Abramovich's UK Non-Dom Status Brings Court Victory

by Robin Pilgrim, LawAndTax-News.com, Cyprus

05 November 2008

The High Court in the UK has come down in favour of Russian tycoon Roman Abramovich over a GBP2.5m claim against him, because the judge considered that he was not domiciled in the UK for tax purposes.

Mr Justice Christopher Clarke ruled in favour of Abramovich on the grounds that he does not spend enough time in the UK to be considered resident in the country. Justice Clark argued that Abramovich remains a Russia citizen and taxpayer, and spends most of his time in his country of birth overseeing his business interests and in his capacity of Governor of the Siberian province of Chukotka. The claim, therefore, should have been served in a Russian court, he said.

The UK tax authority, HM Revenue and Customs, normally considers someone as resident in the UK if they spend more than 183 days in the country in any one tax year. However, in 2007, Abramovich was found to have spent just 57 days in the UK, time almost exclusively devoted to his ownership of Chelsea football club.

“He spends more time in Russia than anywhere else and his business and personal interests are focused on Russia. Virtually all of the business associates with whom he is said to have dealt in these proceedings are Russian. Prior to 2004 he spent virtually no time in England," Justice Clark observed.

The claim against Abramovich was lodged by Yugraneft, a London-listed company which claims that Sibneft, the firm formerly owned by Abramovich, illegally diluted its 50% share in development of the South Priobskoye oilfields in Western Siberia to virtually zero by transferring ownership to offshore companies. This legal action stemmed from a lawsuit commenced five years ago by Sibir Energy, which held its shares in the joint venture through Yugraneft.

In 2005, the Eastern Caribbean Supreme Court in the British Virgin Islands ruled against Sibir, dismissing an application for legal jurisdiction in the BVI where the offshore companies are thought to be registered.

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