“no Ordinary Dollar Shares in the capital of the Company shall be transferred unless there are transferred to the transferee at the same time all of such Ordinary Dollar Shares for the time being in issue and all of the Common Stock in [GEFI Inc] for the time being outstanding.”
“… the term “resident of a Contracting State” means, for the purposes of this Convention, any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, citizenship, place of management, place of incorporation, or any other criterion of a similar nature. This term, however, does not include any person who is liable to tax in that State in respect only of income from sources in that State or of profits attributable to a permanent establishment in that State.”
“15. […] Article 31 of the 1969 Vienna Convention on the Law of Treaties provides: 1. A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose. […] 16. It was common ground that a convenient summary of these principles and the way in which they have been applied by the English courts is to be found in the judgment of Mummery J (as he then was) in Inland Revenue Commissioners v Commerzbank AG[1990] STC 285 at page 297 where the judge said: “[…] The parties are agreed that the correct approach is that laid down by the House of Lords in Fothergill v Monarch Airlines Ltd[1981] AC 251 . […] that decision makes clear the approach which should be adopted by the court. (1) It is necessary to look first for a clear meaning of the words used in the relevant article of the convention. […]. (2) The process of interpretation should take account of the fact that— 'The language of an international convention has not been chosen by an English parliamentary draftsman. It is neither couched in the conventional English legislative idiom nor designed to be construed exclusively by English judges. It is addressed to a much wider and more varied judicial audience than is an Act of Parliament which deals with purely domestic law. It should be interpreted, as Lord Wilberforce put it in James Buchanan & Co. Ltd v. Babco Forwarding & Shipping (UK) Limited[1978] AC 141 at 152], “unconstrained by technical rules of English law, or by English legal precedent, but on broad principles of general acceptation': per Lord Diplock (at 281–282) and Lord Scarman (at 293). (3) Among those principles is the general principle of international law, now embodied in art 31(1) of the Vienna Convention on the Law of Treaties […] (4) If the adoption of this approach to the article leaves the meaning of the relevant provision unclear or ambiguous or leads to a result which is manifestly absurd or unreasonable recourse may be had to 'supplementary means of interpretation' […] (5) Subsequent commentaries on a convention or treaty have persuasive value only, depending on the cogency of their reasoning. Similarly, decisions of foreign courts on the interpretation of a convention or treaty text depend for their authority on the reputation and status of the court in question: per Lord Diplock (at 283–284) and per Lord Scarman (at 295). (6) Aids to the interpretation of a treaty such as travaux préparatoires, international case law and the writings of jurists are not a substitute for study of the terms of the convention. Their use is discretionary, not mandatory, depending, for example, on the relevance of such material and the weight to be attached to it: per Lord Scarman (at 294).” (1) It is necessary to look first for a clear meaning of the words used in the relevant article of the convention. […]. (2) The process of interpretation should take account of the fact that— 'The language of an international convention has not been chosen by an English parliamentary draftsman. It is neither couched in the conventional English legislative idiom nor designed to be construed exclusively by English judges. It is addressed to a much wider and more varied judicial audience than is an Act of Parliament which deals with purely domestic law. It should be interpreted, as Lord Wilberforce put it in James Buchanan & Co. Ltd v. Babco Forwarding & Shipping (UK) Limited[1978] AC 141 at 152], “unconstrained by technical rules of English law, or by English legal precedent, but on broad principles of general acceptation': per Lord Diplock (at 281–282) and Lord Scarman (at 293). (3) Among those principles is the general principle of international law, now embodied in art 31(1) of the Vienna Convention on the Law of Treaties […] (4) If the adoption of this approach to the article leaves the meaning of the relevant provision unclear or ambiguous or leads to a result which is manifestly absurd or unreasonable recourse may be had to 'supplementary means of interpretation' […] (5) Subsequent commentaries on a convention or treaty have persuasive value only, depending on the cogency of their reasoning. Similarly, decisions of foreign courts on the interpretation of a convention or treaty text depend for their authority on the reputation and status of the court in question: per Lord Diplock (at 283–284) and per Lord Scarman (at 295). (6) Aids to the interpretation of a treaty such as travaux préparatoires, international case law and the writings of jurists are not a substitute for study of the terms of the convention. Their use is discretionary, not mandatory, depending, for example, on the relevance of such material and the weight to be attached to it: per Lord Scarman (at 294).” [...] 17. […]. Although the views expressed in [textbooks and other articles] are of some interest, they are of course no more than the views of their authors (however distinguished) on the issues discussed and are not in any sense authoritative in relation to the legal issues of construction which we have to decide.”
