Treatment of overseas resident’s diving income

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. As such it was 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 consisting in seabed diving is treated as the carrying on of a trade.

The First-tier Tribunal allowed the taxpayer’s appeal; the Upper Tribunal overturned that decision and the Court of Appeal found for the taxpayer. HMRC appealed.

Lord Briggs in the Supreme Court said expressions in the treaty such...