So if you are self employed – Sole Trader or Partnership – you can’t be an employee.
If you work on cruise ship or a shipping line you will probably be an employee so that’s fine but if you would on other ships then you should create your own Limited Company so that you can be an employee.
HMRC are actively investigating many self assessment returns where the claim for Seafarers Deductions has been incorrectly made.
The mechanics of the deduction – the first stage is to calculate what the legislation (ITEPA 2003, s 378(2) and (3)) calls an eligible period, which:
is a period of at least 365 days;
begins and ends with a period of absence from the UK;
does not include any single period of presence in the UK in excess of 183 days; and
at least half of which is spent outside the UK (the 50% test to which All at Sea refers).
If they weren’t on cruise ships HMRC would probably argue that they were employees but in the case of cruise ships they argue the opposite.
Pete Matthews (1) Keith Sidwick (2) v Revenue & Customs  UKFTT 24 (TC)
Mr Sidwick was a musician and played piano on a series of cruise ships. Mr Matthews was a juggler, similarly entertaining passengers on cruise ships. Both were subject to a close degree of control by the ships officers but the First-tier Tribunal found that this degree of control was required by the context of a cruise ship.
The First-tier Tribunal concluded that the entertainers were not employees ‘…but earn their living by entering into a series of separate engagements with a number of different cruise lines in a similar way to actors…’