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R Lee and N Bunter v HMRC

In R Lee and N Bunter v HMRC [2017] UKFTT 279 (7 April 2017) the FTT found that a scheme failed because the taxpayer had not established that the place of management and control the POEM of a trust was outside the UK.

Mr Lee and Mr Bunter had implemented the ‘round the world scheme’. Although they had ‘not formally conceded’ that they had entered into the arrangements for a tax avoidance purpose they did not ‘seriously challenge the proposition’.

The scheme worked as follows: assets held within an off-shore trust (shares in this case) became pregnant with gain and were migrated to a low-tax or no-tax jurisdiction here Mauritius with which the UK had a double taxation treaty. The gain was realised; and because the alleged effect of the treaty was to confer the right to charge CGT on Mauritius alone and...

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