Glyn v Revenue and Customs (INCOME TAX/CORPORATION TAX : Appeal) [2018] UKFTT 219 (TC)

FTT-Tax
Glyn v Revenue and Customs (INCOME TAX/CORPORATION TAX : Appeal)
[2018] UKFTT 219 (TC) · 2005-04-05
[198]In the absence at the relevant time of any statutory definition of residence taxpayers and their advisers have had to turn to the guidance given by the courts. There are, however, two statutory provisions which in effect deem a person to be resident or non-resident which at the time in question were in s 334 and s 336 of the Income and Corporation Taxes Act 1988 (now in s 829 of the Income Tax Act 2007). 199. Section 334 provides that:
“Every Commonwealth citizen or citizen of the Republic of Ireland – (a) shall, if his ordinary residence has been in the United Kingdom, be assessed and charged to income tax notwithstanding that at the time the assessment or charge is made he may have left the United Kingdom, if he has so left the United Kingdom for the purpose only of occasional residence abroad, and (b) shall be charged as a person actually residing in the United Kingdom upon the whole amount of his profits or gains…” 200. Section 336 provides that a person who is in the UK “for some temporary purpose only and not with the intention of establishing his residence there shall not be treated as resident in the United Kingdom if he has not in the aggregate spent at least six months in the United Kingdom in the year of assessment, but shall be treated as resident there if he has”
. That question is to be decided “without regard to any living accommodation available in the United Kingdom for his use”. 201. In this case s 334 would be in point only if it is found that the appellant was not resident in the UK under general law. We have concluded that is not the case and, therefore, there is no issue under that provision. Whilst these provisions are not directly in point here, therefore, they (or similar provisions in place at the relevant time) are referred to in a number of the relevant cases and an understanding of the provisions assists in understanding the relevance of some of the commentary in those cases. Caselaw 202. For many years the leading authority has been Levene v Inland Revenue Comrs [1928] AC 217 . Until 1919 Mr Levene was resident and ordinarily resident in the UK. During the next five years he spent about five months (mainly in the summer) each year, staying in hotels in the UK and receiving medical attention or pursuing religious and social activities. He spent the remaining months staying in hotels abroad. It was held that Mr Levene had remained resident and ordinarily resident in the UK during those years. 203. Viscount Cave, the Lord Chancellor, adopted, at page 222, the definition of “reside” given in the Oxford English Dictionary, namely: “to dwell permanently or for a considerable time, to have one’s settled or usual abode, to live in or at a particular place”. 204. He continued that in most cases there is no difficulty in determining where a man has his settled or usual abode, and if that is ascertained he is not the less resident there because from time to time he leaves it for the purpose of business or pleasure:[15]“Thus, a master mariner who had his home at Glasgow where his wife and family lived, and to which he returned during the intervals between his sea voyages, was held to reside there, although he actually spent the greater part of the year at sea ( Re Young ; 1875, 1 Tax Cases 57; Rogers v. Inland Revenue , 1879, 1 Tax Cases 225). Similarly a person who has his home abroad and visits the United Kingdom from time to time for temporary purposes without setting up an establishment in this country is not considered to be resident here…… But a man may reside in more than one place. Just as a man may have two homes—one in London and the other in the country—so he may have a home abroad and a home in the United Kingdom, and in that case he is held to reside in both places and to be chargeable with tax in this country. Thus, in Cooper v. Cadwalader (1904, 5 Tax Cases 101) an American resident in New York who had taken a house in Scotland which was at any time available for his occupation, was held to be resident there, although in fact he had only occupied the house for two months during the year……...” 205. It is clear from Levene that the tribunal is not limited to an enquiry into the situation in a particular year of assessment. As Viscount Sumner said, at 226:
“It is suggested that the Commissioners misdirected themselves in point of law, because they took into account, with regard to the earlier years, conduct which only occurred subsequently. I agree that the taxpayer’s chargeability in each year of charge constitutes a separate issue, even though several years are included in one appeal, but I do not think any error of law is committed if the facts applicable to the whole of the time are found in one continuous story. Light may be thrown on the purpose, with which the first departure from the United Kingdom took place, by looking at his proceedings in a series of subsequent years. They go to show method and system and so remove doubt, which might be entertained if the years were examined in isolation from one another.” 206. In the Cadwalader v Cooper case referred to in Levene an American citizen who had his ordinary residence and practised his profession in New York took a lease for three years of a furnished shooting lodge in Scotland with certain rights of shooting and fishing. The lessor was bound to maintain the buildings, to keep the grounds in order, to pay all rates and taxes, and to pay the wages of certain servants whose services were at the disposal of the lessee. The lessee resided at the shooting-lodge for a period of two months in each year during the shooting season, but the lodge was available for his occupancy at any time. He had no place of business in the UK, and during his stay in the UK his residence in New York was kept open so that he could return at any time. 207. It was held that the lessee was a person “residing in” the UK within the meaning of the Income Tax Acts, and accordingly was liable to assessment for income-tax. He did not fall within the exception applicable at the time under the equivalent of s 336. The Lord President said: “ He has, in effect, a lease of heritage in Scotland, he occupies personally the subjects let to him for a considerable portion of each year, and when he is absent in America these subjects are kept in readiness for his return. His occupation of the subjects is not of a casual or temporary character, but is substantial, and as regards some of its incidents it is continuous.” 208. He continued that he did not think that the appellant could reasonably maintain that he is in the UK “for some temporary purpose only, and not with any view or intent of his establishing his residence therein,” in the sense of the section, as he took the Lodge with the view of residing there during a material part of each year, and maintaining his connection with it as tenant during the rest of the year, as he has a residence always ready for him if he should choose to come to it”
. Finally he concluded that it was not necessary for a person to be chargeable that he had his sole residence in the UK:
“A man can reside in more countries than one, although he can only have one domicile”. 209. Another early leading authority is the case Lysaght v Commissioners of Inland Revenue [1928] AC 234. Mr Lysaght had lived in England and had run a company here as director and managing director until 1919. He retired but retained the post of advisory director. He sold his English residence and went to live in Ireland. During the relevant years he had no definite place of abode in England, but he came to England every month to attend directors’ meetings, remaining here for about a week each time. He contended that he was neither resident nor ordinarily resident in England. 210. The Special Commissioners held that he was resident and ordinarily resident in England. In the Court of Appeal decision ( [1927] 2 KB 55 ) a majority held that the Special Commissioners had erred in law because his visits to this country were for strictly business purposes only, not involving any choice by him of England as a desirable abode, no intention of being present otherwise than in the course of his duties and no intention of making England his home in any ordinary sense of the word, the place where he worked being “much less dependent on his own volition and independent of social considerations.” 211. The majority of House of Lords held that the Court of Appeal had not been justified in interfering with the decision of the Special Commissioners. Lord Buckmaster said at page 247-8: “It may be true that the word “reside” or “residence” in other Acts may have special meanings, but in the Income Tax Acts it is, I think, used in its common sense and it is essentially a question of fact whether a man does or does not comply with its meaning.” 212. He continued to conclude that the Court of Appeal’s reasoning was not sound: “ They state that it was not of his own free choice but in obedience to the necessities of his position in relation to the company of John Lysaght, Ld., that he was over here, from which it would appear that the element of choice is regarded by the Court of Appeal as a factor of great, if not of final, consequence in determining residence. In my opinion this reasoning is not sound. A man might well be compelled to reside here completely against his will; the exigencies of business often forbid the choice of residence, and though a man may make his home elsewhere and stay in this country only because business compels him, yet none the less, if the periods for which and the conditions under which he stays are such that they may be regarded as constituting residence, as in my opinion they were in this case, it is open to the Commissioners to find that in fact he does so reside, and if residence be once established ordinarily resident means in my opinion no more than that the residence is not casual and uncertain but that the person held to reside does so in the ordinary course of his life.” 213. Mr Glyn’s counsel referred to the distinction which seemed to be drawn in the judgement of Viscount Sumner between visits to the UK under a continuous obligation, such as the necessities of business, and visits of chance and occasion which such a continuous obligation would seem to preclude: “If he came for the first three months in the year for the purpose of his duties and then returned home till the next year, would there not be evidence that he was resident here, and, if so, how does the discontinuity of the days prevent him from being resident in England, when he is here in fact, though the obligation to come as required is continuous and the sequence of the visits excludes the elements of chance and of occasion?”
