In HMRC v Fowler [2018] EWCA 2544 Civ  the Court of Appeal held that the deeming provisions of UK tax law were effective in determining for the purposes of a tax treaty whether an employed individual could be self employed in terms of the treaty.

  • Mr Fowler, a South African resident worked as a diver in the North Sea. 
  • He had no permanent establishment in the UK and was employed under an employment contract.
  • Section 15 ITTOIA 2015 deems divers who work on the continental shelf to be self-employed for tax.
  • The taxpayer thus considered that his income was business profits for the purposes of the UK/South Africa double tax treaty and this made them exempt from UK income tax.
  • HMRC considered that he should be treated as employed in terms of the treaty, and so subject to UK tax.
  • The FTT found in favour of the taxpayer
  • HMRC appealed to the UTT


The UTT reviewed the treaty and considered how terms that were not specifically defined by the treaty should be defined. It decided that tax treaties are not an artefact of English (or other British) law so domestic law, and interpretations, should not be considered. 

  • International law gives “employment” its ordinary meaning so the UTT applied Article 14 to determine taxing rights before domestic law taxes the income as trading.
  • Mr Fowler was therefore deemed to be employed for the purposes of the treaty and the UK therefore held taxing rights.

Mr Fowler was granted leave to appeal to the Court of Appeal. 

The Court of Appeal

Lewison LJ took the approach of focusing on what is taxed and not how it is taxed. The starting position was that as a diver, diving income was employment income. It was taxed however as self employed income by virtue s.15 which then deemed it to be self employed income for tax. Therefore in terms of the double tax treaty the income was employment income and the UK had taxing rights.

Henderson LJ and Baker LJ took a different approach they agreed that the s15 deeming provision created an 'imaginary world'  where actual earnings of Mr Fowler from his employment must instead be regarded as profits from self employment. The charges to tax on employment income and trading income are mutually exclusive. The words "for income tax purposes" in section 15(2) were clearly wide enough to embrace the purposes of double taxation arrangements given effect in domestic law by section 6 of the Taxation (International and Other Provisions) Act 2010. 

The taxpayer's appeal was allowed


Although it is pretty rare for any self employed individual (other than an offshore diver) to seek to claim treaty relief, this case is one to bookmark as it also includes some useful discussion on interpreting tax treaties where there are ambiguities as to interpretation.

UPDATE: Leave has been granted for an appeal to the Supreme Court.

Case link:

Fowler v HMRC EWCA 2544 Civ

The Commissioners for HM Revenue and Customs v Martin Frederick Fowler: [2017] UKUT 0219 (TCC).

Fowler v HMRC [2016] TC05009,

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