Issues of Domicile

To Those Concerned About the HMRC's Rulings

noreply@blogger.com (Issues of Domicile) — Fri, 12 Mar 2010 15:35:00 +0000

I find the continued nonsense about my case quite fascinating and frequently at times, I wonder how on earth I have got caught up in such an “Alice in Wonderland” situation. Prior to all this nonsense I was a low key, ordinary entrepreneur who had left the UK many years ago. Now, I am involved in a sort of time warp situation.

When I visit the UK, it is like revisiting ones old school; the place is extremely familiar, particularly in the case of my old school, but no longer part of ones daily life. I was driven out by Denis Healey’s draconian 98% tax, along with thousands of others.

I was pleased to be told that all the Judges were not on agreement in this latest farcical round. I will of course be attempting to appeal to the House of Lords – now I believe the Supreme Court, and for those of you who are concerned, I am not the sort of person you can bowl over, especially if the rules are changed on me then backdated to 1992. Is this the England I used to know! Who are the people who are running the place today and are they really going to push what was once a wonderful Country into total bankruptcy.

Whilst writing, I would like to comment on the extremely erudite entries onto my website by anonymous. He seems to have a very good grasp of the situation and I think it is rather a shame that I don’t know who he is. Thank you anyway for helping us all by presenting the situation in such a clear and simple manner.

Have no fear, I shall fight on. Best wishes to you all. Robert Gaines-Cooper

Taxman targets exiles who keep UK toehold

noreply@blogger.com (Issues of Domicile) — Mon, 30 Nov 2009 18:37:00 +0000

Robert Gaines-Cooper

From The Sunday Times Online
November 29, 2009

by Jon Ungoed-Thomas

RICH Britons who claim to have moved overseas could find themselves back in the clutches of the taxman if they have hung on to a car, a mobile phone number or even a golf club membership in the UK.

A new HM Revenue & Customs unit is to probe the lifestyles of those who claim to have moved to the Channel Islands, Monaco and other tax havens. Inquiries will range from the homes of their close family to their children’s schools and club memberships.

HMRC’s new high net worth unit, which monitors the tax contributions of the country’s wealthiest 5,000 people, will examine the non-residency claims of the super-rich. Businessmen commuting to London from tax havens are expected to face particular scrutiny.

Britain’s tax exiles include the Candy brothers, Nicholas and Christian, who turned a £6,000 loan into a property empire. They are worth an estimated £330m and commute to London from Monaco. Others living in tax havens include Lewis Hamilton, the Formula One driver, Sir Roger Moore, the actor, and Peter Cruddas, who founded a financial trading group and is worth more than £1 billion.

Until this year, tax exiles could claim non-residency if they were in Britain for fewer than 90 days a year, under rules devised before private jets made it viable to commute. New HMRC guidelines make it clear that tax exiles must prove they have severed almost all links with the UK.

Ronnie Ludwig, a partner at Saffery Champness chartered accountants, said: “[The taxman] is now not just looking at the days you spend here, but your entire lifestyle to see whether you have really left.

“It comes down to many different things, like property, or a mobile phone number or membership of sports clubs. It is anything that would demonstrate an ongoing link with the UK. If you are ticking a lot of these boxes you are likely to face a challenge over your residency.

“A number of people who now think they are safely out of the system could find themselves on a 50% tax regime.”

HMRC changed its guidance after a case against Robert Gaines-Cooper, an Oxfordshire businessman who faced a tax demand of £30m after inspectors challenged his non-residency status. He claims he left for the Seychelles in the 1970s.

Gaines-Cooper said he spent fewer than 90 days a year in the UK on average, but tax inspectors argued that he was still resident here because he owned a 27-acre estate in Henley-on-Thames with a collection of vintage Rolls-Royces. His son also attended a school in England.

Gaines-Cooper is appealing against the decision because he says he complied with HMRC guidance. His website says his case has “ushered in a climate of uncertainty in taxation, which is ... arguably unfair”.

In another case the taxman has pursued a British Airways pilot who spends only a few weeks a year in the country. HMRC has argued that because the pilot, who is originally from South Africa, flies out of Gatwick and has a house in Britain he is resident for tax purposes.

Even if HMRC does not win these cases, others can expect to be challenged. Tax advisers are warning exiles previously resident in Britain to be cautious about continuing links to the country.

Among those who have recently gone into exile is Guy Hands, the private equity tycoon, who has moved to a £6m home in Guernsey, which has a 20% income tax rate and does not levy capital gains tax. But his wife Julia and family still live in Sevenoaks, Kent, and the couple celebrated their silver wedding anniversary this month.

Hands’s arrangements are likely to be examined closely. He has vowed not to set foot in Britain in the near future so as to establish his new residency.