[214]It has become accepted that when looking at whether a taxpayer has ceased to be UK resident it is relevant to ask whether the taxpayer has made a distinct break from the UK. This formulation was first made in the context of s 334. It was confirmed in the case of Reed v Clark [1986] Ch 1 to be the effect of that section that, where the relevant person ceases to be resident in the UK, he will nevertheless be deemed to have remained resident in the UK if he has left the UK for the purpose only of occasional residence abroad. So in order to escape liability as a resident, a person needs to establish not only that he has become non-resident but also that his change to non-residence was not for the purpose only of occasional residence abroad. It was in the context of deciding whether the taxpayer had left the UK for the purpose only of occasional residence abroad, that Nicholls J referred to the test of whether a taxpayer had made a distinct break from the UK.215. In that case Mr Dave Clark, who had been resident and ordinarily resident in the UK, moved to Los Angeles on 3 April 1978 and made his home and place of business there until 2 May 1979, when, not having set foot in the UK in the interim, he returned to reside here. Nicholls J dismissed the appeal against the ruling of the commissioners that he had not been resident nor ordinarily resident in the UK in 1978-79.216. Nicholls J, at 15C, accepted the submission that s 334 brought into the tax net those who were not resident in the UK at all in the year of assessment. He held, at 16H, that “occasional residence” was the converse of “ordinary residence”. He cited, at 17D, the statement of Lord Scarman in R v Barnet London Borough Council, Ex p Nilish Shah [1983] 2 AC 309 , 343 that “ordinary residence” referred “to a man’s abode in a particular place or country which he has adopted voluntarily and for settled purposes as part of the regular order of his life or the time being, whether of short or of long duration”. He contrasted “occasional residence” with residence for a settled purpose. He then held, at 18G, that there had been a “distinct break” in the pattern of Mr Clark’s life in the UK such that his becoming non-resident had not been for the purpose only of occasional residence abroad.217. In referring to a “distinct break” Nicholls J, as he acknowledged at 14F, adopted a phrase used in the same context of s 334 in the decision of the Court of Session in Inland Revenue Comrs v Combe 17 TC 405 . In that case until 1926 Captain Combe was resident and ordinarily resident in the UK. Then he went to New York to work as a broker for a firm on Wall Street. The objective was that he should become its European representative and, in furtherance of it, he returned to the UK, staying in hotels, for 52 days, 175 days and 181 days during each of the following three years. In upholding the conclusion that he was not liable to tax as a UK resident for those years the court concluded that the captain had not left the UK for the purpose only of occasional residence abroad. It was implicit in its conclusion that he had left the UK in the sense of becoming non-resident in it. When, therefore, Lord Sands observed, at page 411, that “there was a distinct break” in the captain’s “residence” in the UK, it was with a view to explaining his conclusion that the captain’s residence abroad had been more than occasional.218. In the later case of HMRC v Grace [2008] EWHC 2708 (Ch) ; [2009] STC 213 , Lewison J summarised, at [3], the relevant legal principles to be derived from earlier cases including as regards the “distinct break” test. Although a number of propositions deal specifically with whether a person is “ordinarily resident”, rather than “resident”, we have set out the summary in full:
“i) The word “reside” is a familiar English word which means “to dwell permanently or for a considerable time, to have one’s settled or usual abode, to live in or at a particular place”: Levene v Commissioners of Inland Revenue (1928) 13 TC 486 , 505. This is the definition taken from the Oxford English Dictionary in 1928, and is still the definition in the current on-line edition; ii) Physical presence in a particular place does not necessarily amount to residence in that place where, for example, a person’s physical presence there is no more than a stop gap measure: Goodwin v Curtis 70 TC 478, 510; iii) In considering whether a person’s presence in a particular place amounts to residence there, one must consider the amount of time that he spends in that place, the nature of his presence there and his connection with that place: Commissioners of Inland Revenue v Zorab 11 TC 289 , 291; iv) Residence in a place connotes some degree of permanence, some degree of continuity or some expectation of continuity: Fox v Stirk [1970] 2 QB 463, 477; Goodwin v Curtis 70 TC 478, 510; v) However, short but regular periods of physical presence may amount to residence, especially if they stem from performance of a continuous obligation (such as business obligations) and the sequence of visits excludes the elements of chance and of occasion: Lysaght v Commissioners of Inland Revenue 13 TC 511 , 529; vi) Although a person can have only one domicile at a time, he may simultaneously reside in more than one place, or in more than one country: Levene v Commissioners of Inland Revenue 13 TC 486 , 505; vii) “Ordinarily resident” refers to a person's abode in a particular place or country which he has adopted voluntarily and for settled purposes as part of the regular order of his life, whether of short or long duration: R v Barnet LBC ex p Shah [1983] 2 AC 309 , 343; viii) Just as a person may be resident in two countries at the same time, he may be ordinarily resident in two countries at the same time: Re Norris (1888) 4 TLR 452; R v Barnet LBC ex p Shah [1983] 2 AC 309 , 342; ix) It is wrong to conduct a search for the place where a person has his permanent base or centre adopted for general purposes; or, in other words to look for his “real home”: R v Barnet LBC ex p Shah [1983] 2 AC 309 , 345 and 348; x) There are only two respects in which a person’s state of mind is relevant in determining ordinary residence. First, the residence must be voluntarily adopted; and second, there must be a degree of settled purpose: R v Barnet LBC ex p Shah [1983] 2 AC 309 , 344; xi) Although residence must be voluntarily adopted, a residence dictated by the exigencies of business will count as voluntary residence: Lysaght v Commissioners of Inland Revenue 13 TC 511 , 535; xii) The purpose, while settled, may be for a limited period; and the relevant purposes may include education, business or profession as well as a love of a place: R v Barnet LBC ex p Shah [1983] 2 AC 309 , 344; xiii) Where a person has had his sole residence in the United Kingdom he is unlikely to be held to have ceased to reside in the United Kingdom (or to have “left” the United Kingdom) unless there has been a definite break in his pattern of life: Re Combe 17 TC 405 , 411.”
[219]The propositions in sub-paragraphs (i)-(vi) and (xiii) are concerned with “residence”, while the remaining sub-paragraphs are concerned with whether a person is “ordinarily resident”. This summary was cited with approval on appeal by the Court of Appeal: see Grace v HMRC [2009] EWCA Civ 1082 ; [2009] STC 2707 at [6].[220]In that case the issue was whether an airline pilot working for British Airways (BA) on long-haul flights out of the UK was UK tax resident. He had to be in England for some days before any outward flight and, in practice, sometimes between inward and outward flights. He had been flying in this way since 1987 latterly owning and living in a house in Horley. He argued that he ceased to be UK tax resident in 1997 when he took a rented apartment in Cape Town, and later bought a house there. That was on the basis that he regarded his house in Cape Town as his home, spending as much time there as he could, consistently with performing his duties as a BA pilot, and that he intended to spend his retirement there in due course. HMRC argued that his continued presence in the UK, as the base from which he did his work, showed that he was still resident here. There was also an issue as to whether s 334 and s 336 applied. 221. The Special Commissioners decided that the taxpayer had ceased to be resident in the UK in 1997 and that, in any event, he satisfied the requirements of s 336. Lewison J reversed that decision and held that the only possible conclusion from the primary facts found was that he remained resident in the UK and that the conclusion on s 336 was wrong. The Court of Appeal agreed that the Special Commissioner, Dr Brice, had misdirected herself but held that the case should be remitted to the tribunal for re-determination. 222. In the Court of Appeal Lloyd LJ, who gave the leading judgment, described the correct approach as follows, at [3]:
“ The issue of residence in the UK only arises in a case in which the person in question spends time outside the UK. The circumstances in which he or she does so, and the pattern of, and reasons for, time being spent in the UK and elsewhere may be infinitely various. Decided cases illustrate a great variety of examples, and the result of one case cannot normally be used as a guide to how another should be decided, even if the two have some factors in common.”
[223]At [7], he referred to the Special Commissioner’s comments at [58] of her decision in Shepherd v HMRC [2006] STC 1821, a case which also related to an airline pilot, as to the factors to be taken into account in determining residence :
“- that no duration is prescribed by statute and it is necessary to take into account all the facts of the case; the duration of an individual’s presence in the United Kingdom and the regularity and frequency of visits are facts to be taken into account; also, birth, family and business ties, the nature of visits and the connections with this country, may all be relevant ( Zorab; Brown );… - that the availability of living accommodation in the United Kingdom is a factor to be borne in mind in deciding if a person is resident here ( Cooper ) (although that is subject to s 336); - that the fact that an individual has a home elsewhere is of no consequence; a person may reside in two places but if one of those places is the United Kingdom he is chargeable to tax here ( Cooper and Levene) ;”
[224]He said, at [8], that the proposition that a home elsewhere is of no consequence is not to be understood as meaning that the other home is entirely irrelevant to the necessary enquiry. That would be inconsistent with the obligation to take into account all the facts of the case. However, the existence of another home is not decisive, because of the possibility of simultaneous residence in several places.[225]He referred to Lysaght as being of particular relevance, citing in full the passage set out above. He noted, at [16], that the Special Commissioner’s salient findings are as follows:[17]“First, he has retained the Horley house in the United Kingdom which he uses in order to rest before or after carrying out his duties as a long haul pilot or if he has only a few days between flights. The house is fully furnished and equipped. He is on the electoral roll at Horley as a resident. Post is sent to him at the Horley address. This includes credit card statements, bank statements and correspondence with HMRC. He keeps a car in the United Kingdom and uses it to travel from the Horley house to work and from work to the house….. He also keeps a car in Cape Town. He has a bank account in the United Kingdom into which his salary from British Airways is paid. Although he is registered with a dentist in Horley he has only visited one dentist in the entire time that he has been in the United Kingdom…….He has visited his doctor in Horley four times between 1993 and 2003. He has no relatives in the United Kingdom. His ex-wife and daughters live in the United Kingdom but he has had no contact with his children for over 30 years. He has only met his ex-wife twice in the last thirty years. He is a member of the professional body of the British Airline Pilots Association but is not a member of any other club or society in the United Kingdom.” 226. He further noted, at [17], that the conclusions on the amount of time spent in the UK were as follows at [23]:
“On the evidence before me I find that the pattern of the Appellant's life after 1 September 1997 was that the long haul flights he made would last about four or five days. For two or three days before or after each flight he would stay in the United Kingdom. He piloted a number of flights to and from Cape Town. In addition there were regular breaks of thirteen to fifteen days which were spent in Cape Town. I conclude that the time spent in the United Kingdom was time either before or after a flight, or time when the Appellant was sick, but that most of the other time not spent in the air was spent in Cape Town.”
