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ED DWAN and LUCY SAUVAGE consider the implications of HMRC’s success in the company residence case Laerstate BV
KEY POINTS
- Where is the company controlled and managed?
- Effective management means real management.
- Board meetings must have proper authority.
- Directors must be kept informed of transactions etc.
- Relevant documents must be archived properly.
For a number of years we have been aware that HMRC have been keen to obtain some positive tax case precedence in respect of company residence.
Ever since their high profile defeat in 1996 in Untelrab Ltd v McGregor (SpC 55) they have been trying to redress the balance i.e. to demonstrate that maintaining overseas residence for companies where there is a strong UK footprint is not straightforward and on occasion fails.
Initial success at the Special Commissioners in Holden v Wood & Wood was overturned in the High Court and then the Court of Appeal...
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