In a recent decision the Court of Appeal has held that persons who are not normally resident in the UK may still be liable to pay taxes.

This decision, which may affect many people who are resident abroad but retain connections in the UK, was given in the case of Robert John Davies and Michael John James & Robert Gaines-Cooper -v- HMRC [2010] EWCA Civ 83. Previously the HMRC had issued guidance in relation to persons living and working abroad in their leaflet IR20. Herein it contained the proviso that if a person left the UK either indefinitely or to work full time were treated as non-residents if they were absent from the UK for at least a whole tax year and that during this absence their visits to the UK did not exceed 183 days in any given tax year, or exceed 91 days per tax year when taken as an average over a period of 4 years.

In the immediate case Mr Gaines-Cooper was resident in the Seycelles and had abided by the rules contained in the IR20 in relation to visitation. However the court held that despite this he was liable to pay UK tax and could be pursued for up to an estimated £30 million in relation to back taxes owed as a result of this decision.

The Court of Appeal held that any person seeking to rely on the guidance contained in the IR20 as a non-domiciled person must first be able to show that they have left the jurisdiction and that there has been a clear break with the UK. In this case Mr Gaines-Cooper retained property in Oxfordshire and Berkshire and in his decision Moses LJ referred to the earlier decision of The Special Commissioners that the UK had remained "centre of gravity of his life and interests".

In concurring with the leading decision of Moses LJ and the agreeing decision of Dyson LJ, Ward JL states:

"Even if the appellants have established an ordinary residence abroad, the fact that they return to sleep in their own beds in their own homes on a fairly regular basis and retain a string of connections with the life they led in this country, then the Revenue are entitled to question their claim to be non-resident here."

The court dismissed the appeal and held that whilst Mr Gaines-Cooper had abided by the visitation limits as set out in the guidance of the HMRC he was unable to establish that he had left the UK to be able to be defined as a non-domiciled person. It is believed that Mr Gaines-Cooper will appeal the decision.