Example one
A UK company takes out an employer's liability policy to cover employees working on two fixed oil rigs. One oil rig is within the twelve mile nautical limit and the other is outside. The oil rigs are establishments; one is a UK establishment and the other a non-UK establishment. The premium needs to be apportioned. The proportion relating to the rig which is outside territorial waters is exempt but the balance is taxable.
Example two
The catering for employees working on the rigs is sub-contracted to a separate catering company. This catering company takes out an employer's liability policy to cover its own employees while they are working on the rig. The rig is also an establishment for the catering company as it carries on business activities there by virtue of its catering contract with the oil company. The proportion of the premium relating to the rig which is outside territorial waters is exempt but the balance is taxable.
