Establishing residence

Burden of proof when establishing residence status

The taxpayer was born in the UK and was UK resident until 2000. From March 2000 he took steps to establish residence in Monaco. He completed his 2000-01 return on the basis that he was not resident in the UK. HMRC challenged this and using the discovery provisions issued a capital gains tax assessment for £84m relating to a share sale in May 2000.

The taxpayer had previously applied to the Court of Appeal that the discovery point should be the subject of a preliminary hearing. This was because if HMRC could not sustain a discovery assessment a hearing on the substantive point of his residence status would be unnecessary. The Court of Appeal rejected this argument and remitted the case to the First-tier Tribunal for a directions hearing.

This hearing dealt with two issues: which party should...