Revenue and Customs v Smallwood and Another: CA 8 Jul 2010

The taxpayers had set up trusts which they said were based in Mauritius allowing them to claim double taxation relief. The Revenue had issued closure notices, confirmed by the SPCT, but overturned by the High Court. The Revenue appealed, saying that the trust was resident in the UK.
Held: The appeal suceeded (Patten LJ dissenting in part). The judge had erred in applying the test of residence only as at the date of the disposal in issue. The phrase ‘resident in a contracting state’ should be read as ‘chargeable to to tax in that state on account of residence’ which would allow consideration also of subsequent actions and events. The relevant place of effective management was that of the trustees as a contuing body, and on the facts the SPCT had been entitled to conclude that it was in the UK.

Ward, Hughes, Patten LJJ
[2010] EWCA Civ 778, [2010] WLR (D) 177, [2010] STI 2174, 12 ITL Rep 1002, [2010] BTC 637, [2010] STC 2045, (2010) 80 TC 536
Bailii, WLRD
Taxation of Chargeable Gains Act 1992 277, Double Taxation Relief (Taxes on Income) (Mauritius) Order 1981 (SI 1121/1981) Sch 1 4(1)(3) 13(4)
England and Wales
At SPCTTrevor Smallwood Trust v Revenue and Customs SCIT 19-Feb-2008
SCIT CAPITAL GAINS TAX – double taxation relief – trust assets included shares which would realise a gain on disposal – UK settlor had power to appoint new trustees – tax planning scheme – new trustees in . .
Appeal fromSmallwood v Revenue and Customs ChD 8-Apr-2009
The taxpayer had settled company shares for the benefit of himself and his family. He appealed from an amendment to his tax returns creating a CGT liability of 6 million pounds.
Held: The appeal was successful. . .
CitedEdwards (Inspector of Taxes) v Bairstow HL 25-Jul-1955
The House was asked whether a particular transaction was ‘an adventure in the nature of trade’.
Held: Although the House accepted that this was ‘an inference of fact’, on the primary facts as found by the Commissioners ‘the true and only . .
CitedDe Beers Consolidated Mines Ltd v Howe, Surveyor of Taxes HL 1905
The appellant Company was registered in the Cape Colony and it’s business was mining for diamonds in mines which it possessed in South Africa, and selling the diamonds there under annual contracts to a syndicate for delivery there. The Head Office . .
CitedJames Buchanan and Co Ltd v Babco Forwarding and Shipping (UK) Ltd HL 1978
A consignment of whisky was stolen whilst on consignemt from a bonded warehouse under CMR terms for Teheran. In bond, it was worth 7,000 pounds, and on export no excise duty was to be paid. Being stolen in the course of transit, excise duty of . .
CitedWood and Another v Holden (HMIT) CA 26-Jan-2006
Husband and wife sold their business, arranging matters so as to avoid paying Capital Gains Tax by transferring their interest between members of a group of companies which was non-resident.
Held: The scheme was effective. The sole real issue . .
CitedWensleydale’s Settlement Trustees v Inland Revenue Commissioners SCIT 1996
The test for where a trust has its tax residence is the place which is the centre of top-level management. . .
CitedInland Revenue Commissioners v Commerzbank AG ChD 1990
Mummery J set out the correct approach to interpretation of double taxation agreements as laid down in Fothergill. He said ‘(1) It is necessary to look first for a clear meaning of the words used in the relevant article of the convention, bearing in . .
CitedFothergill v Monarch Airlines Ltd HL 10-Jul-1980
The plaintiff, on arriving at the airport found that his luggage had been lost. The defendant denied liability saying he had not notified his claim within the requisite period.
Held: Elementary justice requires that the rules by which the . .

Cited by:
CitedFowler v Revenue and Customs SC 20-May-2020
The taxpayer, a diver resident in South Africa had undertaken engagements within UK waters and now disputed his liability to Income Tax using a deeming provision in section 5 of the 2005 Act being self employed.
Held: HMRC’s appeal succeeded. . .

Lists of cited by and citing cases may be incomplete.

Capital Gains Tax, Taxes Management

Updated: 31 October 2021; Ref: scu.420403