Occasional visits to the UK did not stop an individual being non-resident, said judge

Out-Law News | 27 Nov 2013 | 2:47 pm | 3 min. read

An individual who periodically visited the UK was not UK resident as he had substantially loosened his family ties in the UK, according to the First Tier Tax Tribunal.

James Glyn was a British citizen with a wife and grown up children. He retired from his full-time job as manager of a property investment company owned with his brother, a job he regarded as “drudgery”. The properties were sold before he left and he moved to Monaco with his wife before 6 April 2005. In the 2005/6 tax year he received a substantial dividend and claimed that he was non-UK resident.

Glyn and his wife retained their former family house in London but his children were grown up and did not live there, the Tribunal heard. The Glyns would visit it from time to time often en route as part of longer holidays and trips around the world, when they would usually fly from Heathrow Airport. HMRC argued that Glyn did not make a sufficient distinct break with the UK and was therefore UK resident for the tax year in question.

In the Tax Tribunal, the judge described the use of the UK house as being for the purposes of a “stopover”. He said it was not a hotel but was retained for convenience and because the taxpayer knew he would eventually return to the UK. Retention of accommodation here does not automatically mean UK residence.

Glyn and his wife are Jewish and if they spent a Friday night in London they sometimes had dinner with their children, the Tribunal heard. Glyn also saw friends whilst in the UK and attended occasional Jewish festivals. The Judge said that returning to spend time with family and friends and to celebrate occasional Jewish festivals was not fatal to a non-residence claim where, as here, an individual had made a sufficient distinct break.

He said: "Surely it must follow as a matter of common sense that if a person has left the UK, and he then makes periodic visits back to the UK those visits are likely to be for some special event or some purpose that is of some significance to him. It cannot be envisaged that the person making the visits must make them for some purpose that he considers trivial and incidental. The suggestion…that a visit would be acceptable only if the visitor refrained from meeting family and friends but returned to the UK simply to go and see Stonehenge because he had never seen it whilst formerly living in the UK is ridiculous. Surely visits will inevitably only be made for some purpose that is of real significance to the visitor.”

Glyn spent only about 65 days a year in the UK and the number of days spent in Monaco was very high, over 200 days each year over the five year period. The Tribunal held that he was not UK resident or ordinarily resident in 2005/6.

James Bullock, a tax expert at Pinsent Masons, the law firm behind Out-law, who acted for Glyn, said that in this case the Tribunal had carefully considered all the facts and were satisfied that Mr Glyn had done "more than enough" to be non-resident.

"The case turned on its very clear facts. Deciding factors were Mr Glyn's extremely low day count compared with recent cases, that he had wholly retired and he had established a full life with his wife in Monaco. In the context of the substantial loosening of his other ties in the UK the occasional use of a London property and attendance from time to time at Jewish occasions was not sufficient to make him UK resident." he said.

Bullock said that the decision is in contrast to the decision in the recently reported Rumbelow case which also concerned UK residence. "In contrast to the Rumbelow case, Mr Glyn had kept meticulous records of all his visits to the UK and Monaco, he could describe with great accuracy all his daily routine and provide evidence of each day, he immediately established a settled abode abroad, his UK day count was very low and unlike the Rumbelows he did not continue any work in the UK" James Bullock said.

The common law test of residence has now been replaced by a statutory test of residence which applies from 6 April 2013. The Glyn case is therefore decided in relation to the law as it stood before the statutory test applied.