Jon Moulton, founder of the private equity firm Alchemy and a friend of Hands, warned that the HMRC’s tough new approach could also apply to foreigners who live in London and then move overseas.

“The danger is that they make people who come to London fearful they will never get out again,” he said. “Some bright spark at the tax office will be asking, ‘Doesn’t your child still go to school here?’ ”

Tax inspectors have already tightened up some of the rules on residency. Previously, non-residents who commuted to London did not need to include their days of arrival and departure towards their 90-day tally.

It meant a company executive could fly in early Tuesday morning and leave the following Thursday, while officially having spent just one day in the country. Days of arrival are now counted towards the tally.

Despite the tightening of the rules, tax havens appear to be as popular as ever. Trevor Gabriel, who runs Monaco Villas, a property company in Monaco, said: “The British population in Monaco has doubled in the past 20 years and there is no sign of that slowing down.” He said in addition to its low tax regime, Monaco was clean, secure and well connected.

John Whiting, tax policy director at the Chartered Institute of Taxation, said HMRC wanted to ensure tax havens were not used as addresses of convenience: “It’s going to create a lot of uncertainty because the rules are not clear-cut.”

Judicial Review Granted

noreply@blogger.com (Issues of Domicile) — Thu, 02 Jul 2009 16:56:00 +0000

Against many expectations, Robert Gaines-Cooper was granted a Judicial Review in the Court of Appeal on July 1 2009. The Judicial Review will examine whether the UK tax authorities were right to disapply their longstanding guidance (IR20).

At the hearing the judges wanted to proceed at once but HMRC’s legal team was caught on the hop and had to apply for more time.

Taxpayers will now have another six months to wait while an unsatisfactory state of affairs continues. The review may start in November— most likely early in the new year.

This statement has been issued for "Fairness in Taxation"
by Hurlstons.Consultants on behalf of Robert Gaines-Cooper.
Enquiries may be addressed to Linda Wilbert LL.M on 0207 636 5214 or lwilbert@hurlstons.com

Plus ça change...

noreply@blogger.com (Issues of Domicile) — Tue, 02 Jun 2009 14:32:00 +0000

Her Majesty’s Revenue & Customs (HMRC) issued new guidance to replace IR20 from April 6 2009 ( “Residence, Domicile and the Remittance Basis” ).

As with IR20, HMRC emphasises that it is general guidance only on the officials' view of how the rules apply: the facts of individual cases may make the guidance inappropriate. In other words it's business as usual and taxpayers still do not get the clarity they deserve.

It is high time these concepts were defined by statute - the status quo of relying on HMRC to develop them by applying the limited case law in this area is an inadequate solution.

Letter of support for Robert Gaines-Cooper from Seychelles Secretary of State

noreply@blogger.com (Issues of Domicile) — Tue, 07 Apr 2009 15:59:00 +0000

Robert Gaines-Cooper has the support of the government of the Seychelles. This unsolicited letter was received from the Secretary of State, Alain Butler Payette, in March 2009.

Appeal in the Robert Gaines-Cooper case will be allowed

noreply@blogger.com (Issues of Domicile) — Mon, 09 Mar 2009 16:51:00 +0000

Robert Gaines-Cooper has won the right to appeal against the administrative court decision refusing leave for a judicial review.

He is seeking a judicial review which would clarify the taxpayers' right to rely on guidance from Her Majesty's Revenue and Customs, in particular on IR20 which covers residence.

Robert Gaines-Cooper moved from the UK to the Seychelles in 1976. He ordered his affairs in accordance with HMRC guidance IR20. However HMRC is now seeking to levy tax for the years 1992/3 to 2003/4 as if he were then resident and ordinarily resident in the UK.

He appealed against the assessment to the Special Commissioners in 2006 whose negative decision came out in October 2006. In April 2007 he sought permission for a judicial review to determine whether HMRC had erred in a letter to him about the application of IR20. This application was initially refused but went to an oral hearing after being renewed. The outcome of the oral hearing was again negative; last week's decision gives Robert Gaines-Cooper the right to appeal that decision.

At the heart of the matter is the taxpayer's right to rely on guidance from HMRC.

This statement has been issued for "Fairness in Taxation" by
Hurlstons.Consultants on behalf of Robert Gaines-Cooper.
Enquiries may be addressed to Linda Wilbert LL.M. on 0207 636 5214 or lwilbert@hurlstons.com

The Gaines-Cooper Case and Uncertain Times

noreply@blogger.com (Issues of Domicile) — Sun, 08 Mar 2009 21:34:00 +0000

David Whiscombe of BKL Tax laments uncertainty in tax, and provides two unfortunate examples faced by taxpayers and advisers.

