Haworth and others (Appellants) v Commissioners for His Majesty's Revenue & Customs (Respondent)

Permission to Appeal application lodged

Case summary
Permission to Appeal
Previous proceedings

Case summary

Case ID

UKSC/2025/0152

Parties

Appellant(s)

Geoffrey Haworth, Ian Lenagan and SG Kleinwort Hambros Trust Company (UK) Limited

Respondent(s)

Commissioners of His Majesty's Revenue and Customs

Issue

What is the test for ascertaining the place of effective management (“POEM”) of a company for the purposes of Article 4(3) of the 1981 double taxation treaty (“the Treaty”) between the UK and Mauritius? Is “residence” for the purpose of the taxability of capital gains (“CGT”) within Article 13(4) of the Treaty to be assessed at the time of “alienation” of the relevant assets, or by reference to the relevant tax year during which the gain occurs?

Facts

This appeal concerns the effect of the Treaty on the tax liability of three family trusts. The Treaty co-ordinates the taxation of the same wealth by the UK and Mauritius to avoid double taxation. The Treaty provides that, where a company sells property, the resulting capital gains can only be taxed in the place of the company’s residence. Where the company has multiple places of residence, the Treaty then uses a tie-breaker rule to determine that residence is ultimately located in the place of effective management of the relevant company. In this case, trustees based in Jersey held shares in two companies, TeleWare plc (“Teleware”) and Workplace Group Limited (“Workplace”). A plan was formed to merge the two companies and publicly list the shares. In order to avoid incurring CGT on the resulting profits, advisors recommended the use of a “Round the World” scheme. Under the scheme, the Jersey trustees transferred the shares to Mauritian trustees who sold the shares and then retired in the same tax year to be replaced by trustees located in the United Kingdom. If the trustees were resident in Mauritius then there could be no CGT, whereas if they were resident in the UK then there could. HMRC sought to impose CGT on gains stemming from the sale of the shares. The appellants, who were two settlors and one trustee of the trusts, appealed to the First-Tier Tribunal (“FTT”). The FTT determined that the POEM of the trusts was the UK as it was there that the scheme was designed and from there that the high-level decisions took place. This decision was upheld by the Upper Tribunal (“UT”) and Court of Appeal (“CA”). The Appellants now appeal to the Supreme Court.