Tribunal – residency issues

A recent Tribunal decision concerned the issue of whether an airline pilot who made long haul flights between the UK and South Africa and other locations was resident in the UK or not. This case has a long history stemming from a rental and subsequent purchase of a home in South Africa by the pilot in August 1997.

The taxpayer contended that South Africa was his home, the center of his social life, the place where he intends to retire and where his parents and a brother live. However, the taxpayer retained his house in the UK which is used as a base before and after his duties as a long-haul pilot (for flights from Heathrow and Gatwick), is listed a resident on the electoral role and owns a car used for journeys to and from his work at the airport.

The taxpayer saw that there was a ‘distinct break’ with the UK and a cessation of residence from August 1997 resulting in a ‘wholesale relocation’ of life to South Africa. The taxpayer contended that the UK is no longer his settled or usual abode and he does not “live” in the UK. The taxpayer has an ex-wife and daughters in the UK but has not seen his children for over thirty years and has only seen his ex-wife twice in the last thirty years. He has no other family in the UK. HMRC disagreed and issued a notice of determination that the pilot was ordinarily resident in the UK from 1997-8 to 2002-3 inclusive.

This case was first heard in November 2008 when the Special Commissioner found in favour of the taxpayer. HMRC appealed this decision to the High Court who concluded that the Special Commissioner had made errors of law in arriving at her decision and that the taxpayer was resident in the UK. The taxpayer appealed to the Court of Appeal who agreed ultimately remitted the case to the First-Tier Tribunal to determine whether the taxpayer was resident in the UK for the relevant years of assessment.

In her conclusion the Tribunal Judge stated that she did not consider that the taxpayer has demonstrated a sufficient break from the UK. The time “spent in the UK must be a little less than half the time before September 1997 (bearing in mind that time now spent in Cape Town would before September 1997 have been spent in the UK). But I find this is not enough to amount to a definite break with the UK. He did create new ties elsewhere but he did not sever his main ties (employment and house) with the UK.”

The Tribunal found that the taxpayer went from being a person resident in one country to being a person resident in two. The appeal was dismissed, the Tribunal finding that the taxpayer was both resident and ordinarily resident in the UK for the six years in issue.

This decision illustrates some of the difficulties a UK resident faces in making a sufficent break from the UK in order to become non-resident.

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