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Double tax treaty did not apply to a UK tax ‘deeming’ provision

By Mark McLaughlin, August 2020

A South African diver who undertook diving engagements in the waters of the UK continental shelf and was ‘deemed’ self-employed for income tax purposes was not relieved from tax under the ‘real world’ double taxation treaty between the UK and South Africa. 

A qualified diver and resident of South Africa (MF) undertook diving engagements in the waters of the UK continental shelf in the tax years 2011/12 and 2012/13. The UK and South Africa were parties to a double taxation treaty; the question arose which country was entitled to levy tax on MF’s income from his diving activities during those tax years. Although his status had yet to be determined, the preliminary issue which was the subject of the appeal required the assumption that MF undertook those engagements as an employee, rather than a self-employed contractor. 

HM Revenue and Customs claimed (but MF denied) that the income MF earned from the diving engagements was

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