the same meaning respectively as they have in section 669L.

(b) Relief under subsection (2) shall apply in respect of the following payments arising as a portion of a Brexit compensation sum—

(i) compensation for the destruction of a relevant vessel, and

(ii) compensation for the surrender of a sea-fishing boat licence, as if—

(I) in subsection (1)(a), the period referred to in paragraph (i) of the definition of ‘qualifying assets’ were 6 years, and

(II) in subsection (2)(a), the age attained by an individual were 45 years.”.

(2) Subsection (1) shall come into operation on such day or days as the Minister may appoint by order or orders either generally or with reference to any particular purpose or provision and different days may be so appointed for different purposes or different provisions.

2 OJ No. L 253, 16.7.2021, p. 52

3 OJ No. L357, 8.10.2021, p. 1

4 OJ No. L149, 30.4.2021, p. 10