[227]He described the nature of the enquiry the Special Commissioner was required to take as follows, at [18] :[19]“Thus, the enquiry which she had to undertake involved assessing the duration of Mr Grace’s presence in the [UK] and the regularity and frequency of his visits, the nature of the visits and his connection with this country. Equally, she had to take into account also his connection with South Africa, including his ownership and use of a house there, and his activities, ties and other connections there. She could not regard his ownership and use of a house there as conclusive that he did not reside in the UK, but it was a relevant factor to be taken into account.”[228]He noted that Dr Brice from paragraph [31] to paragraph [44] of her decision set out a number of the cases and then cited her comments at [37]:[22]“ Applying those principles to the facts of the present appeal it is relevant that, after 1997, the nature of the Appellant's presence in the [UK] was to get to and from his work. He had very few connections with this country. He was not born here, he was not educated here, and no members of his family lived here apart from his divorced wife and children whom he has not seen for thirty years. He had no social life here. He did reside here from 1986 to 1997, during which time he began his present employment which he has retained, but in the relevant years of assessment he only visited the [UK] because each of his long haul flights started and ended here. The Appellant’s lack of connections points to the view that, although he might spend time in the [UK] each year, he is not necessarily resident here.”[229]He noted at [22] that Dr Brice then referred to Levene and Lysaght noting from Levene that the word “to reside” meant “to dwell permanently or for a considerable time”. Applying that principle to the facts of this appeal she found that after 1997 the taxpayer “did not dwell permanently in the [UK] as his permanent residence was in South Africa”. Also the UK “was not where he had his settled or usual abode as that was in South Africa”. During the relevant years of assessment the taxpayer “left Cape Town for business purposes only. Although he retained a house in the [UK] that house was not in the nature of a home but was rather a substitute for hotels.” At [24] Lloyd LJ noted that this is open to the comment that one can be resident in a country even though one stays in one or more hotels, not in a house or flat, as in Lysaght . 230. At [25] he noted that she looked at Combe , and considered the proposition that, in the case of a taxpayer who has been resident in the UK, the making of a “distinct break” in his pattern of life, including establishing a residence elsewhere, may mean that even lengthy or regular visits to this country may not amount to continued or resumed residence. He noted that at paragraph [42] she said that applying that principle:[26]“….. I find that although the Appellant was resident in the [UK] before 1997 in that year there was a distinct break and since then his settled mode of life has been in South Africa. In 1997 he set up home in South Africa and purchased a house there. The home is near his parents and brother. He is very attached to his private aeroplanes and it is significant that they are all in Cape Town and that there are none in the [UK]. He intends not to return to the [UK] when he retires. Since 1997 he has returned to the [UK] but only for the purpose of his employment.”[231]At [28] he noted that she concluded that s 336 did apply so that the appellant was treated as non-resident as set out at [59] of her decision, on the basis that: “……after September 1997 the Appellant was in the [UK] for temporary and occasional purposes only. He was here in order to do his work and for no other reason. He had no intention of establishing his residence here and his intention was to establish his residence in South Africa.” 232. At [29] he set out her conclusions from her decision at [60] as follows:[30]“….especially having regard to the Appellant’s past and present habits of life, the reasons for his visits here, the temporary nature of his ties with this country, the more permanent nature of his ties with South Africa, and the distinct break made in 1997, I have come to the conclusion that from 1 September 1997 he ceased to be resident and ordinarily resident in the [UK]. After that date this was not where he dwelt permanently nor where he had his settled or usual abode which was in South Africa….. .”[233]Lloyd LJ concluded, at [30], that there was an error as regards the conclusion on s 336. It seemed to him that Mr Grace’s presence in the UK before every outward long-haul flight, and between flights on some occasions, the UK being the base from which he operated as a pilot, was not for some “temporary purpose only”.[234]He noted, at [31] to [35], that HMRC argued that the Special Commissioner’s conclusion on residence was infected by her wrong conclusion on s 336. In particular, taken with the repeated references to his visits to the UK having been for business purposes only , this showed that the Special Commissioner was (wrongly) treating the appellant’s regular and repeated presence in the UK as being “temporary and occasional”, and that this was reflected in her assessment of the various factors relevant to the common law issue of residence. Lloyd LJ noted that it was also argued, at [33], that Dr Brice had been wrong to find that there had been a distinct break in the appellant’s pattern of living. The demands of his employment did not change in 1997 and the time which he spent in the UK attributable to his employment did not change. In that respect there was continuity in his pattern of existence. What did change was the place where he spent that part of his time when his whereabouts was not dictated by his employment. Lloyd LJ concluded that the facts fell far short of those which, in other cases, have been held to amount to a “distinct break” .[235]Lloyd LJ agreed with Lewison J, at [35], that even if the appellant did not satisfy s 336, it does not follow that he is resident for tax purposes. Specifically, the fact that his presence in the UK cannot be said to be “for temporary purposes only”, “does not of itself show that his presence amounts to residence according to the common law test, because that presence must, for that purpose, be assessed in the light of all other factors including in particular those connecting him with another country”.[236]He concluded, at [36], that the Special Commissioner misdirected herself in law as regards s 336 and that this affected her decision as regards residence generally. Among the other points taken, he agreed with Lewison J’s comments about the status of the appellant’s house at Horley as a “home” referring to his comments at [40]. He also considered that Dr Brice’s reference to the “temporary nature of his ties with this country” followed from her conclusion on s 336. 237. At the passage referred to Lewison J queried why the Special Commissioner concluded that the house in Horley was not “a home”. The only explicit reason she gave was that the Horley house was “a substitute for hotels”. “ But as Viscount Cave explained in Levene , and as Mr Lysaght found to his cost, living in a hotel or a series of hotels can amount to residence, particularly if (as in Lysaght ) the stays in hotels are attributable to a continuous business obligation and the sequence of visits excludes the elements of chance and of occasion. Mr Grace’s stays in the Horley house were attributable to performance of his employment duties; and they were regular and predictable. Moreover, unlike a hotel room, the Horley house actually belonged to him; and unlike a hotel room no one else used it. In my judgment the explicit reason that the Special Commissioner gave cannot be sustained.”[238]However, Lloyd LJ disagreed, at [38] to [41], with Lewison J’s further conclusion that there was only one possible answer on the primary facts found, namely, that the appellant was resident. He considered that it was wrong to treat the appellant’s presence for the purposes of his employment as a factor which necessarily showed residence. It may well be a strong pointer in that direction, but the decisions show clearly the need to “take into account, weigh up and balance all relevant factors”. He did not think “it would be right to regard Mr Grace’s presence in this country in order to perform the duties of his employment as a trump card which of itself concludes the issue in favour of residence”. He therefore decided to remit the case to the tribunal to be re-heard. 239. In the later decision in the tribunal in Grace v HMRC ( [2011] UKFTT 36 (TC) , the tribunal decided in favour of HMRC. As regards the use of the house in Horley, the tribunal commented as follows:
“I cannot agree that he treated his Horley house just like a hotel. He kept his car parked there even when he was out of the country. He paid council tax and received mail. He owned the furniture in the house and was surrounded by his personal possessions. When in Horley he did his washing and went out shopping. He read his post and caught up on his paperwork. He had exclusive possession of the house (even though for a period his girlfriend lived with him)….”
