Scope of income in double taxation treaty

The taxpayer was resident in South Africa. In 2011-12 and 2012-13 he worked as a qualified diver in the UK continental shelf waters of the North Sea. HMRC said the taxpayer’s earnings constituted income from employment within Art 14 of the South Africa/UK double tax treaty and was therefore chargeable to UK income tax.

The taxpayer said the income was business profits within Art 7. It was therefore exempt from UK income tax because he had no permanent establishment in the UK within the meaning of Art 5. Under ITTOIA 2005 s 15 the performance of duties of employment such as seabed diving activities is treated as the carrying on of a trade.

The First-tier Tribunal allowed the taxpayer’s appeal but the Upper Tribunal found for HMRC.

The Court of Appeal found that the effect of ITTOIA 2005 s 15 was that for all...