“[111] That approach reflects the fact that a treaty is a text agreed upon by negotiation between the contracting governments. The terms of the 1975 Convention reflect the intentions of the US as much as those of the UK. […] In that context, one would be predisposed to favour an interpretation which reflected the ordinary meaning of the words used and the object of the Convention. This is indeed a point which has been repeatedly made, in other cases concerned with the construction of the UK/US double taxation conventions, in the face of narrow and technical constructions […].”
“[34] … Reciprocity is a fundamental principle underlying tax treaties …. Hogan J. observed that “[p]arties to a tax treaty are presumed toknow the other country’s tax system when they negotiate a tax treaty; they are presumed to know the tax consequences of a tax treaty when they negotiate amendments to that treaty” (para. 84). This only makes sense. [59][…] treaty partners do not have the unfettered liberty to alter or redefine residence as they wish for the purposes of a tax treaty. […] Pursuant to the principle of pacta sunt servanda, parties to a treaty must keep their sides of the bargain and perform their obligations in good faith (art. 26 of the Vienna Convention). Domestic law definitions of residence should therefore broadly correspond to international norms and not have the effect of redefining residence in a way ‘that takes the words unmistakably past their accepted usage’ (Couzin, at p. 136), including the definitions of residence that were in effect in the two states at the time the Treaty was drafted.”
“Mr. Cohen [Counsel for the taxpayer] propounded a test which had the merits of simplicity and certitude. He maintained that a Company resides where it is registered and nowhere else. […]. I cannot adopt Mr. Cohen's contention. […]. An individual may be of foreign nationality, and yet reside in the United Kingdom. So may a Company. Otherwise, it might have its chief seat of management and its centre of trading in England, under the protection of English law, and yet escape the appropriate taxation by the simple expedient of being registered abroad and distributing its dividends abroad. The decision of Chief Baron Kelly and Baron Huddleston, in the Calcutta Jute Mills v Nicholson and the Cesena Sulphur Company v Nicholson, now thirty years ago, involved the principle that a Company resides, for purposes of Income Tax, where its real business is carried on. […] I regard that as the true rule; and the real business is carried on where the central management and control actually abides.”
“[…], a company which is incorporated in the United Kingdom shall be regarded for the purposes of the Taxes Acts as resident there; and accordingly, if a different place of residence is given by any rule of law, that place shall no longer be taken into account for those purposes.”
“… there is no material difference between a corporation that is actually domestic (and viewed as a resident in the U.S., that is, subject to taxation on worldwide income) and one that is deemed to be domestic for purposes of U.S. tax law (and similarly viewed as a resident of the U.S., in the sense that it is subject to taxation on worldwide income).”
“For the purposes of this Convention, the term “resident of a Contracting State” means any person who, under the law of that State, is liable to taxation therein by reason of his domicile, residence, place of management or any other criterion of a similar nature.”
“[…] There is no indication in the commentary to the 1977 OECD Model Treaty that the addition of the second sentence, which was not found in the 1963 OECD Model, was intended to affect the position of a person not viewed as a resident by the domestic law of the taxing state .... The 1977 Commentary and later OECD Reports make it clear that the change was intended to address the position of a person viewed as a resident by the domestic law of the taxing state (e.g., by reason of an attachment such as residence or place of management), but who, by reason of special privileges (diplomatic personnel, base companies, etc.) was not subject to worldwide taxation by the state ...”