I also take into account the availability of living accommodation in the UK. As I have said, I think his occupation of his own house gave a different quality to his time in the UK than if he had stayed in hotels. Staying in hotels is not necessarily incompatible with residence but staying in one’s own house makes it more likely (though not conclusive) that a person is resident. When staying in the UK he was much more than a visitor: he had a settled and regular presence here staying in his own house that had been his only home up to September 1997 and I find continued to be a home after that date.” 240. In R (Gaines-Cooper) v HMRC [2011] STC 2249 the Supreme Court was primarily concerned with the effect of IR 20. However, the judgments in the Supreme Court contain, as was stated in the Upper Tribunal decision in this case, “important observations” on the issue of residence more generally. After referring to the decision of the House of Lords in Levene , Lord Wilson continued at [14]:
“Since 1928, if not before, it has therefore been clear that an individual who has been resident in the UK ceases in law to be so resident only if he ceases to have a settled or usual abode in the UK. Although, as I will explain in para 19 below, the phrase “a distinct break” first entered the case law in a subtly different context, the phrase, now much deployed including in the present appeals, is not an inapt description of the degree of change in the pattern of an individual’s life in the UK which will be necessary if a cessation of his settled or usual abode in the UK is to take place.” 241. He then proceeded to explain the effect of s 334 and the comments on “distinct break” in Coombe and the Reed v Clark case. At [18], he explained how Nicholls J in Reed v Clark had used the concept of residence for a settled purpose in contrast to “occasional residence” for the purposes of s 334. He noted that when Nicholls J observed at 18A, that his construction might give little scope in practice for the operation of s 334 as an independent charging provision, “Nicholls J perhaps had in mind that, were the person’s residence abroad not to have been for a settled purpose, his settled or usual abode might have remained in the UK with the result that, in the light of the definition adopted in Levene , he would not have ceased to be a UK resident and so would already have fallen at the first hurdle”
. He said that nevertheless the concepts of settled purpose and settled abode are clearly different. As Lord Wilson later said at [41]:
“Nicholls J was describing the settled purpose not as a route to becoming non-resident but as a means by which the taxpayer who had become non-resident escaped being treated otherwise under what is now section 829 of the 2007 Act.” 242. Lord Wilson further explained what was meant by a distinct break at [20]: “ It is therefore clear that, whether in order to become non-resident in the UK or whether at any rate to avoid being deemed by the statutory provision still to be resident in the UK, the ordinary law requires the UK resident to effect a distinct break in the pattern of his life in the UK. The requirement of a distinct break mandates a multifactorial inquiry. In my view, however, the controversial references in the judgment of Moses L.J. in the decision under appeal to the need in law for “severance of social and family ties” pitch the requirement, at any rate by implication, at too high a level. The distinct break relates to the pattern of the tax-payer’s life in the UK and no doubt it encompasses a substantial loosening of social and family ties; but the allowance, to which I will refer, of limited visits to the UK on the part of the taxpayer who has become non-resident, clearly foreshadows their continued existence in a loosened form. “Severance” of such ties is too strong a word in this context.” 243. Lord Wilson continued at [45] as follows: “when all the passages in it to which I have referred were considered together, [IR20] informed the ordinarily sophisticated taxpayer of matters which indeed were unlikely to come as a surprise to him, [the general law in the submission of the appellant] namely that (a) he was required to “leave” the UK in a more profound sense than that of travel, namely permanently or indefinitely or for full-time employment (b) he was required to do more than to take up residence abroad; (c) he was required to relinquish his usual residence in the UK; (d) any subsequent returns on his part to the UK were required to be no more than visits and (e) any property retained by him in the UK for his use was required to be used for the purpose only of visits rather than as a place of residence. He will surely have concluded that these general requirements in principle demanded - and might well in practice generate – a multifactorial evaluation of his circumstances on the part of the Revenue.. if invited to summarise what the booklet required, he might reasonably have done so in three words: a distinct break.” 244. Lord Hope described the essential inquiry at [63]: “But the underlying principle that the law has established is that it must be shown that there has been a distinct break in the pattern of the taxpayer’s life in the UK. The inquiry that this principle indicates is essentially one of evaluation. It depends on the facts. It looks to what the taxpayer actually does or does not do to alter his life’s pattern. His intention is, of course, relevant to the inquiry. But it is not determinative. All the circumstances have to be considered to see what light they can throw on the quality of the taxpayer’s absence from the UK.” 245. Lord Walker, who agreed with Lord Wilson, noted at paragraph 67 that Lord Wilson’s reasons were effectively those of Moses LJ in the Court of Appeal: [2010] STC 860 . Moses LJ observed the importance of a distinct break in distinguishing exclusive residence abroad from dual residence: see [52] of the judgment of Moses LJ. Even if a taxpayer limits his return visits, in the absence of a distinct break, that will not lead to cessation of residence status: see [56] of the judgment of Moses LJ. Discussion 246. As set out in Levene, residence is tied to where a person has a “settled or usual abode” or where he “dwell[s] permanently or for a considerable time”
. Essentially it is established, as set out by the Supreme Court in Gaines-Cooper that where a person has been resident in the UK, he will cease to have a settled or usual abode in the UK only if he makes a distinct break in the pattern of his life in the UK. That does not require a severance of ties in the UK but a substantial loosening of them. Return trips must be no more than visits. As a person may have more than one residence, the question of whether the distinct break has been made is not determined by whether the taxpayer is resident elsewhere. 247. The Supreme Court described the inquiry required to establish whether that is the case as “multifactorial”, a factual evaluation. Lord Hope said that it is a question of assessing what the taxpayer actually does or does not do to alter his life’s pattern. His intention is relevant but not determinative. Consistently with this, in the earlier decision in Grace , Lloyd LJ approved comments in Shepherd that it is 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, his birth, family and business ties, the nature of visits and the connections with this country. The availability of living accommodation in the UK is a factor. The fact that a person has a home elsewhere is relevant but not determinative given that a person may be resident in more than one place. 248. Whilst the question is whether Mr Glyn had made a distinct break in the pattern of his life on or before 5 April 2005, from Levene it is clear that the tribunal may look at the taxpayer’s proceedings in later years as they may throw lights on the purpose with which the first departure from the UK took place. 249. Whilst residence connotes some degree of permanence and continuity, short but regular periods of physical presence may amount to residence, especially if, as in Lysaght , they stem from performance of a continuous obligation (such as business obligations). That does not mean, however, that a person is not resident if there is no such obligation. As the Upper Tribunal noted in their decision in this case, at [72] and [73], in Lysaght the contrast was between the “continuous business obligation” which required Mr Lysaght to come to England from his home in Ireland each month for a week and visits resulting from the “the elements of chance and of occasion”. The Upper Tribunal commented, at [73], that the fact that:
“Mr Lysaght’s continuous business obligation required him to make regular monthly visits to the UK was relevant to whether he was resident in the UK, but the absence of a continuous obligation on the part of Mr Glyn to make visits to the UK is not determinative or even relevant as to whether he remained resident in the UK after April 2005.” 250. We are mindful that it is not correct to approach this by reference to whether Mr Glyn had a settled purpose when assessing the impact of his visits to the UK. As was held by the Upper Tribunal decision in this case, at [71], there is nothing in the authorities which “justifies the view that the existence of a settled purpose, or equally a single or fundamental settled purpose, is relevant in the case of a person such as Mr Glyn when assessing the impact of his return visits to the UK”
. The Upper Tribunal considered that this was made clear by Lord Wilson in Gaines-Cooper at [18] where he stated that “the concepts of settled purpose and settled abode are clearly different” and his later comment at [41] (as set out in full above). 251. The Upper Tribunal accepted, at [74] and [75], that in considering facts relevant to a “departer” the quality of presence, and the reason why an intending “departer” seeks to explain his limited presence in the UK is all relevant. In this context, and bearing in mind the central feature that residence is geared to “habitual presence”, “having a settled abode”, and “dwelling permanently or for a considerable time”… it is certainly relevant to consider the circumstances that occasioned visits to the UK.” It was not correct, however, that it is a relevant issue, “whether Mr Glyn had a settled purpose, or a single or dominant purpose, for his visits to the UK” when considering the significance of those visits. Rather, at [75], as Lloyd LJ said in Grace at [18], the enquiry which the tribunal has to undertake involves:
“assessing the duration of Mr Glyn’s presence in the UK and the regularity and frequency of his visits, the nature of the visits and his connection with this country. The reasons for those visits are, in my judgment, relevant but what is irrelevant is whether they demonstrated any settled purpose”. 252. In that context the Upper Tribunal noted, at [76], that in looking at the use of CR the correct approach is to assess the effect that its retention and continued use had on the quality of Mr Glyn’s presence when he was in the UK. The Upper Tribunal continued, at [78], that: “there is again no basis in the authorities for considering that the reasons for the retention of a house in the UK, still less the dominant reason for doing so, are relevant to whether the individual continued to be resident in the UK. There might be some circumstances in which it had some relevance, but in a case such as the present where Mr Glyn returned on a number of occasions to his house in London, the issue is to determine whether the frequency and nature of his visits, and generally the quality of his presence in the UK, meant that he continued to be resident in the UK.”
