Introduction – Cogefin
The First-tier Tribunal has ruled that a Bermuda-incorporated investment company was in fact UK resident for corporation tax purposes, a decision with significant implications for anyone relying on offshore governance arrangements to establish non-UK residence.
In Cogefin (Bermuda) Ltd & Anor v HMRC [2026] UKFTT 1108 (TC), the FTT found that despite the company having Bermudian-resident directors and holding board meetings in Bermuda, its central management and control was actually exercised from the United Kingdom by the trust’s economic settlor and beneficiary.
The Cogefin Facts
Cogefin was a Bermuda-incorporated company established to hold and manage investments on behalf of a family trust. The company had professional directors based in Bermuda who, on paper, made investment decisions and administered the company’s affairs.
HMRC took a different view.
The Revenue argued that Giuseppe Ciardi, the trust’s economic settlor and beneficiary who was UK-resident, was in fact directing the company’s investments and other significant transactions from the UK.
The directors, HMRC contended, were simply implementing decisions that had already been made elsewhere.
Cogefin and Mr Ciardi disputed this, maintaining that the company was managed and controlled in Bermuda and that Mr Ciardi’s role was limited to that of an advisor making investment recommendations which the directors could accept or reject as they saw fit.
Central Management and Control: Where Decisions Are Really Made
The key issue in determining corporate tax residence is where a company’s central management and control (CMC) is exercised.
This is a question of fact, focusing on where the highest level of strategic decision-making takes place… not merely where board meetings are held or where documents are signed.
The FTT examined the evidence in painstaking detail. The tribunal found that the strategic, high-level decision-making rested with Mr Ciardi, and that the directors generally treated his proposals as instructions rather than recommendations requiring independent consideration.
In the words of the tribunal, the directors had effectively “abdicated” decision-making, undertaking administrative functions and, at most, carrying out a “sense check” of proposals rather than exercising the level of strategic decision-making required for CMC.
The Form Versus Substance Problem
This case is a textbook illustration of the long-standing principle that tax residence follows substance, not form. Having professional offshore directors, Bermudian board meetings, and all the trappings of non-UK governance counts for nothing if the real decision-making happens in someone’s London study.
The tribunal was unimpressed by arguments that Mr Ciardi was merely making “recommendations.” As the judgment makes clear, it matters little whether proposals are formally labelled as recommendations if, in practice, they are treated as instructions and routinely implemented without genuine independent scrutiny.
A Silver Lining for Cogefin?
While Cogefin lost on the central residence question, the tribunal did find that the company’s actions were not “deliberate” for penalty purposes. The Bermudian directors genuinely believed the company was not UK resident — they simply got it wrong.
This matters significantly for penalties. HMRC had sought substantial penalties and had issued a personal liability notice to Mr Ciardi.
The tribunal found the behaviour was at worst careless rather than deliberate, which reduced the penalties significantly and meant the personal liability notice could not stand.
Lessons for Practitioners
This decision reinforces several key points that advisers and their clients ignore at their peril:
- Substance beats form — Professional offshore governance is necessary but not sufficient. Directors must exercise genuine, independent decision-making, and there must be real evidence of this.
- Documentation matters — Board minutes that simply rubber-stamp proposals from the beneficial owner will be scrutinised. There needs to be evidence of genuine deliberation, challenge where appropriate, and independent judgment.
- Communication patterns are revealing — HMRC will examine the flow of information and instructions. If every “recommendation” from the UK-based principal is invariably adopted without meaningful consideration, that tells its own story.
- Get the analysis right upfront — A robust CMC analysis before implementation is essential. Retrospective justification when HMRC comes knocking rarely convinces.
Wider Implications
This judgment arrives at a sensitive time. With the abolition of the remittance basis from April 2025 and the introduction of the new residence-based regime, more HNW individuals are reviewing their structuring.
For those considering offshore companies as part of their arrangements, Cogefin is a stark reminder that the location of decision-making – real decision-making, not theatrical board meetings – will determine UK tax exposure.
The case also underlines HMRC’s willingness to look behind corporate structures to identify where control truly lies.
The Revenue has substantial resources devoted to tackling offshore non-compliance, and the introduction of the Common Reporting Standard has given them unprecedented visibility into offshore arrangements.
The Bottom Line
If you’re relying on offshore corporate residence to achieve a UK tax advantage, make sure the substance matches the structure. Professional directors need to make professional decisions — genuinely, demonstrably, and with a proper paper trail.
Otherwise, like Cogefin, you may find your Bermudian company has been UK resident all along… with all the tax consequences that entails.