“1. For the purposes of this Convention, the term “resident of a Contracting State” means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature, and also includes that State and any political subdivision or local authority thereof. This term, however, does not include any person who is liable to tax in that State in respect only of income from sources in that State or capital situated therein. 2. […] 3. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident only of the State in which its place of effective management is situated.”
“As regards the application of the Convention at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that State for the purposes of the taxes to which the Convention applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State.”
“3. Generally the domestic laws of the various States impose a comprehensive liability to tax - “full tax liability” - based on the taxpayers' personal attachment to the State concerned (the “State of residence”). This liability to tax is not imposed only on persons who are “domiciled” in a State in the sense in which “domicile” is usually taken in the legislations (private law). […] 4. Conventions for the avoidance of double taxation do not normally concern themselves with the domestic laws of the Contracting States laying down the conditions under which a person is to be treated fiscally as “resident” and, consequently, is fully liable to tax in that State. They do not lay down standards which the provisions of the domestic laws on “residence” have to fulfil in order that claims for full tax liability can be accepted between the Contracting States. In this respect the States take their stand entirely on the domestic laws. 5. This manifests itself quite clearly in the cases where there is no conflict at all between two residences, but where the conflict exists only between residence and source or situs. But the same view applies in conflicts between two residences. The special point in these cases is only that no solution of the conflict can be arrived at by reference to the concept of residence adopted in the domestic laws of the States concerned. In these cases special provisions must be established in the Convention to determine which of the two concepts of residence is to be given preference. […] 8 Paragraph 1 provides a definition of the expression “resident of a Contracting State” for the purposes of the Convention. The definition refers to the concept of residence adopted in the domestic laws (cf Preliminary remarks). As criteria for the taxation as a resident the definition mentions: domicile, residence, place of management or any other criterion of a similar nature. As far as individuals are concerned, the definition aims at covering the various forms of personal attachment to a State which, in the domestic taxation laws, form the basis of a comprehensive taxation (full liability to tax). It also covers cases where a person is deemed, according to the taxation laws of a State, to be a resident of that State and on account thereof is fully liable to tax therein (eg diplomats or other persons in government service). In accordance with the provisions of the second sentence of paragraph 1, however, a person is not to be considered a “resident of a Contracting State” in the sense of the Convention if, although not domiciled in that State, he is considered to be a resident according to the domestic laws but is subject only to a taxation limited to the income from sources in that State or to capital situated in that State. That situation exists in some States in relation to individuals, eg in the case of foreign diplomatic and consular staff serving in their territory. According to its wording and spirit the provision would also exclude from the definition of a resident of a Contracting State foreign-held companies exempted from tax on their foreign income by privileges tailored to attract conduit companies. This, however, has inherent difficulties and limitations. Thus it has to be interpreted restrictively because it might otherwise exclude from the scope of the Convention all residents of countries adopting a territorial principle in their taxation, a result which is clearly not intended. […] 21. [Paragraph 3] concerns companies […]. It may be rare in practice for a company, etc. to be subject to tax as a resident in more than one State, but it is, of course, possible if, for instance, one State attaches importance to the registration and the other State to the place of effective management. […] 22. It would not be an adequate solution to attach importance to a purely formal criterion like registration. Therefore paragraph 3 attaches importance to the place where the company, etc. is actually managed.”
“4. Residence 1. Except as provided in paragraphs 2 and 3 of this Article, the term “resident of a Contracting State” means, for the purposes of this Convention, any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, citizenship, place of management, place of incorporation, or any other criterion of a similar nature. This term, however, does not include any person who is liable to tax in that State in respect only of income from sources in that State or of profits attributable to a permanent establishment in that State. […] 5. Where by reason of the provisions of paragraph 1 of this Article a person other than an individual is a resident of both Contracting States, the competent authorities of the Contracting States shall endeavour to determine by mutual agreement the mode of application of this Convention to that person. If the competent authorities do not reach such an agreement, that person shall not be entitled to claim any benefit provided by this Convention, except those provided by paragraph 4 of Article 24 (Relief from Double Taxation), Article 25 (Non-discrimination) and Article 26 (Mutual Agreement Procedure).”
