UK Residency Update

Court of Appeal decision in R (on the application of Robert Gaines-Cooper) v Revenue & Customs Commissioners (2010)

On Monday the Court of Appeal released its decision in the judicial review of the Robert Gaines-Cooper case. The appeal was heard together with two other similar appeals by Robert Davies and Michael James.


The saga of Mr Gaines-Cooper began in October 2006, when the Special Commissioners (now part of the Tax Tribunals) determined that despite him seeking to claim residency in the Seychelles, he had remained resident in the UK.

A key part of Mr Gaines-Cooper's case was that he had relied on guidance issued by HMRC (known as IR20) that set out the circumstances in which an individual would, or would not, be treated as resident in the UK and therefore liable to UK income and capital gains tax. A key part of the guidance that Mr Gaines-Cooper relied on was that spending less than 91 days a year in the UK would mean that he could not be treated as UK resident. In particular he had relied on days of arrival in and departure from the UK not being counted for the purposes of the 91-day test to spend the weekend in the UK, flying in on Saturday and out on Sunday to avoid the visit being counted. This led to the Special Commissioners deciding that in his case the number of nights in the UK should be counted rather than the number of days, an approach that has since been enshrined in HMRC guidance, with a 'day' now meaning presence at midnight.

Davies and James relied on different guidance in IR20 that individuals who go abroad to work under a full-time contract of employment would also not be treated as resident in the UK.

The taxpayers all claimed that they had a legitimate expectation that the guidance set out in IR20 would be applied to them and as such, if they followed it, it gave them a binding assurance that they would not be treated as UK resident.

The decision

The Court of Appeal decided that a statement formally published by HMRC can be regarded as binding, subject to its terms, in relation to any case falling clearly within the terms of that statement. IR20 set out a limited number of specific situations in which a taxpayer would be treated as non-UK resident. If the taxpayer fell within those situations then HMRC had said that they would treat the taxpayer as falling within that guidance and would not resile from this. However, a taxpayer had to fall clearly with the terms of the guidance, Messrs Gaines-Cooper...

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