Question of habit

Determining whether a taxpayer is ordinarily resident

The taxpayer was born in Australia. He had worked in various countries although his wife and children lived in London. HMRC treated him as ordinarily resident in the UK for the years 2005-06 to 2007-08. The taxpayer appealed.

Three issues arose. First whether the taxpayer was ordinarily resident in the UK for those years; second whether £500 000 he received from an unapproved unfunded retirement benefit scheme (UURBS) was subject to tax; and finally the tax treatment of a payment he received on the cancellation of some share options. It was common ground that he was UK-resident in the years 2005-08.

On the first issue the First-tier Tribunal said the UK legislation did not create a concept of ‘ordinary residence’. Instead it asked whether a person was ordinarily resident. This directed attention to what was going on rather...