Resident parent meaning

HMRC v Sehgal and another [2024] UKUT 74 (TCC) The taxpayers were non-domiciled individuals resident in the UK who were taxed on the remittance basis. They disposed of their shareholdings in VGL to CLS, a Luxembourg-resident company. At completion, IRL—owned indirectly via a Jersey vehicle, SKS—owed £6m to a subsidiary of VGL. Under the share purchase agreement, the taxpayers agreed to indemnify that liability. Soon afterwards, it emerged the debt was irrecoverable, thereby triggering the indemnity. At the behest of CLS’s parent, a structured sequence followed: SKS purchased clothing stock from M, another company within the CLS group, for a sum mirroring the amount owed; at the same time, CLS and the taxpayers entered into a side letter confirming that this payment would reduce the outstanding debt to nil. Under these arrangements, the consideration for the clothing matched the £6m debt and, as recorded in the side letter, operated to eliminate the balance in full. The clothing, however, was worth merely £200,000 and was then gifted...

Hargreaves Property Holdings Ltd v HMRC [2024] EWCA Civ 365 The background The borrower, a UK-resident taxpayer and the parent of a group active in UK property investment, financed its business and activities with loans from a large number of lenders. In 2004, the loan arrangements were altered with the objective that the interest would not be chargeable to UK tax, ultimately so: each lender transferred its entitlement to interest (and likewise to principal) to a Guernsey-resident vehicle for consideration very shortly before the interest fell due for payment—from 2012, once assigned to the Guernsey entity, the interest was subsequently transferred again to Houmet, a UK-incorporated and UK tax-resident company just one or two days after the assignment, the interest was paid and the principal also repaid, and the same lender then made a fresh advance equal to or greater than its prior loan to the same borrower—the new advance being financed by the proceeds of the assignment This pattern...

Blackrock Holdco 5, LLC v HMRC [2024] EWCA Civ 330 What was the background? In April 2024, the Court of Appeal delivered its decision in the Blackrock appeal. The dispute focused on whether companies could deduct interest under the transfer pricing (TP) rules and the Unallowable Purpose Rule, as set out in sections 441–442 of the Corporation Tax Act 2009. A US-headed group deployed a debt-financed, Delaware-incorporated SPV that was UK tax resident (LLC 5) within the structure for acquiring a US target. LLC 5 took an interest-bearing loan from its US parent (LLC 4) of approximately $4bn to purchase preference shares issued by the acquisition vehicle (LLC 6), which generated non-taxable income. LLC 5 sought to surrender its tax losses, for no consideration, to other UK entities within the BlackRock group as group relief. HMRC contested the interest deductibility under TP, arguing that independent parties acting at arm’s length would not have entered into the loan, and also under the Unallowable Purpose Rule on the basis...

Migration Migration concerns a change in a company’s tax residence. A business might choose to migrate for numerous reasons: its fiscal profile in the current jurisdiction, or its capacity to secure relief under double tax treaties (DTTs). Equally, shifts in a company’s operations or governance can make an alteration of tax residence necessary or beneficial. For an outline and comparison of the factors when selecting a tax jurisdiction for a corporate group’s holding company, see Practice Note: Holding company jurisdictions—tax considerations. In practice, there are several routes by which a UK tax resident company (or group) may move from the UK, or restructure to reach an equivalent outcome for tax purposes. As set out below, these include: direct emigration—where a UK tax resident company relocates its tax residence outside the UK corporate inversion—by inserting a new, non-UK resident holding company above the existing UK parent of the corporate group Alternatively, in suitable circumstances, a further route is to sell all of...

An individual is treated as UK domiciled where, although they are domiciled outside the UK under the common law principles outlined in Practice Note: Domicile for UK tax purposes before 6 April 2025 [Archived], a statutory rule nevertheless treats them as domiciled for one or more tax purposes. This Practice Note looks only at the deemed domicile provisions that came into force on 6 April 2017, and insofar as they apply to individuals. For details of the deemed domicile rules in place before that date, see Practice Note: Deemed domicile for tax before 6 April 2017 [Archived]. In contrast to domicile at common law, deemed domicile is not inherited from parent to child. For information on the regime brought in by the Finance Act 2013 allowing a non-UK domiciled spouse or civil partner of a person domiciled in the UK to elect to be treated as UK domiciled for IHT purposes, see Practice Note: IHT issues for mixed domicile spouses and civil partners before 6 April 2025 [Archived]. For guidance...

Migration Migration describes a company moving its tax residence from one territory to another. There are various motivations for doing so. In the past, certain businesses shifted abroad to reduce exposure to UK tax and to benefit from lower rates elsewhere. Yet reforms enhancing the UK’s standing as a holding company jurisdiction have diminished that incentive. Conversely, commercial circumstances may mean a company is incorporated in the UK but tax resident in a different country, for instance where every director is based in that other country. For a discussion and comparison of the issues in selecting the tax jurisdiction for a corporate group’s holding company, see Practice Note: Holding company jurisdictions—tax considerations. In practice, multiple approaches exist by which a UK tax resident company (or a group) might depart the UK (or reorganise to deliver an equivalent outcome for tax purposes). Such decisions are shaped by commercial drivers and the desired tax position. They may involve relocation or restructuring steps that mirror migration from a UK perspective. Timing and...

The statutory formula for child maintenance under the Child Support Act 1991 (CSA 1991) The statutory formula for child maintenance under the Child Support Act 1991 (CSA 1991) does not link the amount payable to whether the paying parent has contact with the children, other than insofar as the shared care rules operate. Under CSA 1991, s 3(5), it is recognised that, for the purposes of the Act, there can be more than one person with care in relation to the same qualifying child. The Child Support Maintenance Calculation Regulations 2012, SI 2012/2677, reg 46(2), further provide that any calculation must be grounded in the number of nights the non-resident parent is expected to care for the qualifying child overnight during the 12 months commencing on the effective date of the relevant calculation decision. The Child Maintenance Service (CMS) retains a discretion to take into account a shorter timeframe where appropriate in making that assessment...