Submissions 253. In summary, counsel for Mr Glyn submitted that the evidence demonstrated that Mr Glyn effected the requisite distinct break by substantially loosening his family, social and business ties as part of a carefully planned exit from the UK such that he ceased to be UK tax resident on or before 5 April 2005. On making the exit he made a radical change in his lifestyle on his retirement from the family business which contrasts with his “life of leisure” in Monaco. With such a low number of days of presence in the UK that conclusion is entirely consistent with the case law. 254. Mr Glyn’s counsel noted that Mr Glyn came back to the UK for a series of different reasons and asserted that the visits were merely made on the basis of “chance and occasion”. That distinguishes his case from that of taxpayers who were required to return for specific business or employment related reasons (such as in Lysaght and Grace ). 255. That his ties with the UK were substantially loosened is further bolstered by the fact that Mr Glyn had clearly established a home and life in Monaco. Counsel noted that it is not disputed that Mr Glyn spent the vast majority of his time in Monaco benefiting from a full social and leisure life and managing his financial affairs there. He is a man of quiet habits who enjoyed socialising but was also happy in his own company and with his wife reading, playing scrabble, learning French and walking and managing his cash as he built up a private share portfolio with the liquid funds from MGL (that represented 75% of his net wealth and were kept outside the UK). He operated an entirely different way of life, freed from what he perceived as the “drudgery” of his former occupation. Counsel submitted that it is clearly more likely that his ties in the UK were sufficiently loosened if similar ties were established instead in Monaco. 256. Counsel noted that Mr Glyn acquired a three year lease of a three bedroomed flat in Monaco (so that friends and family could stay) moving to a larger apartment in 2007 and arranging the connection of phones and computer lines to the flat prior to 6 April 2005; he opened bank accounts in Monaco, obtained a driving licence (having surrendered his UK licence) and residency permit and acquired cars there. He effected a complete change in lifestyle ceasing to go to work each day and instead living in Monaco a life of leisure. 257. Counsel noted that the Court of Appeal stressed in Grace at [18] that all relevant factors must be considered. Thus having a house abroad is not conclusive but it is relevant and not, as HMRC have asserted, of “little consequence.” As the Court of Appeal noted, the test is multifactorial – one has to look at the very many facts which apply to any individual in determining their residence. 258. HMRC submitted that Mr Glyn did not effect a distinct break on or before 5 April 2005. He did not cease to be resident in the UK during the 2005/06 tax year nor during any of the tax years thereafter. The focus should not be on the “day count”, which in their view has no basis in law, but on the pattern, nature and quality of Mr Glyn’s presence in the UK. Mr Glyn’s frequent and habitual presence in the UK after 5 April 2005 was not “casual or transitory residence” but was part of the regular order of his life. 259. He retained a home in London to which he returned regularly and frequently every month to be with his wife and children, to continue his social life with his friends and family, and to attend business meetings. Throughout the relevant years, the quality, consistency and regularity of his presence in his home at CR was wholly inconsistent with his having been a visitor or a person on holiday. The cumulative effect of all of these factors is that the quality of that presence was habitual and part of the regular order of his life and not temporary, transitory or casual. This repeated regular presence coupled with the fact that he had multiple reasons for returning to the UK is indicative of the continued existences of significant ties with the UK. 260. HMRC noted that the issue is not whether Mr Glyn became resident in Monaco but whether he ceased to be resident in the UK. Any change of lifestyle involving a reduction of UK ties will only effect the necessary distinct break if it occurs before the start of the tax year. HMRC said that there is inevitably a change of life-style post-retirement and that of itself is not evidence of the distinct break but simply of retirement. Further, retirement may well involve increased time spent abroad and the acquisition of a home abroad. In such circumstances a person may become resident in another country but he will then be dual resident unless and until UK residence is relinquished. 261. HMRC asserted that on any view Mr Glyn did not make the necessary distinct break as claimed in circumstances where: (1) He retained and continued to use his substantial family home in the UK which he left unchanged and fully operational ready for his return two weeks later and to which he and his wife returned each month to live and carry on their married and family life. (2) He returned to the UK on 22 separate occasions in 2005/2006. (3) His wife remained resident in the UK spending extended periods of time each month in the family home. (4) His family life (his children and mother) remained in the UK and he continued to have the traditional Friday family meals at the family home at least once a month and visit his mother several times on each return. (5) He chose to observe the three main religious festivals in London with his family each year. (6) He continued an active (albeit reduced) social life in the UK attending both informal and formal social engagements each month with family and friends. (7) He continued to have business interests which required his regular presence in the UK (7 meetings in 5 months in the period between September 2005 and February 2006). 262. HMRC noted that Mr Glyn only took very limited advice on becoming non-resident and accepted that in April 2005 the notion of “loosening his ties” had not been in his mind at all and that he had not understood that a person could be resident in two places simultaneously. Further, as noted, prior to his departure he had been advised that the retention of a “home” would not be relevant to whether or not he became non-resident. As he was not advised that he needed to make a distinct break and substantially loosen his ties with the UK, he is less likely to have done so, in circumstances where he had no reason to believe it was necessary and where his “move” to Monaco was so obviously tax motivated and driven. Similarly, if he was not aware that the retention and continued use of a home might negatively impact his residence status he was all the more likely to continue to use CR after 5 April 2005 in exactly the same way he always had, as a home. Day count 263. The parties took different views on the significance of “day count” and how days of presence in the relevant locations were to be calculated. Mr Glyn’s counsel asserted that day count should be the starting point of the enquiry into an individual’s residence. It is relevant not only in terms of the absolute number of days spent in the UK but also in the context of (a) how much time was spent in one place abroad as opposed to in the UK and (b) the nature and quality of visits to the UK in terms of whether they were one off trips or for continuous periods. The length, frequency and nature of visits to the UK lies behind many of the factors set out by the Court of Appeal in Grace and day count was central to many of the earlier decided cases. 264. Mr Glyn’s counsel said that the strength of Mr Glyn’s ties in the UK has to be assessed by reference to his presence in the UK and the quality of his presence. The less time that an individual spends in a country, the less likely he is to be resident there as he will have far less opportunity to form or maintain ties. 265. As regards the tax year 2005/06, counsel noted that: (1) If only days on which Mr Glyn was present in the UK at midnight are counted, he was present on 44 days. (2) If all days on which he was present in the UK for a quarter of the day are counted, he was present for 65 days. (3) Even including every day of presence in the UK, however short, (such as including travelling to the US or Far East via Heathrow) Mr Glyn spent only 86 days here. (4) Out of the 22 trips that Mr Glyn made to the UK in 2005/6, three were for more than six days, twelve were weekend trips and four were en-route to another travel destination via Heathrow (but using CR overnight). His average length of stay was just over two days in the UK and where he did not spend an entire day in the UK the average length of each part day visit is just over half a day. (5) Mr Glyn was in Monaco, excluding days of arrival and departure, for 191 days and, on the basis of midnights spent there, for 214 days. 266. In counsel’s view a high day count in Monaco assists in showing that ties with the UK were substantially loosened. Mr Glyn retained for virtually a full five year period his pattern of a low number of days in the UK and a high number in Monaco. 267. Counsel noted that different tribunals have adopted different methods of counting days to reflect the quality of presence in the UK. In Gaines Cooper v HMRC [2007] STC (SCD) 23 and Hankinson v IRC (No 2) [2009] UKFTT 384 (TC) a midnight day count was used. In the tribunal decision in Grace , the tribunal ignored single day visits and counted each day of arrival and departure as a half day. The methodology used by HMRC of counting as a day of presence any day on which Mr Glyn was in the UK for any point of time is clearly unreliable. 268. Counsel noted that Mr Glyn’s day count is very low and substantially less than that in the cases where taxpayers have been held to be UK tax resident. If he were found to be in the UK, on the basis of either of the day counts used by Mr Glyn, that would be the lowest number of days spent in the UK giving rise to a finding of residence. Counsel noted, for example: (1) In Levene the taxpayer spent an average of 144 midnights in the UK and in contrast to Mr Glyn he acquired no base in Monaco where he spent much of the remaining time. (2) In Lysaght the taxpayer was in the UK for a week every month to attend board meetings. (3) In Grace the taxpayers’ day count was never less than 114 days in any relevant year. (4) In Shepherd , the taxpayer spent 92 whole days in the UK in 1998/99 excluding the day of arrival and departure and only 52 days in Cyprus including days of arrival and departure. (5) In Gaines Cooper the taxpayer spent 147, 121, 158, 110 and 146 midnights in the UK in the tax years in question. (6) In Hankinson the appellant spent 82 midnights in the UK 269. It is clear from the tribunal’s decision in Grace that the higher day count led to a different weight being accorded to his continuing ties in the UK (and in that case the taxpayer spent twice the amount of days in the UK compared with Mr Glyn and also continued to work for BA here as a full time pilot). Over the six years the time spent in the two places was about equal (see [109] of that case). In short a higher day count is indicative of a greater quality of presence and more ties here. 270. Similarly, in Shepherd the taxpayer was an airline pilot who continued to work for BA; he retained a house in the UK and his wife continued living there. He rented a flat in Cyprus in October 1998 and claimed he had moved there and thus was non-resident in 1998-9 and 1999-2000 but spent little time there. The Special Commissioner found that his whole days in the UK were 92 days in 1998-9 (68 in Cyprus) and 80 days in 1999-2000 and concluded he remained UK resident in both years. 