Residence is matter of fact

A group of companies implemented a plan intended to crystallise latent capital losses. Crucial to its operation was that the companies were resident in Jersey from the date of their incorporation until 20 July 2004.

The issue in dispute was whether the Jersey companies were UK tax resident in that period as claimed by HMRC.

Dismissing the taxpayers’ appeal the First-tier Tribunal decided the companies were not resident in Jersey but the Upper Tribunal overturned that decision saying the central management and control was exercised in Jersey so the companies were resident there. HMRC appealed to the Court of Appeal.

Lord Justice Newey delivered the judgment with which Lord Justice David Richards and Lord Justice Nugee agreed. He said ‘essentially’ whether a company is resident is a question of fact. The ‘overarching principle’ was that company was resident where its real business was carried out; it...