Gaines-Cooper was granted leave to appeal the Court of Appeal decision in August 2010 which ruled in favour of HM Revenue and Customs. The subsequent appeal to the Supreme Court again ruled in favour of HM Revenue and Customs on 19 October 2011.
The dispute concerned whether Gaines-Cooper who had moved to the Seychelles in 1976 was still UK resident.
Residence and ordinary residence are not defined in the legislation. Therefore, the issue concerned how much reliance could be made on HM Revenue and Customs (HMRC) guidance and practice.
The Lord Justices found that the wording in IR20 should not be regarded as binding, but just as guidance. They also determined that even if it could be deemed as binding, a full reading of the document indicated that a “multifactorial consideration” of the circumstances of an individual was required. This was despite the fact that they also noted that the document could have been much clearer in respect of how an individual becomes non-UK resident. They also found that there was “insufficient evidence” provided to prove that HMRC practice was to be more lenient than IR20.
Consequently, a multifactorial approach was adopted which resulted in the Supreme Court holding that Gaines-Cooper’s strong links to the UK (including his estate in Oxfordshire) resulted in him being UK resident despite the fact that he had never stayed 91 days in the UK in any given year.
However, the matter may not yet be resolved as Gaines-Cooper issued a statement shortly after the ruling indicating that he may yet appeal to the European Court of Justice “It is a loss but it does not end the war. I do not give up easily.”
The uncertainty which surrounds the case is one of the factors which has prompted the Government to issue their consultation on the statutory residence test which closed on 9 September 2011. However, the current proposals state that cases arising before it takes effect would not be affected. This means that such cases will need to use the current system of relying on case law to establish UK residency and non-residency.
Further information on the consultation can be found in the Statutory Residence Test – A summary article.
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