271. HMRC responded that the appellant’s position has no basis in legal authority. Lloyd LJ in Grace expressly cautioned against such a day count comparison because each case will turn on its own facts (see [3] of that decision). It is particularly dangerous to isolate one factor such as day count and ignore other material differences the existence of which are relevant to the weight to be attributed to day count in any particular case. For example, in Lysaght the taxpayer did not retain a home or have any family or social ties in the UK. Similarly, although Captain Grace retained a home and had a British employer, he did not have any comparable family or social ties. 272. HMRC emphasised that it is important to have regard to the recurrent and habitual nature of the appellant’s regular and frequent returns to the UK on 22 separate occasions in 2005/2006 alone. The authorities clearly state that short but regular periods of physical presence may amount to residence. HMRC noted that Mr Glyn was present in the UK (a) in every month of the five years of claimed non-residence and (b) on at least two separate occasions per month in 48 out of the 60 months, according to Mr Glyn’s day count schedules, and 50 out of the 60 months, according to HMRC’s day count schedules. Significantly, irrespective of the methodology used, the day count of both Mr Glyn and his wife increased, rather than diminished, during the later periods of claimed non-residence. 273. The purpose of HMRC’s schedules is to demonstrate the pattern, nature and quality of the appellant’s presence in the UK. Mr Glyn himself accepted that a methodology which seeks to reflect where a person is in any part of a given day is going to provide a fair and accurate reflection of their presence in a particular location on that day. This is particularly so given his practice of arriving in the UK early on the day of arrival and departing early evening on the day of departure. The methodology which counts only midnights as full days of presence, is far more likely to distort the true picture of Mr Glyn’s presence. 274. HMRC noted that Mr Glyn’s counsel said that there were “a number of occasions where he did not even leave the airport”. However, there were only two such occasions in five years, one of which was not even in the tax year under consideration. HMRC said that the methodology behind the assertion that in 2005/06 Mr Glyn spent on average only two full days in the UK each time he returned is unclear. It is not borne out by either party’s day count schedule. Further, it is highly artificial, and entirely fails to reflect the quality of the appellant’s presence in the UK. Business ties 275. Mr Glyn’s counsel considered that it was plain that Mr Glyn’s business ties were substantially loosened given his total change of lifestyle on his retirement. Following the sale of nearly 200 properties as part of a careful plan drawn up a year before he finally left, Mr Glyn retired from what he perceived as a life of drudgery and instead adopted a life of leisure based in Monaco. By contrast in Levene the taxpayer had a continuing and unchanged tie with the UK and in Grace and Shepherd the taxpayers were obliged to be in the UK to perform their employment obligations. Mr Glyn made a distinct break pursuant to a deliberate and well considered plan and then made visits for a variety of random reasons, as visits of chance and occasion. 276. This is not like the situation in Grace where it was noted that the taxpayer made “short frequent and predictable stays in the UK throughout the year to enable him to work” and at [175] it was noted:
“ a very important part of his life, his employment, remained in the UK. When staying in the UK he was much more than a visitor: he had a settled and regular presence here staying in his own house that had been his only home up to September 1997.” 277. Mr Grace’s presence in the UK was not a stop gap measure: it was indefinite while his employment with BA continued and (like Lysaght ) meant he had to come to the UK for predictable purposes to perform a continuous work obligation. 278. HMRC said that the evidence contradicts Mr Glyn’s assertion that his work had prevented him from getting away for any length of time and that it had only been after his retirement from a lifetime of drudgery that he had been able to enjoy extended holidays abroad. It is clear that he took extended holidays abroad prior to his retirement from the UK family business. 279. HMRC noted that where an individual retires, there will inevitably be a substantial loosening of work ties and consequent change of lifestyle post-retirement. Following 5 April 2005, there was undoubtedly a significant loosening of Mr Glyn’s business ties and consequent change in lifestyle. However, as noted in the years prior to 2005 the appellant took numerous and lengthy holidays each year. He remained a director of several companies and continued to carry out executive functions in respect of them after that date. His business interests continued to require his attendance at business meetings with advisors in London in circumstances where his brother was not qualified or capable to deal with them alone. Significantly, he retained the business papers for these purposes in his office at CR. 280. HMRC said that it is significant that prior to 5 April 2005 Mr Glyn and his brother had carried out separate roles within their business. His brother was “very uncomfortable” with the aspect of the business carried out by Mr Glyn and could not manage on his own without support. Whilst Mr Stuart Glyn attended many if not all of these meetings his contribution was minimal. He did not attend meetings in which Mr Glyn discussed the preparation of company accounts with BDO and he had no involvement with the preparation of those accounts. Mr Glyn knew on 5 April 2005 that he would be required to have further dealings with BDO and he accepted that it was accurate to say that he continued to have a “role” with MGL. Mr Glyn’s witness statement makes clear that his presence in the UK on a number of occasions was specifically to attend these meetings with BDO although in cross examination he said that these business meetings were one of a number of reasons for his presence in the UK. Mr Stuart Glyn’s evidence was that he had no involvement whatsoever in the computational matters arising after April 2005. He confirmed that he was not able to say what the nine BDO meetings which took place after 5 April 2005 were about, nor whether he in fact attended them with his brother. Circus Road 281. Mr Glyn’s counsel submitted that it is clearly not the case that any retention of a house in the UK is incompatible with establishing non-UK residence. Otherwise both Mr Grace and Mr Gaines-Cooper would automatically have been UK resident. As Lord Wilson noted in Gaines Cooper , the question is whether the retention of a house in the UK is compatible with visits rather than a place of residence. HMRC accepted that retention of a home is merely a factor in considering whether a person has left the UK in a press release issued in 1993 (regarding an amendment to s 336). 282. Mr Glyn’s counsel continued that a house, as the bricks and mortar, may have the physical quality of continuity and permanence but it is a question of how the particular individual uses the property. A house can be a relevant tie for one individual and not another. In Cherney v. Deripaska [2007] EWHC 965 and Yugraneft v Abramovich I 2008] EWHC 2613 the High Court held, in each case, that in determining whether an individual was resident in the UK for the purposes of whether a claim could be brought against him, ownership of very substantial properties in the UK did not make the individual resident under general law. 283. Mr Glyn’s counsel asserted that Mr Glyn’s tie with CR was substantially loosened. Before he left the UK on 5 April 2005, Mr Glyn commuted back and forth from CR to the office each day. CR was his base and family home where he socialised and entertained apart from when he was on holiday. After the sale of the properties there was nothing for him to do in the UK, CR was no longer his base from which he commuted, the number of Friday dinners and socialising from there was dramatically reduced and he moved all his personal papers and valuables to Monaco. In that context and bearing in mind the much reduced time spent in the UK, it was a place to visit when Mr Glyn came over to the UK to see friends or was en-route somewhere else. It became in the nature of a pied de terre or high quality holiday accommodation, “a place to visit” in Lord Wilson’s words, not a settled abode. CR was no longer used as home. 284. HMRC said that in arguing that CR was merely high quality holiday accommodation, Mr Glyn repeated the error made by the Special Commissioner in Grace [2008] STC (SCD) 531 where she stated, at [40], that the taxpayer’s Horley house “was not in the nature of a home but was rather a substitute for hotels”
. It was noted by Lewison J, at [40] and the Court of Appeal, at [33], that staying in hotels or accommodation akin to a hotel does not necessarily prevent a person from being UK resident. HMRC also referred to the comments of the tribunal decision in Grace in 2011 as set out above at [239]. 285. HMRC said that in any event CR was plainly not a “pied de terre” but a substantial family home. Mr Glyn left everything as it was, renewed his insurance, maintained all connections required to keep it fully operational, kept two cars parked (one of which was bought only five months before 5 April 2005), applied for and secured a resident’s parking permit for Westminster on declaring it was his sole residence and continued to have bills sent there including for his Cannes apartment. His read this correspondence in his office at CR and filed it away there because on each and every occasion that he returned there, he knew that he would be back again within a matter of weeks. He maintained his typical routine from CR at a location where he continued to be within walking distance of his family and friends and other facilities as set above. 286. In HMRC’s view it is significant that Mr Glyn was advised that the retention of a “home” was not relevant to the residence issue and that he had not understood the concept that one could be resident in two places simultaneously. This means that he was all the more likely to continue to use CR after 5 April 2005 in exactly the same way as he always had, as a home, as he was not aware it might impact on his tax planning. 287. HMRC asserted that CR clearly continued to be Mr Glyn’s home and he accepted that it continued to be such. Mrs Glyn’s evidence was that whenever she was at CR during the period of claimed non-residence she was at “home” and that her time spent in the UK in the relevant period was not a holiday but “general living” which included continuing to visit the same hairdresser and frequenting the same local shops. She described a “home” as somewhere she could “live, cook and welcome the children”. The appellant’s children continued to regard CR as the family home and they retained some of their possessions there such as books and clothes. 288. In all the circumstances, Mr Glyn’s retention and use of CR plainly gives a different quality to his time in the UK. When staying there he could not properly be described as a “visitor”. He slept there in every month of the five year period. According to HMRC’s schedules, he returned at least twice a month in 50 out of 60 months and habitually continued to spend time with his wife and enjoy family meals together with his children on the substantial number of Fridays upon which he was present in the relevant period. He was also able to visit his mother and friends who all lived nearby. 289. Mr Glyn’s counsel responded that the size and grandeur of CR was irrelevant. On the contrary it may be said that leaving a big house was demonstrative of a major break. Given that a person can keep a house without becoming UK tax resident it follows that the payment of bills and the retention of cars is not a negative factor. The size of the apartment in Monaco is also irrelevant given that small apartments are the norm in Monaco. Mr Glyn was happy anyway to downsize. The test is not the nature of the physical assets but rather the quality of the use. Sleeping in a house or driving a car are not indicative of residence. As noted by Mr Glyn’s counsel, Mr Glyn’s use of CR changed dramatically. Social and family ties 290. Mr Glyn’s counsel asserted it was apparent that Mr Glyn’s family and social connections were substantially loosened given the much reduced time he spent in the UK and the much less frequent basis he saw his family and friends. That was particularly the case given the pattern of his new life in Monaco where his family and friends frequently visited him. 291. HMRC said that Mr Glyn’s close family and social ties to the UK continued to such an extent and with such a degree of regularity that the ties were not substantially loosened. He described his family as his “hobby” and accepted that his very close relationship with his children did not diminish when he went to Monaco. His family lived within walking distance of CR. When he was in the UK he would see them all and would usually visit his mother several times on each visit. He was in the UK for their birthdays as set out above. By contrast between 8 September 2005 and 5 April 2006, Mr Glyn’s son did not visit Monaco and his daughter visited only once for a period of four days. CR was the only place that was a home, as described by Mrs Glyn in her witness statement, as a place she could “live, cook and welcome the children”. The only place that met this description in the relevant tax year was CR. 292. HMRC continued that Mr Glyn, his wife and his children all emphasised the importance of the tradition of their Friday family dinner. Whilst Mr Glyn was not a religiously observant Jew, nevertheless his Jewish identity was important to him. The Friday night family dinners at CR continued on 15 Fridays in 2005/06 (compared to 36 the previous year). This was a pattern which continued in all five years of claimed non-residence. 