The recent case of Grace v HMRC has shed more light on HMRC’s position regarding residence.
Mr Grace was born in South Africa but lived in the UK for a decade before moving back to Cape Town. He argued that for five years after 1997 he was not UK tax-resident. This was challenged by HMRC who argued he never lost his UK-residence status on the grounds that he maintained a house in the UK and continued to use it as a base for his work out of Gatwick.
The Tribunal found for HMRC, on the basis that Mr Grace’s presence in the UK was a permanent feature of his life. He had a ‘settled abode’ here and he would be constantly linked to the UK whilst he worked for British Airways. There was an expectation that he would continue to be present in the UK and in fact at the time of the hearing he still had a house near Gatwick and was still a pilot with British Airways.
He had short, frequent and predictable visits here and he spent as much time in the UK as he did in South Africa.
There was no evidence of a distinct break from the UK when he returned to South Africa – although he created new ties there, he did not sever his ties in the UK. Consequently he did not succeed in proving his case.
These recent cases just go to show how much care has to be taken in this area, particularly when someone is leaving the UK but retaining some connection with it.
If you have any residence queries or concerns please do give me a call.
Sue Stephens
Tax Manager
