I am advised by Revenue that the High Court judgments of October 2001 to which the Deputy refers relate to a number of cases dealing with share fishermen with similar facts. In those cases, it was determined by the High Court that the share fishermen were not employees of the boat owner but had a relationship with the boat owner or skipper in the nature of a partnership.
I am further advised by Revenue that, in determining whether a partnership or an employee/employer relationship exists as between the owner of a fishing boat and the crew (fishermen), regard must be had to the individual facts of each boat and the nature of the working relationship between the owner and the fishermen. This will also determine any entitlements to capital allowances.
Where an employer/employee relationship exists based on the facts of the case, salary or wages of the fishermen is chargeable to income tax under Schedule E and is subject to deductions under the PAYE system by the employer. Part 42 Chapter 4 Taxes Consolidation Act 1997 imposes a legal obligation on employers to make deductions at source under the PAYE system from the payment of emoluments to an employee. Where a fisherman is an employee, he has no entitlement to capital allowances relating to the boat and equipment.
Where the relationship between the owner and fishermen is a partnership, their relationship will be governed by partnership law. As is the case with all partnerships, the precedent acting partner is obliged, under the rules of self-assessment, to submit an annual Form 1 partnership return which contains details of the activities of the partnership and includes the identity of the partners and the details of the division of the profits/losses and capital allowances between partners. In general, the precedent acting partner in a boat will be the owner/skipper.
Where the share fishermen are in a partnership, each partner is required to submit an annual tax return, as they are chargeable persons under self-assessment rules. There are also obligations to make appropriate preliminary tax payments and pay the balance of any tax due.
In relation to capital allowances, where a partnership exists, the capital allowances relating to the boat and equipment become the capital allowances of the partnership. This means that the capital allowances are calculated at partnership level and are allocated to each partner. The appropriate share of the allowances is the amount computed in accordance with the profit-sharing ratio included in the partnership agreement for the year of assessment and returned on the annual Form 1 partnership return.
Revenue has published guidance on the tax treatment of share fishermen which is available on their website at: https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-04/04-01-11.pdf.
Finally, if the Deputy has concerns about a particular case or class of cases in relation to this issue, he might wish to raise the specific details of those cases with the Revenue Commissioners.
