The Commissioners for HM Revenue and Customs v Martin Frederick Fowler
| Jurisdiction | UK Non-devolved |
| Judge | Mr Justice Smith |
| Neutral Citation | [2017] UKUT 0219 (TCC) |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Subject Matter | Tax,30 May 2017 |
| Date | 30 May 2017 |
| Published date | 30 May 2017 |
[2017] UKUT 0219 (TCC)
Appeal number: UT/2016/0122
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 Article 14 or as
business profits under Article 7 of the South Africa/UK Double Tax Treaty
2002 – interpretation of the Double Tax Treaty in accordance with the
Vienna Convention on the Law of Treaties – application of Article 3(2) of
the Double Tax Treaty
UPPER TRIBUNAL
TAX AND CHANCERY CHAMBER
THE COMMISSIONERS FOR HER
MAJESTY’S REVENUE
AND CUSTOMS
Appellants
- and -
MARTIN FREDERICK FOWLER Respondent
TRIBUNAL:
The Honourable Mr. Justice Marcus Smith
Sitting in public at The Rolls Building, Fetter Lane, London EC4A 1NL on 18
and 19 May 2017
Akash Nawbatt, Q.C., instructed by the General Counsel and Solicitor to HM
Revenue and Customs, for the Appellants
Jonathan Schwarz, instructed by Norton Rose Fulbright, for the Respondent
© CROWN COPYRIGHT 2017
DECISION
A. INTRODUCTION
1. Mr. Fowler is a qualified diver resident in South Africa. During the
2011/2012 and 2012/2013 tax years, he undertook diving engagements in the 5 UK Continental Shelf waters.
2. Mr. Fowler is a resident of the Republic of South Africa for the purposes
of the Convention between the Government of the United Kingdom of Great
Britain and Northern Ireland and the Government of the Republic of South
Africa for the Avoidance of Double Taxation and the Prevention of Fiscal 10 Evasion with Respect to Taxes on Income and on Capital Gains (the “Double
Tax Treaty”).
3. The Double Tax Treaty has been incorporated into English law by the
Double Taxation Relief (Taxes on Income) (South Africa) Order 2002, S.I.
2002 No. 3138. 15
4. By closure notices issued by the Commissioners for Her Majesty’s
Revenue and Customs (“HMRC”) in respect of the relevant tax years, HMRC
sought to tax Mr. Fowler’s income from his diving activities on the ground that
this income was from employment within Article 14 of the Double Tax Treaty
(“Income from Employment”) rather than business profit within Article 7 of the 20 Double Tax Treaty (“Business Profits”).
5. It is common ground that if Mr. Fowler was self-employed in the relevant
tax years, then his diving income is not taxable as he has no permanent
establishment within the UK. What is not common ground is Mr. Fowler’s self-
employed status. Mr. Fowler contends that he was self-employed in the relevant 25 tax years, but that is disputed by HMRC, who contend that he was an employee.
6. Section 15 of the Income Tax (Trading and Other Income) Act 2005
(“ITTOIA 2005”) provides as follows:
“Divers and diving supervisors
(1) This section applies if – 30
(a) a person performs the duties of employment as a diver or diving
supervisor in the United Kingdom or in any area designated by Order in Council
under section 1(7) of the Continental Shelf Act 1964,
(b) the duties consist wholly or mainly of seabed diving activities, and
(c) any employment income from the employment would otherwise be 35 chargeable to tax under Part 2 of ITEPA 2003.”
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