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OT43130 | Non-residents working on the UK continental shelf: transfer pricing: characteristics of a bareboat charter

From HM Revenue & Customs · Oil Taxation Manual

A bareboat charter may also be called a bare lease or a demise charter. Commonly:

  1. the rig will normally be leased not only for the charterer to run (operate) but also to be in legal possession thereof;

  2. the owner will merely collect his rents and take delivery of the rig at the end of the charter period;

  3. the owner is under no obligation to maintain, equip, supply or man the rig;

  4. the charterer has no authority to bind the owner into a drilling contract;

  5. legal possession of the rig can only be manifested through the master and crew and if these are engaged, employed and paid by the charterer (perhaps the most significant consequence of a bareboat charter) then the charterer is deemed to be in legal possession of the rig for the period of the lease and the acts and neglects and defaults of the master and crew are vicariously those of the employer, the charterer.