BIM57001 - Fishing: Fishing vessels (Financial assistance) scheme 1983

The Fishing Vessels (Financial Assistance) Scheme 1983 (SI83/1883) came into operation on 21 December 1983 and during 2001/2002 paid out approximately £35.4 million. The four types of grant payable under the Scheme and their treatment for tax purposes are as follows-

DECOMMISSIONING GRANT

A decommissioning grant is payable when a fishing vessel is either

• scrapped
• permanently transferred to a country outside the EEC

or

• transferred to use for a purpose other than fishing for profit in EEC waters.

If a vessel is sold, scrapped or permanently ceases to be used for the purposes of the trade, the grant is normally treated as a disposal value in the capital allowance computation under CAA2001/S61 (1).

By virtue of TCGA92/S37 (2), the full amount of the grant normally ranks, in addition to the amount of the sale etc proceeds, as a capital sum chargeable to Capital Gains Tax. However, in arriving at the amount of the gain, the deductions prescribed by TCGA92/S38 are available and include the cost, to the person entitled to the grant, of the acquisition and improvement of the vessel.

Exceptionally, where the vessel qualifies for a decommissioning grant but continues to be used in the same trade, the grant is taxable as a trading receipt.

LAYING-UP GRANT

A laying-up grant represents compensation to the owner for loss of profits for temporarily laying- up a fishing vessel. It is a taxable trading receipt.

EXPLORATORY VOYAGE GRANT

An exploratory voyage grant is intended to help meet the costs of an exploratory fishing voyage, where the receipts from the sale of the catch fall short of the voyage costs. The grant should normally be treated as a trading receipt.

JOINT VENTURE GRANT

A joint venture grant is payable to the owner of a fishing vessel for his taking part in a joint venture which involves the transfer, either temporary or permanent, of a vessel to the waters of a third country. The taxation treatment depends on the particular circumstances of the case and a report with the facts and documents should be made to Business Tax (Technical).