“[…] recognizing that "place of incorporation" is the only criterion that has any relevance to the determination of world-wide tax liability under U.S. law, the U.S. entered a reservation to Article 4, paragraph 1 for the right to use "place of incorporation" as an indicator of residence. However, in order to preserve overall conformity with the OECD Model Convention, the decision was taken not to remove the other OECD criteria from Article IV, paragraph 1. Nevertheless, the term "place of incorporation" is the only term in Article IV, paragraph 1 that governs the determination of the residence of a corporation in the United States for purposes of its tax conventions. It is for this reason that the trial judge's rhetoricalconclusion, at p. 6310, ("if the negotiators ofthe Convention meant to exclude foreign corporationsin the U.S., like Norsk, from the status of"resident of a Contracting State" (i.e., the U.S.A.)one wonders why they simply did not write intothe Convention exactly what they allegedly meantto say") must be rejected. The extrinsic materialsreveal that such explicit "writing-in" was simplynot necessary.”
“39 [..] Should the respondent successfully demonstrate that "engaged in a business in the U.S." is a criterion of a nature similar to the enumerated grounds, then Norsk will be deemed to be a resident under the Convention. I agree with the Appellant that the most similar element among the enumerated criteria is that, standing alone, they would each constitute a basis on which states generally impose full tax liability on world-wide income: Klaus Vogel on Double Taxation Conventions (1991), at pp. 154-59; Joseph Isenbergh, International Taxation: U.S. Taxation of Foreign Taxpayers and Foreign Income, vol. I (1990), at pp. 326-27. […] Consequently, the "engaged in a business in the U.S." criterion is not of a similar nature to the enumerated grounds since it is but a basis for source taxation.”
“57. The Commentaries to the OECD Model Convention as well as academic sources indicate that generally the domestic laws of the contracting states employ residence to apply on “full-tax liability” […] So, too, does the American Law Institute, Federal Income Tax Project – International Aspects of United States Income Taxation II - Proposals on United States Income Tax Treaties (1992), at pp. 127-28: Under the prevailing practice, a country entering into an income tax treaty extends the benefits of the treaty to a person or entity that is a "resident of (the other) Contracting State". "Residence", in turn, is defined in terms of taxing jurisdiction. A person or entity is considered resident in a country if that country asserts an unlimited right to tax his or its income - that is, a right based upon the taxpayer's personal connection with the country (as opposed to the source of the income or other income- or asset-related factors). The test of residence requires that the person or entity claiming treaty benefits be "fully taxable" in the residence country, in the sense of being fully subject to its plenary taxing jurisdiction. […] The authority for the proposition that only those who are liable to tax on their world-wide income can be justifiably considered residents for the purposes of international taxation conventions is found in the first sentence in Article 4 of the OECD Model Convention and the absence of the second sentence in the Canada-United States Income Tax Convention (1980)does not detract therefrom. This is because the second sentence is relevant to a situation in which a person is considered a resident under domestic law but where that person, by reason of a special privilege, nevertheless is not subject to tax on the basis of world-wide income. Paragraph 8 of the Commentary on Article 4 of the OECD Model Convention addresses this point …”
“[6]. … Internationally, residency typically does not depend on the existence of [“sufficient substantive economic connections”]; formal criteria for residency are just as well accepted as factual criteria.”
