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UK Tax Exile Loses High Court Domicile Case

by Robert Lee,, London

20 November 2007

The British-born businessman who is contesting a decision by HM Revenue & Customs that he remains domiciled in the United Kingdom for tax purposes has lost his appeal in the High Court in London.

Robert Gaines-Cooper, who has business interests all over the world, claims that he is resident and domiciled in the Seychelles, but the court concluded - in agreement with HMRC - that he maintained sufficiently strong ties to the UK to put his claim in doubt.

After examining the case, Mr Justice Lewison ruled that it was "impossible to say that the only true and reasonable conclusion was that Mr Gaines-Cooper acquired a domicile of choice in the Seychelles in 1976".

The decision upholds a ruling by the Special Commissioners that Gaines-Cooper could not be considered non-domiciled because he maintained strong links with the UK, for example, by schooling his son in the country, and pursuing business and leisure interests there.

However, the court failed to clarify the rules on residence, which are subject to some uncertainty after HM Revenue and Customs reinterpreted the 90-day residence test in the case of Gaines-Cooper to include time spent transiting through the UK.

While the case is potentially bad news for British-born expats who are attempting to claim domicile in a new country, illustrating how difficult it can be to sever ties with the country of one's birth, tax experts point out that it could help foreign-born individuals living in the UK.

Gaines-Cooper is expected to seek leave to appeal on the residency aspect of the case to the Court of Appeal.

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