Holden v Wood & Wood

CA 2006, 78 TC 1; [2006] STC 443; [2006] EWCA Civ 26; [2006] 1 WLR 1393

A couple entered into a sophisticated scheme to avoid capital gains tax on a share disposal on a share disposal.  Under the scheme, the shares were transferred to a company incorporated in British Virgin Islands, and then transferred again to a subsidiary incorporated in Netherlands. The Revenue issued assessments on the basis that central management and control the Dutch company was exercised in the UK. The couple appealed, contending that the company was resident in Netherlands.

It was held that, on the evidence, the company was resident in Netherlands, since its 'central management and control' was in Amsterdam, where its board meetings were held.

Note: Applying dicta in Cesena Sulphur Co Ltd v Nicholson, the burden of proof with regard to company residence is on HMRC. The residence of a company is the place where the directors meet, conduct their business and exercise the powers conferred upon them.