The Supreme Court has dismissed HMRC’s appeal in the case of R Haworth vs HMRC. Haworth received a follower notice in which HMRC stated its view that, due to the decision in Smallwood v Revenue and Customs Comrs, 2010, EWCA Civ 778, he was unlikely to succeed in his appeal seeking relief under the UK-Mauritius Double Taxation Convention.

The appeal arose due to Haworth’s tax return for the year 2000 to 2001. In the return, Haworth disclosed that he had entered arrangements where he asserted that he avoided any charge to tax on a substantial capital gain arising from the disposal of shares by a trust for which he was the settlor.

The effectiveness of the arrangements depended on a combination of the provisions of the Taxation of Chargeable Gains Act 1992 (TCGGA 1992) and the operation of the UK/Mauritius double taxation convention of 2018. It particularly depended on the place of effective management (POEM) of the trust being in Mauritius at the time that the shares were disposed of.