The Scottish Government says the use of offshore crewing firms in the ferry industry is “accepted practice” after it emerged that state-owned giant Caledonian MacBrayne had avoided paying an estimated £35 million in National Insurance for employees who are seafarers.
CalMac Ferries is wholly owned by the Scottish Government and operates the Clyde and Hebrides ferry service.
It was set up in 2006 to win Scottish government-funded ferry contracts that became subject to competitive tenders.
CalMac had its contract extended in 2016 when it beat outsourcing firm Serco to continue operating the west coast franchise, which is estimated to be worth £1 billion.
The company has also expressed an interest in running Scotland’s trains.
But the publicly owned ferry firm employs 1,000 of its seafarers through Caledonian MacBrayne Crewing (Guernsey), according to the Sunday Times.
Guernsey and another Channel Island, Jersey, were recently named by pressure group Tax Justice Network as being among the “worst” in a compilation of secretive global tax districts.
The SNP Government has repeatedly criticised Westminster for failing to crack down on tax avoidance.
The Scottish Government’s key policy on tax avoidance policy states: “We have consistently called for greater tax transparency and stronger action from the Tory government on avoidance and evasion.”
It is perfectly legal for ferry companies to avoid paying National Insurance contributions and was introduced to keep them competitive with foreign rivals.
A spokesman for Scottish Government transport quango Transport Scotland said: “Arrangements for the award of the next contract to operate the Northern Isles ferry services will be announced following full consideration of the outcome of Pentland Ferries’ complaint to the European Commission.
“Employment practices are a matter for the ferry operators.
“It is accepted practice to use offshore crewing companies in the shipping industry.
“We cannot comment on specific elements of bidders’ tenders.”
All the big ferry operators on UK, Ireland, Isle of Man and continental routes use the same system, including CalMac’s rival Serco NorthLink Ferries. CalMac is also competing to win back the Northern Isles ferry services contract sailing to Orkney and Shetland from Serco.
Transport Scotland is expected to announce the outcome soon.
It comes as the Scottish Government prepares to expand its portfolio of firms which are owned by ministers with the takeover of the Ferguson Marine shipbuilding yard in Port Glasgow.
Finance Secretary Derek Mackay announced last week that ministers would be taking over the yard on an interim basis after Ferguson Marine took steps towards administration over a dispute with CalMac over cost overruns on a £97 million deal to build two ferries for the operator.
The takeover is expected to be completed next month if no commercial bidders come forward.