The special commissioners decided, as a preliminary issue, that a taxpayer had failed to establish on the balance of probabilities that he had abandoned his domicile of origin in England and acquired a domicile of choice in the Seychelles. Moreover, on the evidence, he had been resident and ordinarily resident in the UK during the relevant tax years.

Facts

The taxpayer appealed against a number of assessments, amendments to self-assessments and notices which related to the tax years 1992–93 to 2003–04 concerning his liability for income tax under Sch. D, Case VI either under ICTA 1988, s. 739–746 (relating to the transfer of assets abroad) and/or ICTA 1988, s. 660A–660G (relating to settlements and the liability of the settlor).

It was agreed between the parties that the issues of the domicile, residence and ordinary residence of the taxpayer should be heard as preliminary issues. It was the taxpayer's case that he abandoned his domicile of origin in England and acquired a domicile of choice in the Seychelles in 1976 and that he had retained that domicile of choice ever since. He argued that there had been no home in the UK available for his use when it had been rented out and relied upon the facts that he had built a plastics factory in the Seychelles and had notified the Inland Revenue and the Bank of England that he was non-resident in the UK. Further in the early years he had spent several months in the Seychelles each year compared to the number of days he spent in England.

It was the Revenue's case that the taxpayer had never abandoned his domicile of origin. He had bought a house in the Seychelles and built a plastics factory there in order to obtain a residency permit, but the quality of his long established ties with the UK, his continued residence in the UK, together with his regular visits to the UK all established that he remained domiciled in the UK.

Issues

Whether the taxpayer was domiciled in England during the tax years from 1992–93 to 2003–04; whether the taxpayer was resident in the UK from 1993–94 to 2003–04; and whether the taxpayer was ordinarily resident in the UK from 1992–93 to 2003–04.

Decision

The special commissioners (Dr AN Brice and Charles Hellier) said that the burden of proof was on the taxpayer to show that he had abandoned his domicile of origin and the standard of proof was the balance of probabilities.

Domicile

A domicile of choice was acquired by the combination of residence and the intention of permanent or indefinite residence and in reaching a decision it was necessary to look at the totality of the evidence, including events which occurred after the claimed acquisition of a domicile of choice. Residence for the purposes of the law of domicile meant physical presence as an inhabitant but where a person resided in two countries it was necessary to look at all the facts in the light of the principle that a person who retained a residence in his domicile of origin could acquire a domicile of choice in a new country only if the residence established in that new country was his chief residence. There must also be the intention of permanent and indefinite residence: a determination to make the alleged domicile of choice his home with the intention of establishing himself and his family there and ending his days in that country.

Viewed objectively, the facts and evidence in the present case did not support the conclusion that the Seychelles was the taxpayer's chief residence. England remained the centre of gravity of his life and his interests and his chief residence was there. There was no evidence of an intention of permanent and indefinite residence in the Seychelles nor any determination to make the alleged domicile of choice his home with the intention of establishing himself and his family there and ending his days in that country. Accordingly, the taxpayer had not discharged the burden of proving that he abandoned his domicile of origin in England.

Residence

As regards the taxpayer's residence, the concept of residence’ was not defined in the legislation and the word had to be given its natural and ordinary meaning. The words ‘residence’ and ‘to reside’ meant ‘to dwell permanently or for a considerable time, to have one's settled or usual abode, to live in or at a particular place’ and whether a person was or was not resident in the UK was a question of fact for the special commissioners. Further, no duration was prescribed by statute and it was necessary to take into account all the facts of the case; the duration of an individual's presence in the UK and the regularity and frequency of visits were facts to be taken into account; also, birth, family and business ties, the nature of visits and the connections with this country, might all be relevant. In general the availability of living accommodation in the UK was a factor to be borne in mind in deciding if a person was resident (although that was now subject to s. 336(3) of ICTA 1988). The fact that an individual had a home elsewhere was of no consequence; a person might reside in two places but if one of those places was the UK, he was chargeable to tax there.

Although the taxpayer considered himself resident in the Seychelles, in all the circumstances he resided in both the UK and the Seychelles and so under general principles he was resident in the UK.

Temporary purpose

The words ‘temporary purpose’ in s. 336(1) of ICTA 1988 had to be given their natural meaning and meant a casual purpose as distinguished from the case of a person who was in the UK in pursuance of his regular habits of life. On the facts of the present appeal, the taxpayer's purpose in visiting the UK was not a purpose which lasted for a limited time. It was a permanent and not a transient purpose nor was it simply a passing need. Neither was it a casual purpose but rather it was in pursuance of the regular habits of the taxpayer's life. A decision to visit the UK on a large number of days each year to be with his wife and child was not a temporary purpose. There was no general proposition that because a visit was short it must necessarily be for a temporary purpose. In all the circumstances, the presence of the taxpayer in the UK for the years under appeal was not for a temporary purpose.

The second cumulative requirement in s. 336(1)(a) was the absence of an intention on the part of the taxpayer to establish his residence in the UK. The fact that the taxpayer had a place to live in the UK was now to be ignored by virtue of s. 336(3). The evidence indicated that the taxpayer had no subjective intention of establishing his residence in the UK for the purposes of the Taxes Acts and would have done quite a lot to ensure that residence with that meaning was not established but that did not mean that objectively he was not resident. However since the requirements of a temporary purpose and no intention to establish residence were cumulative and not alternative, and as the taxpayer had been found not to be in the UK for a temporary purpose, the exemption in s. 336(3) did not apply.

Ordinary residence

Finally, the concept of ‘ordinary residence’ connoted residence in a place with some degree of continuity and ‘ordinary’ meant normal and part of everyday life. In the present case, the taxpayer was resident in the UK in the years of assessment under appeal and his residence was continuous in the sense that it continued from year to year. It was ordinary and part of his everyday life bearing in mind that his everyday life was far from ordinary. Moreover the taxpayer would still be ordinarily resident in the UK even if there were an occasional year when he was not so resident.

(2006) Sp C 568.
Decision released 23 October 2006.