HMRC has won another key victory in the courts after judges rejected fresh claims by international business tycoon Robert Gaines-Cooper that he had been wrongly denied non-resident status.
Gaines-Cooper claimed the taxman had laid a "devious trap" for him by
non-resident status and hitting him with a huge retrospective tax bill, but a judicial review did not agree.
The ruling will affect so called "Monaco Millionaires" who try to escape the UK tax net by living overseas but where they retain connections with the UK.
Judges said that HMRC had used the correct interpretation of the UK's non-resident policy, known as "IR20" and said that England had remained "the centre of gravity of his life and interests."
Mike Warburton tax at Grant Thornton said: "This decision will come as a major blow to those wealthy tax exiles who had carefully followed the Revenue published guidelines in IR20 but now find that the goalposts have been moved."
Gaines-Cooper, a globe-trotting businessman insists he has been domiciled at his luxury villa in the Seychelles for more than 30 years and has religiously kept to the taxman’s published demands by spending no more than 91 days-a-year in the UK.
But judges said he had never cut his ties with Berkshire, where he grew up, and Oxfordshire, where the court ruled his mansion, near Henley, continues to be his "chief residence."
Mr. Gaines-Cooper made several major strategic mistakes including maintaining unnecessary U.K. indicia; not moving to a tax treaty country (i.e. use the treaty tie breaker rules to challenge the U.K.'s unilateral residence assertion); and having unencumbered UK assets making him a worthwhile target.
The UK may have made an even bigger strategic mistake by pursuing this case. The UK relies on a small number of wealthy individuals (aka Golden Geese) for a huge amount of their tax revenue (let alone creative and job creation capital). Making this a poster child case will surely cause more Golden Geese to flee now before they are next. The ramifications on future tax revenue losses could be significant. Bookmark this website to watch this saga unfold http://flightofthegoldengeese.blogspot.com/
Posted by: David S Lesperance, 19 Feb 2010 | 00:00
Can somebody tell me. Does the Gaines-Cooper case address Domicile or non Resident/Not Ordinarily Resident. I understand the test for the former is tough but is the test now the same for Residency?
Posted by: Anon, 21 Feb 2010 | 00:00
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