You might expect it to be fairly straightforward to work out whether someone is resident in the UK for tax purposes or not. The case of Gaines- Cooper v Revenue and Customs Commissioners, which was decided in November 2006, shows that in many cases it is not at all straightforward and many factors have to be taken into account.

The Gaines-Cooper case received considerable, and somewhat alarmist, coverage in the press. This is largely because the case seemed at first sight to have overturned some of the Revenue’s own official guidance on residence. In particular, it appeared to disregard the Revenue's well-known practice that days of arrival in, and departure from, the UK should be ignored when calculating the number of days a person has spent in the UK. In some cases this could increase the number of days significantly, so that the total fell the wrong side of a critical line.

In fact, the Revenue have since said that their practice still stands. They say that, if someone has genuinely left the UK and lives elsewhere, or originates from abroad and just visits the UK, that person will not normally be treated as resident in the UK provided he spends less than 91 days a year in the UK. This means less than 91 days a year when averaged over a maximum of 4 years, still excluding days of arrival and departure.

The crucial question is, therefore, whether a person has really left the UK, because only then can they take advantage of the 91 day test and so get the benefit of the Revenue practice of ignoring days of arrival and departure. Mr Gaines-Cooper's problem was that he did not succeed in convincing the Special Commissioners that he had really left the UK. He had indeed moved to the Seychelles, and he had a house, a business and a residence permit there, and the family pets lived there. However, the business in the Seychelles was only one among many businesses that he had all over the world, he still had a house in the UK, his wife and son lived in the UK, and he visited the UK regularly for family, social and business purposes. Moreover he spent more time in the UK than in the Seychelles.

The case has brought calls from many quarters for a clear test of UK residence. The Government said as long ago as 2002 that it intended to review the rules on residence and domicile, but there has been little progress on this. Unless and until a clear test of residence is put in place, we have to rely on a mixture of statute and case law (with an eye to Revenue guidance) to determine whether a person is resident or not. Each case needs to be looked at carefully on its own facts.