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HMRC internal manual

Oil Taxation Manual

HM Revenue & Customs
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Non-Residents Working on the UK Continental Shelf: Double Taxation Agreements - Treaties with an Offshore Article Equivalent - Example India

This is an example of unusual wording which approximates to an off-shore article although at first sight it would seem the effect of CTA09\S1313, ITTOIA05\S874 and ITEPA03\41 is restricted.

The current UK/India Double Taxation Agreement (SI93\1801) came into force in 1993. Article 3(1) retains a restricted definition of the UK which does not extend to the UK Continental Shelf.

However, Article 1 says that the DTA

“extends to the territory of each Contracting State, including its territorial sea, and to those areas of the exclusive economic zone or the continental shelf adjacent to the outer limit of the territorial sea of each State over which it has, in accordance with international law, sovereign rights for the purpose of exploration and exploitation of the natural resources of such areas…”

As the UK has sovereign rights over the “designated areas” (see OT40650) on the UK Continental Shelf these rights are also therefore brought within the DTA. It then provides that

“references in this Convention to the Contracting State or to either of them shall be construed accordingly.”

There is also an extension to the meaning of Permanent Establishment at the end of Article 5(2). After listing standard items, it adds:

“Provided that for the purposes of this paragraph an enterprise shall be deemed to have a permanent establishment in a Contracting State and to carry on business through that permanent establishment if it provides services or facilities in connection with, or supplies plant and machinery on hire used or to be used in, the prospecting for, or extraction or production of, mineral oils in that State.”

Similarly, Article 15 uses “Contracting State” to determine the liability of individuals resident in India who are working here. Such an individual “providing “independent personal services” will be liable for UK tax on income if they have a fixed base or are present in the UK or the UK Continental Shelf for a period or periods aggregating 90 days in the relevant fiscal year.