Upper tribunal ruling on determining corporate residence

Key points

• The Upper Tribunal overturns a decision on corporate residence and reaffirms key principles.
• To create losses three Jersey companies were needed and had to be non-resident for a short period.
• Corporate residence depends on where the company’s central management and control is located.
• The general principle is that a company is resident in the jurisdiction where its board of directors meets.
• SPVs may only have limited functions to perform but nevertheless are principals not mere nominees or agents.
• Does a parent company have control or only influence.
• The duties of the directors and their responsibilities must be taken into account.

A tax case relating to corporate residence is still a relatively rare occurrence and therefore the principles derived from any new hearings are hotly anticipated. The First-tier Tribunal’s finding of 14 July 2017 (tinyurl.com/y27nmcw7) that three Jersey incorporated subsidiaries of the Development Securities Group (DSG) had always been UK tax...