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The Supreme Court, by a four to one majority, dismissed the taxpayer Gaines-Cooper’s claim that he ceased to be UK resident around 20 years ago.
In a case heard jointly with another party, Davies and another, the taxpayers argued that HMRC’s IR20 booklet gave them the legitimate expectation that the department would treat them as not resident or not ordinarily resident in the UK.
The High Court refused the taxpayers permission to apply for judicial review of the determinations by HMRC that they were resident and ordinarily resident in the UK in the relevant years. The Court of Appeal granted them permission, but dismissed their substantive applications; they appealed to the Supreme Court.
Mr Davies had argued that, according to IR20, an individual who left the UK for at least a whole tax year would be considered non-resident, provided visits totalled less than six months in any one year and averaged less than 91 days each year.
Mr Gaines-Cooper maintained that if an individual lived abroad for at least three years and satisfied the 91-day condition, there was no need to consider whether he had made a distinct break in the pattern of his life in the UK.
The Supreme Court ruled that IR20, when read as a whole, did not support the taxpayers’ contentions. Although the guidance could have been clearer as to how to achieve non-resident status, it did inform taxpayers that a distinct break was necessary. For example, property retained in the UK should be used for visits only, not as a place of residence.
The judges said there was insufficient evidence to show that it was settled practice. The taxpayers could not produce evidence to show the practice was so well-established as to amount to a commitment by HMRC to abide by it.
Lord Mance, dissenting, said it was the Gaines-Cooper’s intention regarding the duration of his absence, rather than the quality of any absence, that mattered.
The judge added it would be remarkable if there were a requirement for ‘a distinct break’ from life in the UK when no such requirement was clearly expressed and other factors, including the day-count proviso, militated against such a requirement.
The Supreme Court dismissed the taxpayers’ appeals.
