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HMRC internal manual

Double Taxation Relief Manual

Non-residents: UK income: Examples

The Article lists specific examples of what may be permanent establishments, but these will only be permanent establishments if they fulfil the requirements in (a), (b) and (c) in the previous paragraph. The meaning of most of the examples in the list is clear, for example, branch, office, factory, workshop but it may not always be clear whether a building site or construction or installation project lasting for more than a specified period is a permanent establishment. Even though such a project may have an office or a workshop on the site, it is not a permanent establishment if it does not last for more than the specified period. (Once that specified period is exceeded, all the profits earned from the outset are taxable, not just the profits earned after the expiry of the specified period.) The specified period test applies to each individual site or project and, in determining how long a particular site or project has existed, no account should be taken of time spent by the enterprise on other unconnected sites or projects. Temporary interruptions in the work are included in determining the life of a site. `Carrying on business’ is a far wider concept than our domestic idea of `trading in’. All sorts of activity might be included in the former expression which are not within the latter. Because it is so wide there need to be exceptions to let out activities which, although they constitute the carrying on of a business, are not the sort of activities a country would wish to tax.