On 7 April 2017, the First-tier Tribunal15 held that a double tax treaty (in this case, the UKMauritius DTT) can apply where the two contracting states are seeking to tax different persons.

The Tribunal dismissed the appellants’ appeal, so that the gains in question were taxable in the UK (and not, as the appellants had hoped, in Mauritius under an effective “round the world” tax avoidance scheme) on the basis that the place of effective management of the trusts in question was the UK. 

Despite the Tribunal’s conclusion on the question of place of effective management, the Tribunal nonetheless considered the “different persons” argument raised by HMRC. HMRC had contended that the DTT did not apply as the UK was seeking to tax the trustees, whilst Mauritius was seeking to tax the trust. The Tribunal rejected this argument, on the basis that the focus of both the UK-Mauritius DTT, and the OECD Model Convention on which it is based, is on the category of income/gain, not the identity of the person liable to tax.

The decision can be viewed here