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Exiles may have to pay back taxes after ruling
A tax exile may now have to pay a tax bill of £30m, for the years from 1993 to 2004. After the Court of Appeal upheld the right of HM Revenue & Customs to tax businessman Robert Gaines-Cooper.
Although Mr Gaines-Cooper has lived in the Seychelles since 1976. Judges ruled that he had never been exempt from UK taxes as a non-resident citizen. He had abided by the rules to spend fewer than 91 days per annum in the UK, but he had still not cut his ties with the UK.
Most people assume that the Inland Revenues guidance on non-residency known as a IR20, meant that if you abided by the 91 day rule you would have been treated as a tax exile. This was presented by Mike Warburton of accountants Grant Thornton, who was an expert witness in the case.
However, the three Appeal Court judges ruled that it had always been the case that any would-be tax exile, such as Mr Gaines-Cooper, first had to show they had really left the country.
Mr Gaines-Cooper, now in his 70s, was born in the United Kingdom and made his fortune from international businesses, he moved to the Seychelles in 1976, where he still lives.
Judges said that England had remained the centre of his business interests.
They decided that he had never cut his ties with Berkshire, the area where he had grown up, and he still owns a mansion on a 27-acre estate near Henley. Which judges said was still his chief residence therefore, failing to to prove a ‘distinct break’ with his family and friends in the UK.
The judges based their interpretation of residence, are if you have family connections such as children attending boarding school, membership of a sporting club, and use of UK credit cards, banks and mobile phones.
The judges ruled there were grounds to rule that Mr Gaines-Cooper had in fact been resident and ordinarily resident in the UK throughout his apparent exile.
Mr Gaines-Cooper says he will appeal to the Supreme Court.
If upheld, the effect of the ruling will be to expose thousands of the six million UK citizens living abroad, to retrospective tax bills, not just ones for future years.
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