Gaines-Cooper loses in Court of Appeal - Residence rules revisited

Two years ago the Special Commissioners determined that Robert Gaines-Cooper had retained his domicile of origin and that the frequency of his visits to the UK meant that he was resident and taxable here.

The Commissioners decision was upheld by the High Court and now also by the Court of Appeal. The Judges dismissed Mr Gaines-Cooper's appeal as 'nothing more than an illegitimate attempt to reargue the facts.'

Perversely the case may not be wholly good news for HMRC. In stressing the hurdles that need to be overcome to lose one's domicile of origin, the case also makes it more difficult for HMRC to successfully challenge the claims of non-doms in the UK that they retain their domiciles of origin overseas.

This case was the catalyst for the new rules for determining residence and domicile for tax purposes. These were announced in the 1997 Pre-Budget Report and then, after much backtracking and clarification they were introduced in the 2008 Budget and Finance Act.

In the meantime the Residence and Domicile 'bible' for advisers, IR20, has become out of date. However, as reported previously on the TaxBuzz blog, HMRC are inviting advisers to suggest the issues that an updated IR20 should cover.

The Court of Appeal decision may be the end of the road for Mr Gaines-Cooper although one assumes that his legal advisers thought there was a strong enough case to appeal this far. Whether he has the stomach for an appeal to the House of Lords, or will be granted leave to make such an appeal seems unlikely.