293. HMRC noted that Mr Glyn was present in the UK for a number of Jewish holidays in every one of the five years of claimed non-residence, taking into consideration that these holidays fall on different days of the English calendar every year so that he had to plan specifically to be in the UK on these occasions. 294. He and his wife did not join a synagogue in Monaco. The extent of their religious observance during the period of claimed non-residence took place at the Western Marble Arch synagogue in the same way as it always had done prior to 5 April 2005. Mr Glyn himself characterised his unwavering observance of these holidays in the UK as a “social ritual”. 295. HMRC stated that Mrs Glyn always intended to remain resident in the UK throughout the five tax years in question. In 2005/06 alone she was present in the UK regularly and for 7 consecutive days or more on 9 occasions living her life in London in the same way as she had prior to 5 April 2005. She, therefore, was a substantial tie with the UK and one of the reasons Mr Glyn was present in the UK was to be with his wife at their home in CR. 296. HMRC said that whilst Mr Glyn asserted the decision to “emigrate” to Monaco was a decision taken jointly with his wife the evidence of Mrs Glyn and Mr Stuart Glyn contradicts that. Moreover whilst Mr Glyn may have been happy to have lived a solitary life in Monaco, his wife was not and returned frequently and regularly to their home in London. Mr Glyn accepted that because his wife was in the UK for such regular and substantial periods of time, at least one of the reasons for him being in the UK was for him to be with her. 297. In HMRC’s view, the regular pattern of Mr Glyn’s returns to the UK one to three days after his wife is another clear indication of his continuing UK residence in order to continue his married and family life in what was and continued to be the family home. Mrs Glyn’s insistence that she remain resident in the UK and substantial presence in the UK was a substantial tie with the UK which led Mr Glyn to return in order to carry on his married life with his wife, and to be together with their children as a family. 298. Finally HMRC noted that Mr Glyn had attended a significant number of formal social occasions, often more than one in each month, during 2005/06 and maintained his links with the many friends in the local area. Quite apart from coming to London only for specific reasons such as weddings, funerals or medical appointments the appellant accepted that he had multiple reasons for being in London not least his attendance at numerous social engagements. He said that when in the UK at the relevant time he saw “all of my friends whenever I could”. He met up with friends for coffee and attended the Sunday night supper club meals with his close friends. The more formal social events he attended resulted in Mr Glyn’s presence in the UK every month, most often on two separate occasions per month leaving aside the other reasons for his presence in London. Decision 299. The question of whether, on or before 5 April 2005, Mr Glyn made a distinct break in the pattern of his life in the UK is one of fact and degree to be determined by reference to all the circumstances of Mr Glyn’s life before and after that time including the period of planning for the move to Monaco. 300. We accept that, by 5 April 2005, Mr Glyn had decided he wanted to spend time outside the UK in order to break so far as possible from his former responsibilities in relation to the family business and to live a more leisurely life. He felt it had become something of a burden or a “life of drudgery” to continue in an occupation he did not particularly enjoy. We note that his reference to the ability to take longer holidays on retirement seems to be overstated given the pattern of Mr Glyn’s holidays before and after his retirement (see [196] and [197]). However, that does not invalidate his evidence that his occupation had become an unbearable strain on him and that he wanted to live a different life free from the family business. He felt the best way of achieving this was to move abroad as if he stayed in the UK he was more likely to be sucked back into family business. 301. Mrs Glyn was less keen on the move, at least initially, due to the impact on her ability to see her family and friends and having to scale down very considerably her charitable work. The extent of her misgivings is not clear. She can be described as having at best mixed feelings albeit that she said at the hearing that she grew to like being in the sunshine in Monaco with all its attractions. In the event, whilst after 5 April 2005 she typically went to the UK before her husband and often returned to Monaco after him, she was otherwise with him for the majority of the time. 302. Whatever the initial motivation, as he accepted, Mr Glyn was mindful of ensuring that in making the move to Monaco he was outside the UK tax net or that he maintained his “absence” from the UK for a sufficient period to avoid tax on the dividend received on the retirement from the family business. Prior to the move, he received advice (albeit limited advice in a formal sense) that it was possible to do so provided he was non-resident during a period of three years as regards income tax and five as regards capital gains tax. That there was at least to some extent a tax motive for staying out of the UK does not of itself affect the position. The question remains whether, as a factual matter, Mr Glyn made a distinct break in the pattern of his life in the UK. 303. Mr Glyn did not want to slip up on the 90 days test he thought was relevant to him being non-resident from the terms of HMRC’s published guidance on residence/non-residence in IR 20. He kept a detailed diary following 5 April 2005 it seems with a view to ensuring that there was no such slip. He accepted that he was advised that he could retain CR without that affecting his non-residence status. He did not know that a person could be dual resident but he was aware it was not simply a case of becoming resident elsewhere and there was more required to be non-resident than simply sticking to the 90 day “limit” albeit he was not thinking of it in terms of having to loosen ties. 304. By the time the Glyns set off on 5 April 2005 to take up residence in their new apartment in Monaco, leaving aside the properties which were to be retained in GC or retained by Mr Glyn personally, all bar one of the properties of the family business had been sold following a fairly lengthy and active period of preparation and planning for the retirement and the move. We accept that Mr Glyn intended to set up a home in Monaco given the Glyns had obtained residence permits for Monaco, leased a substantial apartment in Monaco for a three year period for which they took time and trouble over choosing the furnishings and made attendant arrangements (such as for a telephone line), that they took valuables with them from CR and Mr Glyn took scanned files he thought he may need to deal with queries on the property sales. We note Mr Glyn insisted on having a break clause in the lease of the apartment at Villa Rosa but that was with a view to being able to leave that apartment if the Glyns could later obtain an apartment in their preferred location in the Roccabella building, as they did in March 2007. 305. It is less clear to what extent, at that point, Mr Glyn anticipated being in the UK and for what purposes after that time. He left CR “fully operational” with all facilities including a resident house keeper and two cars (one of which was purchased five months before the move) (see [116] to [130] above). One of the reasons, although there were others, for retaining CR, was that the Glyns would be able to stay there whilst in the UK. He accepted that he was aware he may have to input on the remaining issues regarding the disposal of the properties of the family business (although he thought at the time that he may be able to deal with this from Monaco), retained some paperwork at CR and still had bills and bank statements sent there, including those for the Cannes apartment. He kept his registration with his NHS doctor in London, carried on with his statins prescription and maintained his MCC membership. He accepted that his wife did not intend to be constrained by any 90 day time limit as regards visits to the UK, as it did not matter to her whether she was resident in the UK or not, but said that there was no particular anticipation as to how much she would be in the UK. In the event, as noted, she was largely with Mr Glyn except that usually she went to the UK ahead of him and returned to Monaco later. He accepted that he anticipated returning to London quite soon after the initial departure on 5 April and in fact did so for three nights on 22 April 2005. 306. Taking all of this into account we consider it is reasonable to infer that, as at 5 April 2005, Mr Glyn anticipated he would be returning to CR with at least some degree of regularity over the coming months within the parameters of the time limit of 90 days which he thought he could spend in the UK without affecting his residence status. We note the argument that leaving such a substantial property as CR evidences a distinct break from the UK, in terms of the significance of the move. However, in our view, the retention of all facilities required for the house to function as a home for the Glyns when in the UK points to the contrary. 307. Overall we consider that the evidence as to Mr Glyn’s intentions and motivations as at 5 April 2005 is not of itself sufficient to determine one way or the other whether he had made a distinct break in the pattern of his life in the UK. Moreover, whilst his intention is relevant, as noted by Lord Hope in Gaines-Cooper , it is not determinative. HMRC argued that the fact that Mr Glyn was to some extent unaware of what was required to be non-resident means that it was more likely that Mr Glyn did not loosen his UK ties substantially and continued to use CR as a home. We do not, however, see any basis for drawing any inference to that effect from the extent of Mr Glyn’s awareness of the residence test. As noted it is a question of assessing all the facts and circumstances of Mr Glyn’s life in looking at the pattern and quality of his continued presence in the UK. It is a matter of looking at the actuality of all the circumstances. It is necessary to move on, therefore, to examine the pattern of Mr Glyn’s life before and after the move. 308. As set out, there is no specific time limit but the amount of time spent in the UK is clearly a relevant factor in assessing a taxpayer’s on-going connections and ties with the UK. It is not a factor to be looked at in isolation but as part of the overall assessment of the pattern of Mr Glyn’s life and the nature and quality of his presence in the UK. Given that Mr Glyn typically flew to the UK in the morning and returned to Monaco in the evening, on a relatively short flight, it would give an artificial impression not to take into account that he spent a significant amount of time on those days in the UK and what he did on those days. We have taken into account, therefore, in making our assessment, all time spent in the UK, including parts of days spent in the UK, according to the evidence of how that time was spent (as set out in detail in relation to the tax year 2005/06 at [158] to [191]). 