Taxpayers and their advisors might be forgiven for thinking that, once in the UK for whatever reason, it is very difficult to get out – at least for tax purposes! As is well known, on 23 February, the Court of Appeal dismissed Mr Gaines-Cooper's application for judicial review of HMRC's interpretation of its published guidance contained in IR20 (now HMRC 6). His argument was that he should be treated as being not resident and not ordinarily resident in the UK for the tax years 1993/1994– 2003/2004, following his move to the Seychelles in 1976.
A major part of Mr Gaines-Cooper's argument was that before 2004/05 HMRC did not require taxpayers to demonstrate that they had made a distinct break from the UK in order to be treated as non-resident within paras 2.7 – 2.9 IR20. HMRC, however, denied that its approach had changed, but did acknowledge that the increase in the number of people claiming non-resident status in recent years had necessarily led to 'greater scrutiny'. Despite evidence to the contrary, the Court of Appeal found that there was no change in HMRC policy and that it had always been necessary to make a distinct break with the UK in order to fall within paras 2.7 – 2.9.
On a similar theme, the First-tier Tribunal has recently found in Dr Andreas Helmut Tuczka v HMRC  UKFTT 53 (TC) that the taxpayer was ordinarily resident for the tax years 1998/99, 1999/2000 and 2000/2001. Dr Tuczka, an Austrian national, lived in Vienna. In April 1997 he was offered a job at UBS and took up employment in London on 1 July 1997. Dr Tuczka expected to stay between 2½ - 3 years in the UK. He argued that his presence in the UK was not with a settled purpose of being ordinarily resident here because he had spent much of his time in the UK planning how best to leave his UK employment and go back to Austria. The Tribunal found, however, that Dr Tuczka's principal base was in the UK, that a degree of settled purpose must be taken from the fact that he intended to spend a lengthy period of time in the UK as a result of his employment and that, although he wished to leave, there were compelling professional reasons preventing this.
With the changes introduced in the FA 2008 and the formation of the new High Net Worth Unit at HMRC, residence, ordinary residence and domicile are hot topics at the moment in the tax world. HMRC appears to consider such taxpayers as a lucrative source for increased tax yield. The Gaines- Cooper and Tuczka cases illustrate the difficulties that taxpayers face at the moment in persuading an aggressive HMRC that they are not ordinarily resident and/or domiciled in the UK, but there is some light at the end of the tunnel – Mr Gaines-Cooper has obtained permission to appeal to the Supreme Court and the appeal is likely to be heard later this year. It is to be hoped, therefore, that the Supreme Court will clarify the position and introduce some certainty into what is a difficult and complex area of law.