“[54] In the context of corporations, the “liable to tax” requirement is met under the Treaty where the domestic law of a contracting state exposes the corporation to full tax liability on its worldwide income because it has its residence in that state (see Crown Forest, at paras 40 and 45). Liability to full taxation is established by the nexus between that State and the corporation’s resident status…. [55]Aside from the “liable to tax” requirement, the purpose of art 4(1) is not to establish specific standards for defining residence. This provision expressly states that residence is to be defined by the laws of the contracting state of which the person claims to be a resident. This provision of the Treaty is modelled almost word for word on art 4(1) of the 1998 OECD Model Treaty, whose Commentary also made it clear that the intention was to leave the core definition of residence to domestic law, not to bilateral tax treaties […] [56] Consideration of the context of the Treaty confirms this intention expressed in the Commentary. Indeed, this preference for leaving the meaning of residence to domestic law is totally consistent with the scheme of the Treaty. Most terms found in the Treaty are defined under domestic law and not by the Treaty itself. […] The importance of domestic law as a source of substantive content for the application of the Treaty is expressly spelled out in art. 3(2) … … [60] I pause here to observe that the definition of residence in Luxembourg law is consistent with international practice. Broadly speaking, there are two internationally recognized methods used to determine corporate residency: (1) the “place ofincorporation” or “legal seat” rule, pursuant to which residence is determined by a purely formal criterion, that is, where the corporation was incorporated or has its legal seat; and (2) the “real seat” rule, pursuant to which residence depends on a combination of factual factors aimed at identifying the corporation’s place of effective management … [61] … I understand the Minister’s submissions as suggesting that establishing residence merely on the basis of a formal criterion is insufficient to conform to the spirit of the rules of residence under the Treaty. Something more would be needed: some real connections to the country of residence. What the Minister’s submissions overlook, however, is that many of the world’s most developed economies — including Canada itself — accept and apply the “place of incorporation” or “legal seat” rule (Avi-Yonah, Sartori and Marian, pp. 130 and 133-34; see s. 250(4)(a) of the Act). Although a formal criterion may sometimes be unable to capture the real location of a corporation’s economic activities, it nevertheless became widespread internationally because of its certainty and simplicity… … [67]In sum, the object, spirit, and purpose of arts 1 and 4(1) are to allow all persons who are residents under the laws of one or both of the contracting states to claim benefits under the Treaty so long as their resident status could expose them to full tax liability (regardless of whether there is actual taxation). […]”
“the stapling of the entities effectively makes them a single enterprise, both economically and commercially.”
“10.2 The Convention does not contain an exhaustive definition of the term “business”, which, under paragraph 2, should generally have the meaning which it has under the domestic law of the State that applies the Convention.”
“The word ‘business’ is an etymological chameleon; it suits its meaning to the context in which it is found. It is not a term of legal art and its dictionary meanings, as Lindley LJ pointed out in Rolls v Miller(1884) 27 Ch D 71 , 88, embrace ‘almost anything which is an occupation, as distinguished from a pleasure – anything which is an occupation or duty which requires attention is a business.’” ‘almost anything which is an occupation, as distinguished from a pleasure – anything which is an occupation or duty which requires attention is a business.’”
“I think that the primary sense of “carrying on a business” in ordinary speech is commercial. But it was rightly common ground that this was not the appropriate linguistic register, and that “carrying on a business” extended to the office activities of, say, professional men. Statutory construction here imperatively demands consideration of the object of the legislation [...].”
“The question is one of fact ... [The special commissioners] accepted the company's submission that because the letting of its property was one of the objects set out in its memorandum of association this was in law conclusive that in making any letting of its premises it was carrying on a business. So stated this is, in their Lordships' view, too broad a proposition. It derives apparent support from an observation of Pollock M.R. in Inland Revenue Commissioners v. Westleigh Estates Co. [1924] 1 K.B. 390, where he said, at p. 409: "… if [a company's] objects are business objects and are in fact carried out,… the company carries on business…" This, however, was said in the context of a company which was carrying out one of the principal objects stated in its memorandum. Their Lordships would not endorse the view that every isolated act of a kind that is authorised by its memorandum if done by a company necessarily constitutes the carrying on of a business. […] In the case of a private individual it may well be that the mere receipt of rents from property that he owns raises no presumption that he is carrying on a business. In contrast, in their Lordships' view, in the case of a company incorporated for the purpose of making profits for its shareholders any gainful use to which it puts any of its assets prima facie amounts to the carrying on of a business. […] The carrying on of "business," no doubt, usually calls for some activity on the part of whoever carries it on, though, depending on the nature of the business, the activity may be intermittent with long intervals of quiescence in between.”
