A Norwegian offshore drilling company operating in the North Sea has lost a final attempt to have an HMRC ruling on corporation tax overturned, leaving a multimillion pound tax bill and substantial legal costs
The Supreme Court has unanimously dismissed the appeal by Dolphin Drilling over the hire cap tax relief rules affecting the use of a leased converted oil rig called the Borgsten, which was used for ‘incidental’ accommodation purposes for employees working on the Dunbar rig.
The case has been going through the courts for five years and related to a dispute over the cap on claims for tax relief on leases of plant and machinery under Part 8ZA of the Corporation Tax Act 2010 (CTA 2010).
The amount of tax at stake was substantial and related to Dolphin’s tax returns for the accounting periods ending 31 December 2014 and 31 December 2015.
HMRC rejected the company’s use of the hire cap and issued a first closure notice in January 2018, indicating that further corporation tax was payable for FY14, and then another notice for FY15.
