Since the decision of the Supreme Court of Canada in St. Michael Trust Corp., as Trustee of the Fundy Settlement v. Her Majesty the Queen., the tax community has been abuzz with the fact that trusts are now subject to the same “central management and control”test applicable to corporations when determining the residence of a trust. In Mark Higgins Rallying (a firm) v. The Commissioners for Her Majesty’s Revenue and Customs, the First-Tier Tribunal (Tax Chamber) concluded that the “management and control” test applicable to corporations was also applicable to partnerships. That case conducted an analysis of what this phrase really means from a UK context. In a nutshell, the Tribunal concluded that the case law has identified the following principles:

1. The residence of a company is where the directors meet and transact their business and exercise the powers conferred upon them;
2. The determination of management and control is a question of fact and,consequently, there is no presumption that management and control will be found where the directors meet;
3. In considering the facts, it must be determined (a) who was managing the business by making high-level decisions, and (b) where those persons were making such decisions.

Reproduced with permission from the publisher.