The answer to the vital question of whether a taxpayer is ‘ordinarily resident’ in the UK depends on many factors. In one such case, a billionaire businessman received an £84 million tax bill after HM Revenue and Customs (HMRC) refused to accept that he had made his home in Monaco.

HMRC claimed that the tax was due after the man’s sale of a tranche of shares in his company yielded £200 million. He argued that, at the time of the sale, he and his partner were living in a hotel suite in the principality, later moving to a yacht in the harbour and subsequently to a rented apartment.

In arguing that he was not subject to UK tax at the time of the share sale, he said that his move to Monaco represented a distinct break in his pattern of life and that he had a settled intention of remaining there.

In countering those arguments, however, HMRC pointed out that he had remained Executive Chairman of the English-registered company he founded and had retained his family home in England. He had flown to the UK more than 40 times during the relevant tax year, primarily in order to visit the company’s head office. The facts of the case emerged as the First-tier Tribunal gave directions in respect of the pending hearing of the businessman’s appeal against the tax bill.

This dispute will clearly be appealed no matter what the decision, as such a large amount of tax is at stake. It does underline the point that HMRC will seek to attack tax avoidance measures involving large sums of tax whenever the possibility exists, and emphasises the need to take great care when making any tax avoidance arrangements.

In his Autumn Statement, the Chancellor announced that the Government intends to change tax laws for non-domiciles to make residence the key issue in determining liability for UK tax.


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