Robert Gaines-Cooper lost his appeal at the Supreme Court judging, 19 October 2011, concerning HMRC guidance to decide his tax residency status in a case estimated to be worth £30m…

On Thursday the 7th of July this year, Robert Gaines-Cooper continued his long-running residency battle with HMRC in Supreme Court.

15 weeks later and a decision has finally been reached.

The Supreme Court ruled in favour of HMRC on Wednesday 19th October, with the court of appeal deciding that despite spending the majority of his time overseas that Gaines-Cooper qualifies as a UK resident.

The battle between Gaines-Cooper and HMRC over whether he qualifies as a UK resident has been based around IR20 – HMRCs residency guidelines for tax purposes.

Robert Gaines-Cooper was born and lived in Britain until he left for the sunnier skies of the Seychelles, over thirty years ago, in 1976.

Since leaving Britain Gaines-Cooper has always claimed that he abided HMRC guidance to qualify for non-resident status and tax benefits and has stayed no longer than 91 days in the UK each year.

In 2006 HMRC challenged Gaines-Cooper’s claims and classed him as a UK resident due to his ‘significant ties’ in Britain.

HM Revenue and Customs classed his significant ties as a large estate within the UK and return trips to attend Ascot – which amongst others made Gaines-Cooper a UK resident according to HMRC.

The Supreme Court’s decision on the status of Gaines-Cooper’s residency was made on a 4-1 split.

Under a full reading of HMRC’s IR20, most of the Lord Justices in court found that Gaines-Cooper would fail to be classed as a resident.

Judges said that a claim by Gaines-Cooper for non-residency in the UK should have called for ‘multi-factorial consideration’, according to paragraphs 2.1 and 1.7 – 1.9 of HMRC’s IR20.

But, that Gaines-Cooper’s defense had been ‘far too thin and equivocal’ to provide sufficient evidence that HMRC had steered away from the IR20 guidelines in classing him as a UK resident.

Supreme Court judges did in-fact say that HMRC’s guidelines ‘should have been much clearer’ for how Gaines-Cooper could have received non-residency status.

Lord Mance, the one judge to disagree with the Supreme Court’s decision, said the requirement for a distinct break, when no requirement had been clearly outlined by HMRC was ‘remarkable’.

The long-running residency battle between HMRC and Robert Gaines-Cooper is thought to have been the pushing factor for the government consulting a new statutory residency test.

Commenting on the Supreme Court’s decision, Gaines-Cooper, said:

“The Judgment I have received today is a disappointment to me and to my family.

“I also consider it to be a blow for all UK taxpayers who have relied on HMRC’s published guidance when planning their tax affairs.

“My next step is to seek the views of my legal advisors with a view to referring my case to the European Court.”

By arguing they are not constricted to their own published guidance for non-residency and recently consulting a new approach, tax payers may lose some confidence in HMRC.

Kevin Kinsella, of KinsellaTax, said:

“The long running case between Robert Gaines-Cooper and HMRC underlies the need to clarify distinct rules of residency and factors that qualify for non-residency.

“Due to confusion over HMRC’s IR20 guidance brought to light in Gaines-Cooper’s residency trial, I would in no doubt expect the Revenue’s consulted Statutory Residency Test to fall in line next year.

“Guidance like these needs to be crystal clear as a huge amount of money is spent by HMRC and individuals in fighting these rules in court.

“Perhaps it is time to take notice of a recent publication from the Institute of Fiscal Studies relating to the overall tax position.”

Are you under Tax Investigation by HMRC? Don’t suffer in silence.

 

KinsellaTax staff consists of ex-HM Inspector of Taxes and ex-HM Custom and Excise Officers, fully experienced in HMRC investigations.

Call us now on 0800 471 4546 to speak to one of our dedicated tax enquiry experts or click here to fill in an online tax enquiry form.

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