Whether the taxpayer's circumstances had changed sufficiently to show that he had ceased to be resident or ordinarily resident in the UK

The taxpayer had significant interests in a non-resident trust and in that regard he went to work in the Netherlands in 1998. In January 1999 he became ill and he returned to the UK in April 1999 but did not return to work in the Netherlands again. Substantial gains were realised by the non-resident trust and such gains were taxable in the UK if the taxpayer was ordinarily resident in the UK in 1998/99.

The taxpayer submitted his UK tax return for 1997/98 claiming non-residence and non-ordinarily residence in the UK. He claimed split year treatment based on a departure date in February 1998. The taxpayer claimed his country of residence was the Netherlands. Similarily, the taxpayer claimed non-residence, non-ordinarily residence in his UK tax return for 1998/99. The taxpayer claimed that his “connection” with the UK had greatly diminished and changed from February 1998 and that on a statutory basis at least, he had acquired residence in Holland. His duties arising out of the Monoliet employment were performed outside the UK and his Bison role had been incidental to it.

HMRC did not accept that the taxpayer was non-resident and non-ordinarily resident in the UK and in 2004/05 issued a ‘discovery’ assessment giving rise to charge to CGT of more than £30 million.

The main issue of the appeal before the First-tier Tribunal was whether the taxpayer was resident or ordinarily resident in the UK in 1998/99; if he was, whether he was also resident in the Netherlands under the terms of the UK/Netherlands double taxation agreement. If he was resident in the UK, the validity of the discovery assessment issued by HMRC was also an issue for decision by the Tribunal.