Fowler v HMRC (UK Supreme Court): Neither Fish nor Fowler: Tax Treaty Implications of Domestic Deeming Rules

Abstract

This case note deals with the UK Supreme Court decision in Fowler v HMRC [2020] UKSC 22; [2020] STC 1476. The authors explain why the decision illustrates that domestic law deeming rules may in certain cases neither affect the meaning or interpretation of a term, nor the legal qualification of facts, but rather fall into yet a third category for the purposes of applying a tax treaty. The Supreme Court's decision is critically assessed on the basis of three core propositions put forward by the Court: (1) Nothing in the Treaty required its business profits or employment income articles to be applied to the fictional, deemed world which may be created by UK income tax legislation; (2) It is required to determine for what purposes and between whom is a fiction created, and whether it is for the purpose of rendering a person immune from tax in the UK, or adjudicating between the Contracting States as the potential recipient of tax; and (3) To apply such a deeming provision so as to alter the meaning of terms in the Treaty with the result of rendering a taxpayer immune from UK taxation would produce an anomalous result, and would be contrary to the purposes of the Treaty.

Note: This material was first published by Thomson Reuters, trading as Sweet & Maxwell, 5 Canada Square, Canary Wharf, London, E14 5AQ, in the British Tax Review as 'Fowler v HMRC (Supreme Court): Neither Fish nor Fowler: Tax Treaty Implications of Domestic Deeming Rules', British Tax Review Issue 4, 2020 and is reproduced by agreement with the publishers.

Keywords: Statutory Deeming; Tax Treaty Interpretation; Relationship Between Domestic and International Law; Double Non-Taxation

JEL Classification: K00, K33, K34, K40