More uncertainty...

The single most desirable characteristic of a tax is certainty. OK, in an ideal world taxes would also be fair, consensual, subject to proper Parliamentary scrutiny and designed to influence behaviours in a desirable way: but the most single important thing is that taxpayers know where they stand. In my experience, for businesses in particular, uncertainty is an unequivocally Bad Thing.

Which brings us to two recent developments.

Dividends as employment income

The first is the publication of the updated HMRC guidance on the revised ITEPA s447. This legislation deals with the taxation of "post-acquisition benefits from employment-related securities" and with the circumstances in which such benefits (and in particular dividends) are chargeable as employment income.

(The remainder of this section of the article is excluded as not pertinent to this blog post. If you wish to view it, visit http://www.taxationweb.co.uk/expert-eye/income-tax/uncertain-times.html)

Uncertainty on residency

For our second recent example of uncertainty look at the Gaines-Cooper case. It has been widely recognised for many years that the statute and case law surrounding questions of residency is in a state that is technically known as a pig's breakfast. Even before the ease of transglobal travel and communications and the rise of the global village made boundaries increasingly pervious to ideas, money and people it was already practically impossible to make any rational sense of the law; and the rise of international commuting has been the final nail in the coffin of any hope of getting much practical help from the (mostly nineteenth and early twentieth century) case law. Thus the codification of HMRC practice set out in IR20 has assumed great practical importance and has become generally accepted as the rule book for such matters. IR20 might be imperfect but at least one thought one knew where one stood. IR20 says that the normal rule is that days of arrival and departure are ignored in counting the number of days of presence in the UK. Mr Gaines-Cooper did not, on that basis, average more than 90 days a year in the UK: he therefore believed he was home (or rather, not home) and dry.

IR20 does create anomalies: many will agree that it is odd that someone who spends in aggregate many days physically present in the UK should be non-resident simply because his presence includes a large number of short trips. And perhaps there is an argument that IR20 should be revised. But, note – "revised": not "ignored when it seems like a good idea". Look, HMRC – you wrote the rules– you encouraged us to play by them – it's frankly unacceptable for you to change them halfway through the game or – as in the case of Mr Gaines-Cooper, to decide towards the end of extra time that the rules have been changed with effect from the start of the game.

In Revenue & Customs Brief 01/07 HMRC make a valiant but misguided attempt to defend the indefensible and invite us to believe that the approach in Gaines-Cooper is wholly consistent with IR20. If you have been resident at any time in the UK, say HMRC, you have first to decide whether you have left the UK before you move on to the stage of counting days of presence in the UK. What was fatal to Mr Gaines-Cooper, they say, is not that his days of arrival and departure have to be counted: it's that he never left the UK in the first place. There are a number of objections to this. First, it's not the case that seems to have been put before the Special Commissioner – rather it's an ex post facto attempt to square the circle. Second, if this approach be true, it follows that two individuals whose actions and behaviours in a given tax year are absolutely identical may be treated differently for residency purposes depending upon whether they have at some time in the past lived in the UK – a surprising result to say the least. Third, there is nary a word of this fine distinction in IR20. On the contrary the very strong impression given by IR20 is that an individual who makes his home elsewhere and who habitually and regularly spends less than 91 days in the UK will be treated as ceasing to be resident and ordinarily resident. Full stop.

There is already more than enough uncertainty in taxes. We need more of it about as much as (to paraphrase John Donne) Argus needs more eyes, or women or the sea more tears. So how about HMRC start seeing their job as promoting certainty rather than removing it?

Reproduced with the kind permission of the author David Whiscombe BKL Tax Consultancy Services

BKL Tax is a division of Berg Kaprow Lewis LLP. For information about BKL Tax Consultancy Services, click the links above
or call 020 8922 9222 for telephone support.

Nichola Ross Martin believes"A judicial review of the Gaines-Cooper case would be timely"

noreply@blogger.com (Issues of Domicile) — Sat, 07 Mar 2009 16:52:00 +0000

Residence and domicile in the firing line. Tax case report.
By Nichola Ross Martin

Reproduced with the kind permission of AccountingWEB

Do you remember the case of Shepherd v. HMRC [2005] STC (SCD) 644? This was the residence case concerning a long haul airline pilot, in which the special commissioner Dr. Brice, ignored HMRC’s guidance on the "90 day rule," as detailed in the publication "IR20 Residents and Non-Residents - Liability to tax in the United Kingdom."

The commissioner preferred the tried and tested method of looking at case law and of course statute. The Shepherd case was a very important one, not just for long haul airline pilots, but because it illustrated the practical difficulties and the numerous uncertainties that exist in this area of tax. The result could have prompted parliament to get around to reviewing the whole problem, but as it happens, it is very much in a chancellor’s interests to have fuzzy rules for residence because then there is so more scope for catching the unwary and hence netting more revenue.

