Jade Bradley considers the Gaines-Cooper effect and the future of IR20
The recent decision of Special Commissioners in Robert Gaines-Cooper v The Commissioners for HM Revenue & Customs [2006] SpC 568 (see NLJ, 2 February 2007, p 176) has rocked the boat in what was thought to be the clear and settled waters of income taxation. This has left those taxpayers most affected by the decision—business travellers—unable to rely on HM Revenue & Customs (HMRC) guidance with any degree of confidence.
Despite a lack of statutory definition of residency in the Income and Corporation Taxes Act 1988 (TA 1988), a series of rulings by the courts, culminating in the publication of the HMRC guidance booklet IR20—Residents and Non-residents: Liability to Tax in the United Kingdom, has meant that residency has been a relatively non-contentious area of the law.
The high-water mark in those residency cases has long been recognised as IRC v Lysaght [1928] AC 234, in which the House of Lords established the 91-day test that was subsequently adopted by HMRC. The essence of the test is that, to prove non-residency, taxpayers must show that
