The Supreme Court has ruled in favour of HM Revenue and Customs (HMRC) in the Gaines-Cooper case. The case involves a businessman who has been defending his right to be treated as non-resident for UK tax purposes on the basis that he followed HMRC's guidance on residence for many years.
Mr Gaines-Cooper organised his affairs so that he complied with the HMRC guidance, contained in their leaflet IR20, to make himself not resident in the UK for tax purposes. However, HMRC decided that its previous guidance was not correct and that Mr Gaines-Cooper's connections with the UK were too strong for him to be treated as non-resident. It therefore argued that he was assessable to tax for the years during which he claimed he was not resident in the UK.
In essence, HMRC have been successful in persuading the Court that where they issue guidance to taxpayers, designed to provide certainty to them in understanding how their tax affairs will be dealt with, and subsequently decide that the guidance was incorrect or incomplete, they may 'move the goalposts'.
This decision will have a severe impact on many people who think they have achieved non-resident status but have maintained links with the UK. In addition, the decision may tempt HMRC to reconsider the 'correctness' of their guidance in other areas in which a change in policy may yield significant amounts of tax.