309. We accept that, in all the circumstances, by 5 April 2005 Mr Glyn had certainly significantly reduced his UK business activities and interests. However, he did retain substantial UK investments albeit largely as a passive investor rather than as an active property manager. 310. Clearly Mr Glyn’s retirement from the family business was a major change in his life albeit that he remained involved in a limited way, after 5 April 2005, as regards dealing with issues relating to the prior periods such as the computation of gains on the property disposals and the tax loss planning. He attended at least nine meetings with BDO in the tax year 2005/06 and accepted that he may have had other meetings or conversations with them and that he had other conversations with his brother. Mr Glyn thought his record of nine meetings was correct but could not recollect with absolute certainty. 311. We note that Mr Glyn remained formally engaged as a director at some of the MGL/Hillpride companies following the date on which he considered he had retired (1 April 2005). That appeared to be because Mr Stuart Glyn was not prompt in organising the paperwork for his formal resignation as a director rather than any desire on Mr Glyn’s part to remain as a director. We accept Mr Glyn’s evidence, as supported by his brother’s evidence, that notwithstanding he remained formally as a director of some of the companies, he did not have an active or on-going role in the winding-up of family business in the period from 5 April 2005 onwards beyond that set out in further detail above (see [76] to [92]). 312. Otherwise Mr Glyn retained some UK property investment interests in relation to which we accept that he was a passive investor rather than an active manager. Whilst in the UK he had the occasional lunch or discussion with Mr Lyall regarding the investments made through MVP and he discussed what was happening with his investments with his brother. We accept that he had no significant role as regards the sale of the properties held in the GC structure on the basis of the evidence set out at [93] to [101]. 313. Whilst the precise frequency of the discussions with his brother is not clear, Mr Glyn was involved in the plans for the Parkfield property in the sense that he initially opposed his brother’s plans as he would have preferred to have sold the property prior to its development. The brothers were consistent in their evidence, however, that Mr Stuart Glyn organised and dealt with the development project once it was going ahead albeit he kept his brother informed and discussed progress with him given the substantial sums involved and potential returns for them both (see [111] to [116]). 314. We accept Mr Glyn’s evidence that following 5 April, on the business and investment side of things, he was more pre-occupied with managing from Monaco the cash he had realised on his exit from the family business as evidenced by his frequent meetings with Barclays in Monaco. 315. We note that continuing to have accommodation available in the UK is not of itself determinative of the residence issue nor does staying in hotels in the UK or similar preclude a finding that a person is UK tax resident. However, the fact that Mr Glyn continued to use CR as a home, as in our view he clearly did, adds a different quality to his time spent in the UK. 316. We do not accept that CR became a place Mr Glyn dropped into merely as a convenient stop off or that it ceased to be used as a home for Mr Glyn. He said it was “homely” but it had ceased to be his home; he regarded Monaco as his home at that time and being in London was like being on holiday. However, whatever Mr Glyn’s feelings as regards CR during the period of claimed non-residence, as a factual matter, it is clear that it continued to be used as a home by the Glyns when in London in any natural sense of that term. 317. As noted, CR, a substantial family size house located within close reach of the Glyn’s family and social network, was kept exactly as it was on a fully operational basis (including with a live-in housekeeper) for Mr and Mrs Glyn’s use whenever they chose (see [116] to [130]). When in London, using CR as his base, Mr Glyn lived life much as he had before 5 April 2005 as regards his personal, family and social life albeit on a reduced scale. He and Mrs Glyn sometimes hosted family dinners there on Friday evenings when they were in London; Mr Glyn said the majority of Friday evening dinners (comprising 15 in the tax year 2005/06 and similar numbers in the subsequent years) took place at CR. From CR Mr Glyn went for dinner elsewhere with the family, he went for strolls in the neighbourhood, he met with friends in the vicinity for coffee or dinner, he visited his mother, he celebrated family birthdays and religious events (in a social manner) and he attended more formal social events. He dealt with many of his bank statements and post there and kept some of his paperwork there. He said he tried to see all of his friends whenever he could. 318. Mrs Glyn typically went to London ahead of Mr Glyn and stayed in London longer than he did. Otherwise her activities in London were seeing family and friends and what she described as “general living”. She shopped at the same shops as she had previously and regularly went to the same hairdresser. Mrs Glyn insisted that CR was retained although Mr Glyn said she did not really need to insist for him to be of the same view. She may not always have been as happy there as she was before 5 April 2005 when she and Mr Glyn would have spent less apart but we do not consider that affects the conclusion that she was using CR as her home in the UK. 319. Mrs Glyn’s status and pattern of activities does not of itself directly affect Mr Glyn’s position. Their residence status has to be assessed independently. The fact that Mrs Glyn may well have remained UK tax resident does not of itself mean Mr Glyn must be such. However, we consider her longer presence in London at CR and use of CR when there as another factor evidencing that CR continued to be used as a home by Mr Glyn. He accepted that Mrs Glyn liked to have the house ready and comfortable for him when he arrived in London. When Mr Glyn went there, he was essentially joining his wife for the two of them to use CR much as they had always done albeit he was doing so for less time. 320. We do not consider that it affects the position that CR was no longer Mr Glyn’s base from which he commuted to work on a daily basis on weekdays. CR would have ceased to be such a base on Mr Glyn’s retirement from the full time business, whether he decided to retire abroad or to remain in the UK. Mr Glyn’s retirement inevitably brought with it a change in his lifestyle. The question is the quality of the continued use of CR in the changed circumstances of Mr Glyn’s retirement which necessarily involved greater leisure time. It is a question of weighing up Mr Glyn’s on-going UK connections in the light of this changed lifestyle. 321. We note that Mr Glyn made 22 trips to the UK in the tax year 2005/06. He was typically present twice a month in most months throughout the period of claimed non-residence. We accept Mr Glyn’s evidence that there was not a single specific reason for his presence in the UK on most of these occasions. Usually he came to the UK for a variety of reasons including to see his family and friends, sometimes for particular occasions, but also fitting in business meetings at BDO (and occasionally with other advisers). We note that in his witness statement he had indicated that on occasions he came to the UK specifically for business meetings with BDO but at the 2013 hearing he clarified that he kept his brother informed of his plans and his brother arranged these meetings for when he was otherwise planning to be in the UK. 322. Mr Glyn’s counsel argued that this meant Mr Glyn merely made visits to the UK of “chance and occasion” which is to be contrasted to presence under an obligation or tie such as for employment (as in Grace or Lysaght ). However, we cannot see that the fact that Mr Glyn came for multiple reasons and spent his time in the UK on many occasions in a variety of ways detracts from the pattern and quality of the time spent. On virtually every occasion he spent time in the UK with family and friends using CR as his home in substantially the same way as he had before the move (albeit he also used CR prior to the move as his base for commuting). We cannot see that the fact it was his entirely voluntary choice to do so diminishes the nature of his on-going connections of this kind. 323. Moreover it is the very regularity and frequence of the time spent in the UK in this way that demonstrates that these were not merely visits of “chance and occasion” but substantial on-going connections. It was habitual for Mr Glyn to be in the UK, as noted, usually on two occasions per month and, on those occasions, it was habitual for him to carry on with the pattern of his previous personal, family and social life in the UK using CR as his home in the UK. That was a pattern that continued throughout the claimed period of non-residence. 324. We note that Mr Glyn’s friends said that they individually saw less of the Glyns in the period of claimed non-residence, that the Glyns ceased to be full time members of the Sunday supper club and, unlike before 5 April 2005, plans had to be made in advance to see the Glyns when they were in London. Mr and Mrs Glyn also emphasised the reduced scale of their social activities in the UK (including as regards attending charitable events) and reduced time spent with their family in the UK compared with their life before 5 April 2005. Whilst we accept that there was clearly a reduction in the scale of these activities in absolute terms, again it is the on-going habitual nature of the pattern of these activities in the UK which, in our view, mean these ties were not sufficiently loosened for Mr Glyn to have made a distinct break in the pattern of his life in the UK. 325. Overall we consider that this on-going habitual pattern of spending time in the UK in substantially the same way, as regards Mr Glyn’s family and social connections, from what we consider to be a continued home in the UK, combined with his on-going reduced but still substantial UK investments and business interests demonstrates that, as at 5 April 2005, Mr Glyn had not made a sufficiently distinct break in the pattern of his life in the UK for him to have become non-UK tax resident. We do not consider that, given this regular and habitual pattern of his UK lifestyle over the full claimed period of non-residence, in the context of Mr Glyn’s changed life on retirement from the family business, the reduced time spent in the UK and the change in his UK business interests from active hands on manager to passive investor suffice to demonstrate that he had made a distinct break. 326. We acknowledge that Mr Glyn did clearly have an established life and a home in Monaco during the relevant period and he spent more time there than in the UK. However, whilst that is not to be ignored, given that a person may be resident in more than one location, it is not a question of simply measuring the amount of time spent in or the quantity or scale of a person’s ties with one place compared with the other. It is a question of whether, in all the circumstances of Mr Glyn’s life, his existing ties with the UK were so substantially loosened that he made a distinct break with the UK. For all the reasons set out we consider they were not. Conclusion 327. For all the reasons set out above, the appeal is dismissed. 328. This document contains full findings of fact and reasons for the decision. Any party dissatisfied with this decision has a right to apply for permission to appeal against it pursuant to Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009. The application must be received by this Tribunal not later than 56 days after this decision is sent to that party. The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice. HARRIET MORGAN TRIBUNAL JUDGE RELEASE DATE: 18 th APRIL 2018

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