“Double taxation and international tax enforcement arrangements to have effect 2. It is declared that— (a) the arrangements specified in the Convention and Protocol set out in the Schedule to this Order have been made with the Government of the Kingdom of Spain; (b) the arrangements have been made with a view to affording relief from double taxation in relation to capital gains tax, corporation tax and income tax and taxes of a similar character imposed by the laws of the Kingdom of Spain and for the purposes of assisting international tax enforcement; and it is expedient that those arrangements should have effect.” it is expedient that those arrangements should have effect.”
“It is important, in my view, to identify what Articles 4 and 13 are designed to achieve in the context of the DTA because, as the judge recognised, this largely colours the interpretation of the provisions themselves. But for the Treaty, residents of the UK and Mauritius or companies operating in both territories would be exposed to the risk of taxation on their income and gains under the laws of each Contracting State. The 1977 Model Convention adopted in the DTA eliminates the possibility of double taxation by what the commentary describes as two categories of rules. The first allocates the right to tax by reference to the situs or source of the taxable income or gain or the place where the person in receipt of the profit is treated as resident for tax purposes. The second category of rules (represented by Article 24) comes into play when the first set of rules leaves both Contracting States as eligible to tax the same gain and operates by allowing tax payable in one Contracting State to be credited against the taxpayers’ liabilities in the other.”
“Article 4 – RESIDENT 1. For the purposes of this Convention, the term “resident of a Contracting State” means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management, place of incorporation or any other criterion of a similar nature, and also includes that State and any political subdivision or local authority thereof. This term, however, does not include any person who is liable to tax in that State in respect only of income or capital gains from sources in that State or capital situated therein. The term “resident of a Contracting State” includes a pension scheme established in that State. 2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows: - a) he shall be deemed to be a resident only of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident only of the State with which his personal and economic relations are closer (center of vital interest- [COVI]); b) if the State in which he has his [COVI] cannot be determined, or if he does not have a permanent home available to him in either State, he shall be deemed to be a resident only of the State in which he has an habitual abode; c) if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident only of the State of which he is a national; d) if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.”
“The determination whether the objection “appears…to be justified” requires the competent authority to which the case was presented to make a preliminary assessment of the taxpayer’s objection in order to determine whether the taxation in both Contracting States is consistent with the terms of the Convention.” (Emphasis supplied)
“You should note that this is not a MAP conclusion as there has been no agreement between the Spanish and UK competent authorities”
“After considering all the information above in its entirety, I have concluded that [the Claimant] had a Permanent Home in both the UK and Spain and his Centre of Vital Interests are inconclusive to either the UK or Spain. During the UK tax years 2009/10 – 2015/16 [the Claimant] should be Spanish treaty resident based on the nationality test, and for 2016/17 to 2020/21, he is UK treaty resident based on his habitual abode. I appreciate that this may not be the outcome you were expecting. However, I believe this is the correct outcome once applying the tiebreaker test and to move the case to conclusion under MAP. I shall now send my position to Spain for their consideration. Once a MAP decision has been decided by the Competent Authorities it will be up to [the Claimant] to decide if he accepts the MAP outcome. There is no appeal to a MAP decision and the only alternative for [the Claimant] would be to pursue the legal route in Spain.”
“I want to speak to David [Price] again and send you a breakdown of how I arrived at my decision prior to us our [sic] meeting.”
“The DT provides Mr Carulla Font with the ability to request arbitration proceedings in the event that no agreement has been reached between the UK Competent Authority (“UK CA”) and the SCA within the two years following the initiation of the MAP (as outlined in Article 25.5 DTT). However, this arbitration proceeding is subject to the condition that neither of the judicial or administrative bodies of the Contracting States has previously ruled on the matter. In principle, as I have already stated in paragraph 43 above, the initiation of a MAP should result in domestic procedures with the same object and purpose being suspended. However, despite this, in the case of Mr Carulla Font, the TEAR of Catalonia [the Regional Economic-Administrative Tribunal] issued a resolution regarding his tax residency, and this development was used by Spain to oppose the processing of the arbitral procedure. Even if Mr Carulla Font could access the arbitration process, the communication of the Decision by the Defendants to the SCA would likely undermine the process (and any other legal remedy in Spain available to Mr Carulla Font, if it exists) as neither an arbiter nor judge is likely to contradict the position of the UK CA and the SCA asserting Mr Carulla Font as treaty resident in Spain, regardless of whether or not that position is correct.”
“Centre of Vital Interests (COVI) Having considered all the information that has been provided to me, I agree that [the Claimant] is resident in the UK and fulfils our domestic criteria. I have also considered what COVI he has in Spain. When considering all the facts, it is clear that [the Claimant] has a lot of personal, economic, political and social connections in both the UK and Spain. Although I consider COVI to be stronger in the UK, I do not consider it to be a conclusive factor to determine residence in either he UK or Spain. Therefore, it is necessary to move onto the next test of the tie-breaker in Article 4(2) of the UK/Spain [DTA].”
