Following a long and ‘hard-fought’ dispute with the tax authorities, a retired property mogul has managed to persuade the First-tier Tribunal that he should be relieved of a £5.5 million income tax burden on the basis that he was non-resident in the UK during the financial year in which he received a £29 million dividend.
The businessman insisted that he was resident in Monaco when he received the dividend on the sale of property assets. However, HM Revenue and Customs (HMRC) was equally adamant that his heart had remained in England where his wife, as well as being a high-powered charity boss, was legendary amongst family and friends for her sumptuous home cooking.
HMRC pointed to the couple’s regular returns to London during the relevant tax year for Jewish festivals and traditional Friday night suppers with their grown-up children as evidence that they had never really left. It was said that their continued fondness for their family home and close contacts with a wide circle of friends meant that they had retained dual residence in England as well as in Monaco.
However, in allowing the businessman’s appeal, the Tribunal found that he had truly made his home in the principality after over 30 years managing a family property business – a task which he had viewed as drudgery. Having spent more than 200 days in Monaco, and less than 90 days in Britain, during the relevant tax year, he had ‘unquestionably acquired a habitual abode’ in the tax haven.
The businessman had stated that, following his departure from Britain, his house in London ‘did not feel like home’ any more. After settling in Monaco, he and his wife had enjoyed an affluent, more relaxed, way of life and had taken full advantage of the ‘countless attractions’ the principality had to offer.
The Tribunal found that, although the wife had initially had ‘mixed feelings’ about moving abroad, the couple had intended to make Monaco their ‘home in every sense’ and had done so ‘for various personal reasons, going well beyond merely camping abroad to avoid tax’. They had taken leases of two luxury flats in Monaco and had made a ‘distinct break’ with the UK.
HMRC submitted that the couple had, during the relevant tax year, returned fairly regularly to the UK so that their family and friends could enjoy the wife’s cooking prowess on Friday nights and on Jewish feast days. However, the Tribunal found that the businessman had not been obliged to abandon such traditions in order to qualify for non-UK resident status.
Although the businessman had conceded that ‘his lifestyle in Monaco might be regarded by some as not terribly fulfilling’, the Tribunal observed that his way of life there suited him personally and ‘was in some ways more fulfilling than many other ways of spending one’s early retirement’.