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VICTOR CLARENDON warns that tax jurisdictions are looking for substance and not just the figment of a tax planner’s imagination
KEY POINTS
- EU tax law has traditionally required substance the UK’s tax law has not.
- Internationally different levels of substance are required for different reliefs.
- How does the position compare for personal corporate and trust taxation?
- Cases such as Laerstate Davies & Jones and Smallwood can be seen as a move towards substance.
- Will this move increase in the future?
Businesses have for many years relied upon ‘offshore’ or non-resident structures to reduce or defer taxes and improve returns for UK investors. This has been particularly popular with private equity and real estate structures.
How these structures are managed may however be taking a different turn.
EU case law seems to be asking whether there is a business reason to set up a company in another jurisdiction ...
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