Bizarrely, following the Shepherd case, HMRC did not amend IR20, preferring to say that it had an "enabling function," but clearly, it targeted its efforts carefully.

Dr. Brice recently had the opportunity to extend her approach to the residence problem in another fascinating residence/domicile hearing: Robert Gaines-Cooper v HMRC SPC 568. This is a case that will worry a great many international workers and may have ramifications for large sections of the "ex-pat" community.

To continue, please click here to view the original article published on AccountingWEB.

Videotaped Statements in support of Robert Gaines-Cooper by Individual Witnesses

noreply@blogger.com (Issues of Domicile) — Mon, 29 Sep 2008 19:59:00 +0000

Robert Gaines-Cooper vs HMRC

Reverend French Chang-Him

... What I feel about Robert is that his heart is here in the Seychelles..”

The Right Reverend French Chang-Him is the former Bishop of the Diocese of the Seychelles and the Archbishop of the Indian Ocean.

Marie Therese Geva René

... If he had to choose one place to stay and not travel on, it would be the Seychelles.. and he would stay for good...”

Ms. Rene is the Chairperson of the National Council for Children ("NCC") in the Seychelles.

Sir James Mancham

... If anyone deserves to be Seychellois, it’s Gaines-Cooper...”

Sir Mancham is the founding president of the Seychelles, and member of the Council of the Universal Peace Federation.

John Pugh

... I think he has reached the stage with his present thinking... all he wants out of life is here in the Seychelles...”

John Pugh is the former British High Commissioner to the Seychelles.

Michael Landon

... I've always known Robert as saying Seychelles is his home. I've not heard him relate to any other of the properties he owns as his home.”

Michael Landon is the Managing Director of Venner Trading SA (formerly LMA International S.A. Group).

David Curtis-Bennett

... This is definitely his home. He has business interests all over the world.. whenever he can he comes back here...”

David Curtis-Bennett is the Managing Director of Chelle Medical Limited and of Inter-Medical Supplies ("IMS").

Challenging the changes in the way residence and domicile status will be determined for U.K. tax purposes

noreply@blogger.com (Issues of Domicile) — Fri, 11 Apr 2008 20:54:00 +0000

Robert Gaines-Cooper vs HMRC

Robert Gaines-Cooper is appealing against a number of assessments which were issued by The Commissioners of Her Majesty’s Revenue and Customs. The appeals concern the liability of the Appellant for income tax under Case VI of Schedule D. The basis of the appeal concerns the issues of domicile, residence and ordinary residence of Robert Gaines Cooper. He has asserted and provided documented evidence in the case that he abandoned his domicile of origin in England and acquired a domicile of choice in the Seychelles well before 6 April 1992. He has retained that domicile of choice ever since.

HMRC has changed its policy in regard to the days of entry and departure used to calculate whether an individual has spent an average of more than 90 days in the UK during four consecutive tax years — or more than 183 days during any single year. Anyone who exceeds either limit is liable to British income tax.

Now the days of entry and departure disregard rule has been changed by the Special Commissioners and many people will be stripped of their non-resident status and subject to assessments by HMRC even though they have established a domicile of choice and residency outside of the United Kingdom. It should be noted that this recent change has occurred and effects historical events over the last 13 years.

This Blog presents the key issues and findings in the matter including the sworn testimony of individuals that reject the residency claims of the HMRC. Additionally the facts are intended to support the appeal of this ruling and to prevent these changes from becoming a formal legal precedent if agreed to by a High court judge. We will update this Blog as more information becomes available. However, we encourage you to contact your tax accountancy to best determine the impact this ruling may have on your tax liabilities.

Issues of Domicile

To Those Concerned About the HMRC's Rulings

Taxman targets exiles who keep UK toehold

Judicial Review Granted

Plus ça change...

Letter of support for Robert Gaines-Cooper from Seychelles Secretary of State

Appeal in the Robert Gaines-Cooper case will be allowed

The Gaines-Cooper Case and Uncertain Times

More uncertainty...

Dividends as employment income

Uncertainty on residency

Nichola Ross Martin believes"A judicial review of the Gaines-Cooper case would be timely"

Residence and domicile in the firing line. Tax case report. By Nichola Ross Martin

Videotaped Statements in support of Robert Gaines-Cooper by Individual Witnesses

Robert Gaines-Cooper vs HMRC

Challenging the changes in the way residence and domicile status will be determined for U.K. tax purposes

Robert Gaines-Cooper vs HMRC

Residence and domicile in the firing line. Tax case report.
By Nichola Ross Martin