“I know this may be disappointing to you, but I believe it is the appropriate conclusion under the tie-breaker test to bring [the Claimant’s] Map cases to conclusion.”
“I explained the development on the MAP that Kelly [Grisdale] and David [Price] have concluded Jordi is Spanish tax resident…”
“The function of giving advice and making a recommendation can in principle be a public function amenable to judicial review…”
“Judicial review, generally, is concerned with actions or other events which have, or will have, substantive legal consequences: for example, by conferring new legal rights or powers, or by restricting existing legal rights or interests. Typically there is a process of initiation, consultation, and review, culminating in the formal action or event (“the substantive event”) which creates the new legal right or restriction.”
“Mr McCabe’s objection that the FTT focussed impermissibly on the ‘process’ of the MAP in assessing relevance in fact highlights the central fallacy in his argument. Mr Hickey’s skeleton argument refers to ‘admissions’ which must have or might have been made by HMRC during the MAP, and which Mr McCabe seeks to identify through the disclosure. The fallacy on which this is based is that something said by HMRC in the MAP could bind it in the substantive appeal. Not only could it not bind HMRC, it carries no weight in the process of determining the relevant issues in the appeal. Just as Mr McCabe is not bound by the MAP, either as to its outcome or reasoning, neither is HMRC bound by the process or negotiations which led to that outcome. In the appeal, each party will doubtless vigorously argue each point in issue, and nothing in the MAP process hinders them from doing so. In reaching a conclusion on those arguments, the FTT should place no weight on HMRC’s interpretation of what was said during the process, or what HMRC decided to challenge or not challenge, and what compromises have been reached. The ‘process’ of the MAP was rightly mentioned by the FTT because it goes to the lack of probative value of the documents sought. The MAP is not part of the appeal to the FTT; it was a collaborative process between the competent authorities of two jurisdictions, the outcome of which Mr McCabe has exercised his right not to accept.”
“The first principle is that the exercise of the royal prerogative to conclude international treaties and agreements is non-justiciable, as a general rule, whilst it operates in the international law sphere only. The second principle (which is a corollary of the first) is that if the international law measure descends from the international plane and becomes embedded or assumes a foothold into domestic law then the Courts acquire the right and duty of supervision.”
“Whilst the numbers do reduce significantly, when the difference in days in the UK and Spain reaches and stays consistently over 100 days, I believe it is only from 2016/17 that we could reasonably conclude that [the Claimant] no longer has a habitual abode in Spain, due to him not being customarily present, nor having a settled routine of frequent, regular stays in Spain. When broken down further below there is a clear habit of attending Spain on a regular basis each month, that is up until 2016/2017 [the Claimant] visibly spends less time in Spain but still maintained a pattern of presence during summer and Christmas period. I believe the decline in days spent in Spain could indicate a loosening of ties to Spain. He spent more time travelling the world in later years sometimes without [his wife]. [His wife] spent more time in Spain without her husband. He still attended business meetings connected to the family business but these were sometimes held in other countries. I conclude that [the Claimant] had an habitual abode in both the UK and Spain for UK tax years 2009/10 until 2015/16 and as this test cannot be determined to one country over the other, we should progress to nationality. For years 2016/17 to 2020/21, [the Claimant] only has an habitual abode in the UK and should be considered UK treaty resident.”
“Considering the personal and economic relations for each year, we need to take a balanced approach, and just because a taxpayer was born and raised in one country and maintained a home there does not automatically determine a treaty residence going forward. It is accepted, as per paragraph 15 of the OECD commentary, that retaining a home in one country whilst setting up a second home in another country may demonstrate he has retained his COVI in the first state, although it is also stated that this is when all other elements have been considered. Personally, [the Claimant] has his immediate non-dependant family in the UK, with whom he enjoys spending social time with when present in the UK. However, they also socialise in Spain regularly and are joined by his Spanish extended family. Economically, [the Claimant] has assets in the UK in his own name, and shareholdings in Spain, but other assets are in the name of his wife or company that he also has shares in. It is not unreasonable to assume that he maintains full use and enjoyment of these family assets, and they should not be ignored as a personal and economic interest for him in Spain. He clearly has more assets and financial interests in Spain than the UK which is understandable given his extended family’s business has always been headquartered there. This was in place long before [the Claimant] became UK resident. Based on the extensive amount of information supporting [the Claimant's] COVI, it would not be unreasonable to conclude that COVI is closer to Spain than the UK, given the family connection, family business, assets, interests, and long-term depth of cultural links. The funds he has lived off when in the UK are passive savings income, whereas the Spanish companies are ongoing economic interests. However, due to the significant immediate family day-to-day connection to the UK, and smaller number of assets, I believe his COVI was strong in both the UK and Spain and therefore is not determinative. Accordingly, we must move on to Habitual Abode.”
“[Kelly Grisdale] explained that she was undertaking a full review of the case to make sure that everything is covered rather than just carrying on with what was done before to ensure that nothing had been missed and that there was a balanced view of everything, in case this unlocks a route to a conclusion.”