The taxpayer, a diver resident in South Africa had undertaken engagements within UK waters and now disputed his liability to Income Tax using a deeming provision in section 5 of the 2005 Act being self employed.
Held: HMRC’s appeal succeeded. Assuming the parties factual assumptions were correct he was to be treated as an employee subject to UK Income Tax.
Section 15 used the terms ‘income’ ’employment’ and ‘trade’ in their ordinary meaning. It taxes the income of an employed diver in a particular manner which includes the fiction that the diver is carrying on a trade. That fiction is not created for the purpose of rendering a qualifying diver immune from tax in the UK, or for adjudicating between the UK and South Africa as potential recipients of tax, but to adjust the basis of a continuing UK income tax liability.
Lord Hodge (Deputy President), Lady Black, Lord Briggs, Lady Arden, Lord Hamblen
 UKSC 22,  1 WLR 2227, UKSC 2018/0226
Bailii, Bailii Summary, Bailii Issues and Facts, SC 2020 Mar 24 am Video, SC 2020 Mar 24 pm Video, SC, SC Summary, SC Summary Video
Income Tax (Trading and Other Income) Act 2005 15, Double Taxation Relief (Taxes on Income) (South Africa) Order 2002, Vienna Convention on the Law of Treaties 31
England and Wales
At FTTTx – Fowler v Revenue and Customs (Income Tax/Corporation Tax : Double Taxation) FTTTx 12-Apr-2016
INCOME TAX – preliminary issue – section 15 ITTOIA 2005 – performance of duties of employed diver in UK waters treated as the carrying on of a trade in the UK – appellant resident in South Africa – whether income taxable as employment income under . .
At UTTC – Revenue and Customs v Fowler (Income Tax) UTTC 30-May-2017
INCOME TAX – preliminary issue – section 15 ITTOIA 2005 – performance of duties of employed diver in UK waters treated as the carrying on of a trade in the UK – respondent resident in South Africa – whether income taxable as employment income under . .
Appeal from CA – Fowler v HM Revenue and Customs CA 15-Nov-2018
Whether offshore diver was employee or self employed. . .
Cited – Inland Revenue Commissioners v Commerzbank AG ChD 1990
Mummery J set out the correct approach to interpretation of double taxation agreements as laid down in Fothergill. He said ‘(1) It is necessary to look first for a clear meaning of the words used in the relevant article of the convention, bearing in . .
Cited – Anson v Revenue and Customs SC 1-Jul-2015
Interpretation of Double Taxation Agreements
This appeal is concerned with the interpretation and application of a double taxation agreement between the United Kingdom and the United States of America. A had been a member of an LLP in Delaware, and he was resident within the UK, but not . .
At ChD – Smallwood v Revenue and Customs ChD 8-Apr-2009
The taxpayer had settled company shares for the benefit of himself and his family. He appealed from an amendment to his tax returns creating a CGT liability of 6 million pounds.
Held: The appeal was successful. . .
Cited – Inland Revenue Commissioners v Metrolands (Property Finance) Ltd 1981
Nourse J said: ‘When considering the extent to which a deeming provision should be applied, the court is entitled and bound to ascertain for what purposes and between what persons the statutory fiction is to be resorted to. It will not always be . .
Cited – Marshall (Inspector of Taxes) v Kerr HL 30-Jun-1994
A settlor by will was deemed to have had an interest as funds were passed to a Jersey Trust. The section merely made or allowed that a variation of a will would not be a taxable event in UK law. It had no other effects. A deed of family arrangement . .
Cited – East End Dwellings Co Ltd v Finsbury Borough Council HL 1952
The House was asked whether a hypothetically rebuilt block of flats would have been subject to the Rent Restriction Acts.
Held: A court should not shrink from applying the fiction created by the deeming provision to the consequences which . .
Cited – Revenue and Customs v DCC Holdings (UK) Ltd SC 15-Dec-2010
The taxpayer had entered into a ‘repo’ loan to its bank, agreeing to purchase a block of gilt edged securities, and to resell them at a later date at a fixed figure. The profit and figures included an allowance for the interest payments to be made. . .
Cited – Revenue and Customs v Smallwood and Another CA 8-Jul-2010
The taxpayers had set up trusts which they said were based in Mauritius allowing them to claim double taxation relief. The Revenue had issued closure notices, confirmed by the SPCT, but overturned by the High Court. The Revenue appealed, saying that . .
Lists of cited by and citing cases may be incomplete.
Updated: 14 October 2021; Ref: scu.650857