THE SUPREME COURT’S ruling in a high-profile residency test could open the floodgates for HM Revenue & Customs to pursue thousands of British tax exiles, lawyers have warned.
The Lord Justices found in favour of HMRC in its long-running dispute with Robert Gaines-Cooper (pictured) over his residency status. Gaines-Cooper has claimed that he planned his residency status based on Inland Revenue guidance, document IR20.
Jason Collins, a partner at McGrigors, said this ruling “could open the floodgates”. He said: “Tax exiles will urgently need to review their affairs in the light of this ruling. Taxpayers will not be able to rely on following HMRC’s guidance to the letter to comply with the law.
“IR20 was intended to provide certainty over when HMRC would treat a taxpayer as UK resident. HMRC has signally failed to provide that certainty.”
Mike Walker, a partner at KPMG, said the decision “does offer a small ray of hope” for other taxpayers in dispute with HMRC over their past residency status . “It says in paragraph 45 that a decision by the tax authorities on residence should be based on ‘a multifactorial evaluation’ of circumstances. However, the judges do also stress the importance of a distinct break in severing residence ties with the UK,” he said.
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