“every British company which is fulfilling the objects of its memorandum of association is not thereby ipso facto, and of necessity, brought within [s.52(2)(a)], yet if its objects are business objects and are in fact carried out, it follows that the company carries on business, and consequently comes within the sub-section. […] [In theKorean Syndicate Case Rowlatt J made] a reservation with which I agree. "It does not follow," he says, "that, whenever at some particular moment a company is doing nothing but receiving an income from its investments, it is not carrying on a business"; and he indicates that in a certain class of cases, although a company is not actively doing anything, the right conclusion would be that the company was nevertheless carrying on a business.”
“It is true that the company carries on no trade or manufacture, and that its principal and only function at the present moment is to receive and distribute the fruits of its undertaking; but that is a part, and a material part, of the purpose for which it came into existence. [...]. The company can no longer be called upon to fulfil its first purpose - namely, to make advances for the construction of the line - because all the necessary funds have been already advanced; but it is still fulfilling its second purpose, which was to receive an income for its shareholders while the line was running and to distribute it among them [...].”
“The statute does not define any of these words, but leaves them to their vernacular meaning and, where the Legislature did not think fit to tread, I certainly have no mind to rush in. Nor is much help to be got from the authorities, for the expression "carrying on a trade or business" has generally been discussed in totally different contexts.”
“It is obvious that the company's objects have by no means been accomplished. It is obvious, too, that during its present period of dormant life it has very little to do. I do not attach much importance to the domestic operations of declaring and paying dividends, remunerating directors and presenting reports, but the operation of receiving and thus discharging the annuity payments goes on continuously, and, however simple, it is not a mere passive acquiescence […]. […] Business is not confined to being busy; in many businesses long intervals of inactivity occur.”
“Nothing much turns on the small print of the statutory words, but it is perhaps worth commenting that they assume that a company can exist without carrying on a trade or business. Also they might have been expressed, but are not, in terms of whether the company has any income or other profits in the accounting period: that is that an associated company would only be disregarded if it had no income or profits in the period. By choosing instead the criterion of whether or not the company had a trade or business the legislature might be said implicitly to have recognised that a company could exist and have some income without that inevitably meaning that it was carrying on a trade or business.”
“[…] what American Leaf Blending did was a far cry from a company which was doing nothing except putting its money on deposit at the bank, Lord Diplock did not mean that whenever any company did anything which was 'gainful use of assets' it was thereby of necessity carrying on a business. […] […] although the normal conclusion when a company lays out its assets and earns an income return is that it is carrying on a business, that is not inevitably so as a matter of law. There can be exceptional cases where it is not.”
“The Special Commissioner was entitled, in my judgment, to come to the view on the facts that MML did not carry on an investment (or any other) business, especially in the light of the following matters: MML did not purchase the West Regent Street premises as an investment; it did nothing in the relevant years except receive the rents from its agent, and authorise a rent review; and the premises were a small part of its assets. This was a case of a company left with former trading premises which it let out without any active participation or management.”
“his purpose was to cover the cost of the shoot while making at least an equal contribution to that cost from his own pocket”
“Thirdly, the aspects of that activity which are to be considered, as being indicia or criteria for determining whether the activity is a business, are six in number and were listed by counsel for the Crown as follows: (a) whether the activity is a 'serious undertaking earnestly pursued', a phrase derived from the judgment of Widgery J in Rael-Brook Ltd v Minister of Housing and Local Government[1967] 1 All ER 262 at 266,[1967] 2 QB 65 at 76, or 'a serious occupation, not necessarily confined to commercial or profit-making undertakings', a phrase derived from the speech of Lord Kilbrandon in Town Investments Ltd v Department of the Environment[1977] 1 All ER 813 at 835,[1978] AC 359 at 402, both of them cited to and referred to by the tribunal in their decision; (b) whether the activity is an occupation or function actively pursued with reasonable or recognisable continuity: per Lord Cameron in Morrison's Academy[1978] STC 1 at 8; (c) whether the activity has a certain measure of substance as measured by the quarterly or annual value of taxable supplies made: again per Lord Cameron (at 8); (d) whether the activity was conducted in a regular manner and on sound and recognised business principles: again per Lord Cameron (at 10); (e) whether the activity is predominantly concerned with the making of taxable supplies to consumers for a consideration: per the Lord President (at 6); (f) lastly, whether the taxable supplies are of a kind which, subject to differences of detail, are commonly made by those who seek to profit by them: per the Lord President (at 6) and per Lord Cameron (at 10).”
