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HMRC internal manual

Oil Taxation Manual

Non-residents working on the UK continental shelf: computation of profits: individuals

This paragraph deals with the computation of the profits of certain self-employed traders and professionals (excluding divers) chargeable to UK tax by virtue of ITTOIA2005\S874. Such individuals usually have no actual UK permanent establishment but are residents of a country with which the UK has either a Double Taxation Agreement containing an offshore activities article or no Double Taxation Agreement at all.

The offshore article normally deems the offshore activities to be performed from a fixed base in the UK (see for example Article 29A(3) of the UK/ France DTA). In such circumstances the non-resident is chargeable to UK tax on so much of the income as is attributable to that fixed base, being the income attributable to the relevant offshore activities (see for example Article 14 of the UK/France DTA).

The method for computing the chargeable profits of self-employed individuals broadly follows that for companies described in DT1726. Article 14 (Independent Personal Services) of the Model Double Taxation Convention was deleted in 2000, reflecting the fact that there was no intended difference between the concept of permanent establishment, as used in Article 7, and fixed base, as used in Article 14, or between how profits were computed and tax was calculated according to which of Article 7 or Article 14 applied. The effect of the deletion of Article 14 is that income derived from professional services or other activities of an individual is now dealt with under Article 7 in more modern Double Taxation Agreements as business profits.