JOURNAL 30

RESIDENCE IS NOT NECESSARILY WHERE THE HEART IS

The Special Commissioners decision by Dr Brice and Charles Hellier in Gaines-Cooper v HMRC has attracted a great deal of press comment. However things are not always what they seem. Mr Gaines-Cooper was held to be UK resident for 1993/94 to 2003/04 even though from 2000/01 onwards he was here for less than 90 days on average using the tests set out by HMRC in their booklet IR 20. The concern relates to the fact that HMRC and the tribunal both seem to have ignored the statement in paragraph 1.2 of the booklet that, “the normal rule is that days of arrival and departure from the UK are ignored in calculating the days spent in the UK”.

So does this mean that IR 20 can no longer be relied upon? Probably not, but it probably means that attempts to contrive to fall within its wording without following its spirit are dangerous strategies. But hasn’t that always been the case?

The press reports need to be read in the context of the following facts.

1. Ignoring days of arrival and departure is not a statutory provision. It is an HMRC concession. Indeed the law is that the number of hours in the UK needs to be looked at (Wilkie v CIR – 32 TC 495), although the judge in that case did comment that “the cases where it is necessary to get down to hours in this connection must be very rare.”

2. The Special Commissioners must apply the law; they cannot apply HMRC concessions. If a taxpayer wishes to challenge the denial of a concession he needs to do so by way of judicial review, not by way of an appeal.

3. When HMRC use the word “normally”, they mean “not always”, just as everyone else does.

4. The Preface to IR 20 states, “Some practices explained in this booklet are concessions made by the Revenue. A concession will not be given in any case where an attempt is made to use it for tax avoidance.”

5. Although Mr Gaines-Cooper claimed to be resident in Seychelles the Commissioner found as a fact that in the years in question “the time spent in the Seychelles each year was measured in weeks rather than months.”

6. Even on the IR 20 test the days Mr Gaines-Cooper spent in the UK in 1993/94 to 1999/2000 exceeded 90 days on average.

7. For 2000/01 to 2004/05 the days in the UK were as follows:

	Using IR 20 test	Days based on nights in the UK	Visits where stayed only one night
1999/00	81	127	21
2000/01	50	94	20
2001/02	0	27	27
2002/03	68	105	15
2003/04	35	71	18
2004/05	48	94	22

8. For most of the period Mr Gaines-Cooper’s family were living in the UK.

9. Mr Gaines-Cooper travelled a lot on business, so many of the days spent outside the UK were not days in which he resided somewhere else but days on which he was travelling.

10. It is for the appellant to disprove the assessment and the Commissioners felt that he seemed confused at times, so they approached his oral evidence with caution and there was little documentary evidence to back it up.

11. In applying for a gun licence Mr Gaines-Cooper had told the local police that his current home was c/o his UK address – and in the earlier years at least appears to have led them to believe that he spent five months a year in the UK.

12. Mr Gaines-Cooper was born in the UK, did not take Seychelles citizenship and retained strong connections with the UK. In particular he spent a great deal of money on renovating his UK house and appears to have bought it because his wife wanted to live there.

13. HMRC ignored visits in which he came to the UK and left the same day.

Nevertheless Mr Gaines-Cooper appears to have been unlucky for 2003/04 and 2004/05 where even on the HMRC figures his average days in the UK was below 90. This is probably because the Commissioners looked only at their overall impression of where he was resident and did not consider each year individually.

Robert W Maas