Place of effective management was the UK

The taxpayers were settlors of family trusts that had engaged in a ‘round the world’ tax planning scheme which aimed to avoid UK capital gains tax on disposals of shares on a company flotation. The scheme could only work if the place of effective management (POEM) of the trusts was Mauritius at the time of disposal.

The First-tier Tribunal held that the POEM of the trusts was the UK and the Upper Tribunal agreed. The taxpayers appealed. They said the First-tier Tribunal had erred in law by following the decision in CRC v Smallwood and another [2010] STC 2045. Rather the Court of Appeal’s approach in Wood v Holden [2005] STC 789 applied that the POEM should be determined in the same way as ‘residence’ for tax purposes ie by reference to the location of ‘central management and control’ (CMC). So the POEM of the trusts was...