Beneficial ownership: practical applications

Beneficial ownership and entitlement are pervasive concepts in tax law. The Court of Appeal’s decision in Hargreaves offers an opportune reminder of the domestic meaning of these terms, including that they are susceptible to purposive construction. Artificial arrangements leaving the owner with nothing more than a legal shell will not therefore survive judicial scrutiny. The judgment also plainly states that there is a difference between the domestic and international fiscal meanings. The latter has followed a separate course, having become a seemingly more demanding standard that is increasingly entwined with modern anti-avoidance philosophy. Some areas of tax law where we commonly see the beneficial ownership concept in practice are withholding taxes, tax grouping rules in insolvency and M&A contexts, and stamp taxes.