Cadetship = Tonnage Tax scam ?

[timmillea]

Apologies for the provocative title but you are here now. The point is a serious one. I have read these forums and elsewhere the difficulty that some newly qualified OOWs have in finding a job.

To take advantage of the UK's lenient Tonnage Tax regime, shipping companies are obliged to train new officers in a ratio of one to fifteen of their existing officers every year. The UK Government further helps by covering around half of the cost of training through its SMarT scheme.

Given that shipping companies are allowed to pay non-EU officers lower rates of pay, how many UK cadetships exist merely to allow the shipping company to pay lower tax with little or no prospect of employment afterwards? Or the reverse, which companies are offering employment to all or most of their cadets after qualifying?

[newbie]

Just to ensure this thread starts out with the correct information...

Tonnage Tax rules dictate that you are required to train 1 Cadet for every 15 certified Officers as per the Safe Manning Document, including the back-up leave ratio (for those vessels registered in the UK's TT scheme). The number of Cadets required under TT doesn't have any link to total number of Officers employed.

The Government will contribute up to a maximum of ?17,950 for successful completion (i.e. the issuing of a CoC), which no longer covers the tuition fees alone. SMarT covers between 1/4 and 1/3 of the total cost.

[timmillea]

Many thanks for the point of information Newbie. I would be very interested to know if there are there any figures for the proportion of cadets who successfully complete subsequently being employed by their sponsors?

[ETwhat?]

I'm not aware of a huge number of threads on this forum that are by OOW who cant find a job every so often people pop up but theres also a good number who qualify and get a job with little hassle. Given that people who are stuck at home hunting are going to be more negative and also have much mroe time on their hands i just dont think that its a majority case.

Why was the condition of training cadets put into the Tonage tax system? It would be cheaper to simply not have it, still use the tax system and more money for everyone. Ultimately someone decided there was a need for British officers that companies werent able to fill themselves, however this amy be a goverment ideal that isnt in real life there. this links back to the first point lots of cadets get jobs so there is a demand.

the other aspect is that its much better for a company to train 10 cadets and then employ 8 and it being the 8 best rather than having to employ you all, just becasue people qualify does not mean that they are a good officer in that way its no different from a university graduate who ends up working in burger king.

[YoungMariner]

There are companies who offer no further employment on completion, however there is so much work around that if you can't find a job within 6 months of graduating/qualifying then there is something seriously wrong.

Bear in mind that the cadet ship isn't just an entry into life at sea, but also leads people into jobs in Marine Insurance, VTS, Harbour Pilots, Shipping Management, Coastguard, Naval Architecture, Marine Law and much more. The government is well aware of this.

[Aleorea]

The entire cadetship system is essentially one big tax avoidance scheme. But it's a good one, for me and many others it has given us all good jobs. If it wasn't in place very few companies would train british officers... mabey just bp and couple of others.

Finding work is easy after getting your ticket... the ones that i've seen that don't find work are the ones that sit back and wait for the jobs to come to them... if you are proactive and resourceful you will find a job in no time...

[tlloyd1983]

I think there is a lot of confusion about tonnage tax. Ship owners do not get a tax 'break' by having cadets on board. They have an obligation to provide training for 1 cadet per 15 officers. If they cannot meet this commitment, they have to make a payment in lieu of training of ?550 per month to the Maritime Training Trust.

Some toilet reading: http://www.hmrc.gov.uk/manuals/ttmmanual/TTM19013.htm

A shipping company does not have to enter into Tonnage Tax. The advantage tonnage tax is that it isn't based on the profit/loss of a shipping company (corporation tax), but it is based on the net tonnage that a shipping company has entered into the scheme. No nasty tax surprises at the end of the tax year, you know your tonnage, you know what you have to pay, ideal for long term planning.