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HMRC internal manual

Oil Taxation Manual

Non-Residents Working on the UK Continental Shelf: Double Taxation Agreements - The Construction and Interpretation of Treaties

The following can help to construe and apply the provisions of a treaty.

  • The commentary on the OECD Model Tax Convention on Income and on Capital.
  • The International Tax Manual.
  • The Double Taxation Relief Manual.

The judgements in the cases of CIR v Exxon Corporation (56TC237) and Union Texas Petroleum Corporation (63TC244) suggest that the Courts recognise that the wording of a treaty is likely to be less exact than that of a Finance Act because it is produced by negotiation and compromise between officials rather than by the Parliamentary draftsman. As a consequence the Courts may adopt a more purposive approach to construction than that which is used in considering domestic legislation. However the decision in CIR v Commerzbank AG and Banco do Brazil SA (63TC218) suggests that there may be cases where the Courts will not depart from the plain words of the Agreement.

The most valuable aid to construction will in practice be the OECD Commentary referred to above and in Sun Life Company of Canada v Pearson (59TC250) it was confirmed that the Courts will take account of the guidance offered in the Commentaries. Vinelott J stated in that case that the Commentaries on the OECD Model “can and indeed must be referred to as a guide to the interpretation of the treaty”.