HM Revenue and Customs v Grace
| Jurisdiction | England & Wales |
| Judge | Lord Justice Lloyd,Lord Justice Dyson,Lord Justice Waller |
| Judgment Date | 28 October 2009 |
| Neutral Citation | [2009] EWCA Civ 1082 |
| Docket Number | Case No: A3 2008/3086 |
| Court | Court of Appeal (Civil Division) |
| Date | 28 October 2009 |
[2009] EWCA Civ 1082
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
MR JUSTICE LEWISON
ON APPEAL FROM THE SPECIAL COMMISSIONERS
Dr A N BRICE
(2008) SPC 00663
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Waller, Vice-President of the Court of Appeal Civil Division
Lord Justice Dyson and
Lord Justice Lloyd
Case No: A3 2008/3086
Malcolm Gammie Q.C. and Keith Gordon (instructed by Sharpe Pritchard) for the Appellant
Ingrid Simler Q.C. and Akash Nawbatt (instructed by The Solicitor's Office, HM Revenue and Customs) for the Respondent
Hearing date: 5 October 2009
The issue in these proceedings is whether the appellant, Mr Grace, was resident in the UK for tax purposes during the tax years from 1997/8 to 2002/3. Whether he was ordinarily resident for those purposes is also in issue, but on the facts of this case it is common ground that if, and only if, he was resident, then he was ordinarily resident, so it is not necessary to consider that question separately. Dr Brice, the Special Commissioner, held that he was not resident; on appeal Lewison J held that he was resident. With permission granted by Jacob LJ Mr Grace appeals to this court, contending that the Special Commissioner was right, or alternatively that if there was any error of law in her ruling, the question should be remitted for a fresh decision.
The appellant is an airline pilot. He works for British Airways (BA), flying long-haul flights out of Gatwick or Heathrow. He has to be in England for some days before any outward flight and, in practice, sometimes between inward and outward flights. He started work as a long haul pilot in 1987 for British Caledonian, later taken over by BA. From 1986 to 1997 he was resident in the UK, latterly owning and living in a house in Horley. In August 1997 he took a rented apartment in Cape Town, and later bought a house there. He contends that, since then, he has not been resident in the UK, regarding his house in Cape Town as his home, spending as much time there as he can, consistently with performing his duties as a BA pilot, and intending to spend his retirement there in due course. HMRC argue that his continued presence in the UK, as the base from which he does his work, shows that he is still resident here, just as he was before 1997.
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.
The decision as to residence or otherwise is for the Special Commissioners, or now the First-Tier Tribunal (Tax Chamber). It depends primarily on issues of fact. As is well established, an appeal from such a decision, which must be on a point of law, can only succeed if one or other of two things can be shown: (1) that the decision is one which “no person acting judicially and properly instructed as to the relevant law could have come”; or (2) that the reasoning for the decision contains something which is on its face bad law and which bears on the determination: see Edwards v Bairstow [1956] AC 14, at 36.
There is no statutory definition of residence for tax purposes. There are some statutory provisions with marginal relevance, to which I will refer, but it is case law that affords guidance as to the content and meaning of the relevant phrases, such as that in Schedule E in section 19 of the Income and Corporation Taxes Act 1988: “any year of assessment in which the person holding the office or employment is resident and ordinarily resident in the United Kingdom”. Lewison J summarised a number of relevant factors in paragraph 3 of his judgment, and at the end of his judgment he referred back to, and described as impeccable, another list provided by Dr Brice in her decision in an earlier case about another airline pilot, Shepherd v HMRC (2005) SPC 00484, from which, as it happened, Lewison J had heard and dismissed an appeal: [2006] EWHC 1512 Ch.
Lewison J's summary is as follows:
“(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 (1998) 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 (1926) 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 (1998) 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 (1928) 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 (1928) 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 (1928) 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 (1932) 17 TC 405, 411.”
This has the incidental advantage of identifying almost all the decided cases to which I need to refer. Those not already mentioned to which I will refer are Re Young (1875) 1 TC 57, Cooper v Cadwalader (1904) 5 TC 101 and Commissioners of Inland Revenue v Brown (1926) 11 TC 292.
Dr Brice's list at paragraph 58 of her decision in Shepherd summarises the relevant factors in much the same way. Ignoring, as being less relevant, points which relate to ordinary residence, the following three items in her list are worth quoting, despite the overlap between the two lists:
“- 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);”
As regards that last point, 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.
The point mentioned at sub-paragraph (xi) in Lewison J's list, derived from Lysaght v...
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