August 10, 2026
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A 20,148-page documentary record persuaded the First-tier Tribunal that a Bermudian investment company was centrally managed and controlled from the United Kingdom.
A board that only checks cash and legality after the commercial decision has already been made may be administering a decision—not making it.
Cogefin was incorporated in Bermuda in 1996 and was ultimately owned by the Poole Family Trust. Mr Giuseppe Ciardi was described as the trust’s economic settlor and beneficiary and as an investment adviser to Cogefin. The company began with approximately US$7.7 million of investments and, by 2011, was worth more than US$250 million.
Its formal directors were Bermudian-resident lawyers, supported by a local corporate-services provider. Cogefin held financial investments and also funded projects and assets connected with Mr Ciardi, including property, renewable-energy ventures, art and jewellery.
Following a disclosure under the Liechtenstein Disclosure Facility, HMRC investigated whether Cogefin’s central management and control was exercised in the United Kingdom. It issued discovery assessments for accounting periods from 1999 to 2017, failure-to-notify penalties for earlier periods and a personal liability notice to Mr Ciardi for part of the penalties.
A company incorporated outside the UK can nevertheless be UK resident under common law if its central management and control is exercised here. The test asks who actually makes the company’s high-level strategic decisions and where those decisions are made.
The place where management ought to occur is not decisive. Nor is the place stated in constitutional documents, board minutes or professional-administration agreements. The Tribunal must scrutinise the real course of business.
Directors may accept strong advice without surrendering control. They do not have to originate every proposal, and a decision does not cease to be a decision merely because it is poorly informed. But the directors must apply their minds, exercise discretion and remain capable of rejecting what is proposed. An outsider crosses the line when recommendations become instructions and the board merely implements decisions already taken.
The hearing took place over four weeks. The Tribunal then reviewed a chronological documentary run of 20,148 pages covering more than two decades of correspondence and board material. That scale matters because the events occurred between eight and twenty-six years before the hearing.
Witnesses may honestly reconstruct past events through the lens of later disputes. Contemporaneous emails, bank instructions, draft resolutions and transaction files often provide a more reliable account of who proposed, authorised and executed a decision.
The Tribunal considered the overall pattern rather than isolating a small number of formal board meetings. It found repeated instances in which the Bermudian directors deferred to Mr Ciardi, including matters involving investments, loans, property acquisitions, banking relationships and associated projects.
One director described the board’s role as carrying out a sense check of the merits of Mr Ciardi’s proposals and ensuring that Cogefin had adequate cash. The Tribunal regarded that description as revealing. A sense check may be valuable governance, but it is not necessarily the strategic decision-making required for central management and control.
The directors appeared to assess whether a proposal was practicable, properly documented and financially possible after the commercial direction had already been set. The evidence did not demonstrate a board independently weighing options, determining investment strategy or deciding whether Cogefin should enter the relevant transactions.
Although there were a few examples of genuine director decisions, they were insufficient to change the overall picture or create dual residence. Standing back from the detail, the Tribunal found that the directors did not make the relevant high-level decisions in Bermuda and that Cogefin was resident in the UK throughout the periods under appeal.
The Tribunal held that HMRC’s discovery assessments were valid. Cogefin therefore lost on residence and the validity of the associated assessments, although the amount of tax remained to be agreed or determined separately.
The penalty outcome was different. HMRC alleged deliberate behaviour, but the Tribunal concluded that the allegation had not been properly put and, in any event, was not made out on the evidence. The relevant failure was careless rather than deliberate.
The penalties were reduced to an overall figure of 25% of the potential lost revenue. Because the statutory personal liability notice depended on deliberate conduct attributable to Mr Ciardi, his appeal against that notice succeeded. The case is therefore a useful reminder that losing the substantive tax issue does not automatically establish deliberate behaviour for penalty purposes.
· Provide directors with complete information before—not after—the commercial decision is made.
· Record the options considered, risks identified, questions asked and reasons for the decision, rather than relying on formulaic minutes.
· Ensure the board has the expertise, time and authority to reject or amend proposals.
· Control communications with banks, brokers and counterparties. Direct instructions from a UK principal can contradict the formal governance narrative.
· Keep investment-advisory mandates within clear limits and distinguish advice from authority to commit the company.
· Review the full documentary trail periodically. Residence is tested through conduct over time, not by a single annual board meeting.
The strongest board minutes cannot cure a wider email record showing that the board was routinely informed of decisions rather than invited to make them. Equally, advisers should not overreact: a board may accept recommendations, even consistently, if the evidence shows genuine consideration and retained discretion.
Family investment structures are particularly exposed because the person with the investment expertise, family mandate and economic interest may naturally drive decisions. That commercial reality can conflict with an intended offshore residence if the formal directors become a processing function.
The risk is not limited to tax-haven structures. It can arise wherever a company is incorporated and formally directed in one jurisdiction while the family office, settlor, beneficiary or investment principal operates elsewhere.
Advisers should therefore examine governance alongside personal residence, trust residence, remittance issues and beneficial ownership. A structure may be perfectly valid in company and trust law yet produce an unexpected tax residence because of where the real decisions are made.
Cogefin is an unusually detailed factual decision, but its core lesson is simple. Offshore incorporation and offshore meetings do not establish offshore management. The enquiry is who made the strategic decisions in reality.
Here, the Tribunal considered that the Bermudian directors provided review and implementation rather than central control. The documentary record, viewed over many years, carried more weight than the intended governance model.
For offshore companies, independence must be operational rather than ceremonial. It must be visible in the timing, content and consequences of the board’s decisions.
