Terence Murphy & Ors v The Commissioners for HMRC
Decision date: 1 December 2025
Neutral citation: [2025] UKFTT 1503 (TC)
Overall AI summary confidence: medium
Short overview
This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.
AI confidence in this short overview: medium
The appeals concern trusts that used a round‑the‑world scheme to avoid UK capital gains tax by briefly appointing New Zealand trustees before sales, and whether HMRC made valid discovery assessments and whether treaty relief under article 14(4)/s788 applied. The tribunal held HMRC did not make a valid s29 discovery assessment for DH, found that the appellants had made valid claims for treaty relief (or HMRC were estopped from denying they had), but on treaty interpretation applied article 4(3)'s tie‑breaker and a POEM analysis and concluded the trusts' POEM was in the UK so article 14(4) did not exempt the appellants from UK CGT. Murphys’ appeals were dismissed in principle; DH’s appeal was allowed in principle on discovery grounds.
Ratio decidendi
This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.
AI confidence in this ratio decidendi summary: medium
The judgment indicates that for treaty relief residence for treaty purposes requires full application of article 4, so where a person is liable to tax in both Contracting States the article 4(3) tie‑breaker governs rather than fixing residence solely at the time of disposal; and that POEM under article 4(3) is a broad "place of effective management" test (focusing on realistic, positive/top‑level management and orchestration) which can locate POEM in the UK even where trustees in another state undertook formal acts.
Obiter dicta
This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.
AI confidence in this obiter dicta summary: medium
The tribunal observed that a unilateral statement by one State (New Zealand’s OECD‑based comment equating POEM with day‑to‑day management) carries limited weight for treaty interpretation absent bilateral practice, and that where relief operates as an effective exemption it can be sufficient for a claim to seek full relief rather than specify an exact quantified sum.
Warning
The chunk is long and factually dense with incomplete documentary records and witness recollections; some factual points (especially as to documentary provenance and precise timing) are unclear. The notes are long, factually dense and some documentary provenance and timing are unclear; the record available to the tribunal appears incomplete.