The United Kingdom’s Upper Tribunal (UT) decision in CATS North Sea Limited v. HMRC provides an exploration of statutory deeming rules, in particular the extent to which a deemed trade fiction applies when interpreting other legislative provisions.
The case concerned a niche point around the interaction between “transfer of trade” rules in a capital allowances context and a deemed trade fiction created under the UK’s tax regime for upstream oil-related activities.
However, the UT’s decision may be of broader interest, given the increasing use of deemed trade fictions in UK tax law, including the UK’s new tax regime for carried interest. The UT’s application of the principles set out by the UK Supreme Court in Fowler v. HMRC for interpreting statutory deeming provisions in this context is of particular interest.