The case of Robert Gaines-Cooper, the multi-millionaire who was famously judged by HMRC to qualify for UK tax despite being based in the Seychelles, was back in court last week
Mr Gaines-Cooper, 73, spent two days at the Supreme Court, where he appealed against the decision on his tax exile status made by the High Court in 2010.
The businessman, originally from Reading, moved to the Seychelles in 1976, and followed HMRC guidance including making sure he stayed no longer than 91 days in the UK every year to ensure he did not become liable for UK tax.
In 2006 however, HMRC decided that his close connections with the UK, which included a large estate in Henley (Other OTC: HYNLZ.PK - news) -on-Thames and regular trips to Ascot, meant that he was both resident and domiciled in his home country, and liable for a backdated tax bill totalling millions of pounds.
Mr Gaines-Cooper lost attempts to have the decision on his domicile, broadly defined as the place where a person has his permanent home, overturned, but was given leave to appeal the judgement on the more complicated issue of his residency status last August.
Peter Vains, head of tax at the London office of solicitors Squire, Sanders & Dempsey , which is representing Mr Gaines-Cooper, said that he felt the hearing had gone well, but that it was “difficult to say” what the outcome would be.
“It’s been a very big case, and we expect to hear the judgement in two or three months,” he said.
In a statement, Mr Gaines-Cooper said that it remained a “mystery to me why this case has come so far over so many years and ended up in the Supreme Court, when all I sought was fairness and the right to rely on published guidance from HMRC when planning my tax affairs.
“I have every confidence in my advisers and in the British legal system and so will be following proceedings over the coming days with interest, as you might imagine."
The case has led to increased criticism of HMRC for its unclear rules on tax residency. Although accountants have long advised clients that abiding by the 91-day rule is the standard requirement for non-residency, there is no official definition, with cases assessed individually. Last month, HMRC launched a consultation into the idea of a statutory residency test, which it hopes will clarify the issue.
Rhiannon Davies, editor of the website Shelter Offshore , said that such a test was long overdue.
"The majority of Britons who move abroad permanently do not seek to flout the residency rules, but because there has never been a statutory test in place to determine whether a person is resident for tax purposes or not, it’s a constant nagging worry for many expats who have legitimate cause to occasionally visit the UK," she said.
"When you get a case like Mr Gaines-Cooper's, it sends shockwaves through the expatriate world."
The Supreme Court is the final court of appeal in the UK, but Mr Vains said that if the hearing is unsuccessful, there might be a “European aspect” which Mr Gaines-Cooper could consider pursuing.