“As I understand their judgments, the learned judges in the Court of Session did not thereafter set out to lay down principles which, if satisfied, would in all cases demonstrate that an activity must be regarded as a 'business' within those provisions. Those aspects of an activity, to which their Lordships drew attention, and on which counsel for the Crown has relied in formulating the indicia listed above, plainly describe the main attributes of any activity which will be regarded as falling within the concepts of 'business' and 'trade, profession or vocation', and clearly they are useful tools, some perhaps more useful than others, for the analysis of an activity and for the comparing of it with other activities which are unarguably 'businesses'. The courts, however, cannot, by the formulation of tests and by the expounding of indicia, substitute any test or phrase different from that set out in the statutory provision and I am sure that their Lordships had no intention of doing so.”
“As to the turnover being substantial, it does not seem to me that, subject to the de minimis rule, the amount of money received can by itself be relevant: some pleasures or sports are very expensive and expense alone cannot turn a pleasure into a business. Again the use of planning and the efficient running of the activity, or 'sound and recognised business principles', are, no doubt, both part of the pleasure of running a large shoot and necessary to make shooting enjoyable for the participants, but such matters again cannot turn a pleasure into a business. Lastly, there are very few pleasures which are not also provided somewhere by people who carry on the business of providing them; the fact that other people commonly supply facilities for such pleasures for commercial profit cannot turn a man's pleasure into a business.”
“There is no such context for the purpose of s.162 TCGA. There is no statutory definition of “business” in that respect. Business is not aligned as a concept with trades or professions, and there is nothing in that respect to colour its meaning. […] The legislation is looking at business in the context of something that is or may be carried on both by, for example, an individual and by a company. In my judgment the proper approach in that context is to construe “business” broadly, according to its unvarnished ordinary meaning.”
“66. There remains, however, the question of degree. That is relevant to the equation because of the fact that in the context of property investment and letting the same activities are equally capable of describing a passive investment and a property investment or rental business. Although resolution of that issue will be assisted by consideration of the Lord Fisher factors, to those there must be added the degree of activity undertaken. There is nothing in the TCGA which can colour the extent of the activity which for the purpose of s 162 may be regarded as sufficient to constitute a business, and so this must be approached in the context of a broad meaning of that term.”
“83. Although there can be little doubt that the activities of the LP fit the description of a “serious undertaking” it remains necessary to consider the other factors identified by Judge Berner at [64] in Ramsay, namely whether these were actively pursued with reasonable or recognisable continuity, whether they had a certain amount of substance in terms of turnover, whether they were was conducted in a regular manner and on sound and recognised business principles, and whether the activities were of a kind which, subject to differences of detail, are commonly made by those who seek to profit by them. 84. While the loans were conducted on sound and recognised business principles and the sums involved clearly substantial, holding five affiliate loans over the course of approximately six years, especially as only three of these originated with the LP is, in my judgment, more of a passive, sporadic or isolated activity than a regular and continuous series of activities. In this I agree with Ms McCarthy who submits that there is nothing to suggest that personnel or agents acting on behalf of the LP made or conducted continuous and regular commercial activities in the US. All that appears to have happened was that monies were directed straight to GELCO without negotiating terms or the consideration at a director level as would have been expected from a company carrying on commercial activities on sound business principles. […] 91. Therefore, notwithstanding its objects, and having regard to the degree of activity as a whole, particularly the lack of participation in the strategic direction of the LP by the directors of GEFI Inc, I have come to the conclusion that GEFI was not carrying on a business in the US through its participation in the LP.”