In Development Securities (No 9) Ltd & others v HMRC [2017] TC06007 a Jersey company was held to be UK resident: it undertook transactions (part of a capital loss scheme) that were engineered by its UK parent.

  • The companies undertook capital loss schemes; each was carefully constructed so that the scheme was enabled by its own management decisions in Jersey.
  • The aim was that a company remained controlled and managed abroad and was non-UK resident.
  • This was challenged by HMRC who contended that there was a scheme of management in the UK via the parent company.

The First Tier Tribunal (FTT) found that the companies were acting uncommercially: there was no reason for the directors to enter into the transaction other than that the parent company wanted them to do so and told them to do so. This was their only transaction, and that the transaction served no benefit to the companies. It was also intended that the companies would become UK resident in the future to assist administration and the reasoning as to that element lacked all credibility.

It concluded that the company was centrally controlled and managed by its parent in the UK, this being so it was UK resident for corporation tax.


The case is an interesting one as in all these kind of cases there are a pool of advisers who will plan out the steps and then the routine is that all steps are undertaken and approved by an overseas board so that it is the central management of the company that makes the actual resolutions. It seems that the combination of the lack of the commerciality of the transaction and the lack of benefit to the company meant that the FTT took the view that the Jersey board was acting like a puppet of its parent. This decision follows a recent trend in cases involving tax schemes, see Companies: residence and permanent establishment


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Development Securities (No 9) Ltd & others v HMRC [2017] TC06007