Rupert Kimber v HMRC

The taxpayer returned to the UK having spent many years abroad, working in Japan.

He returned to the UK on 17 July 2005 and remained here until 30 July 2005, when he went on holiday to Italy for four weeks, returning at the end of August. On 12 August, he disposed of a block of shares, realising a gain on which the capital gains tax charge was £96,499.60. When he returned from Italy at the end of August, he took up employment with a company in the UK.

He claimed that he did not become UK resident until the end of August; his stay in the UK during July was part of his normal holiday arrangement. During that stay, he arranged to take a lease on a UK property. HMRC 6, the publication dealing with residence, states:

“When you come to the UK temporarily

If you are simply visiting the UK, then you might not be resident. But you are not simply visiting the UK if you have a purpose for being here which is not temporary. The nature and extent of your connections to the UK may indicate that your purpose in the UK is not temporary.

If you are here temporarily, read paragraphs 7.5 to 7.6. You may also need to read paragraph 7.7.

If you remain in the UK for a period that spans two years and are resident in the second year then you will need to think about whether you were also resident in the first year. This will depend on all the facts.

It is possible that after you first come to the UK your circumstances change and you are going to live in the UK permanently or indefinitely, or you are going to remain here for three years or more from the date of your arrival. In such a situation, you will become resident and ordinarily resident in the UK and you should read paragraph 7.7. If your circumstances change and you become resident in the UK, you should tell us as soon as possible to make sure that you are paying the correct amount of tax”.

By concession, when a person becomes resident during a tax year, it is permissible for him to be treated as UK resident from the date of arrival. HMRC claimed that he had become UK resident from 17 July.

HELD: The Tribunal therefore decided that the circumstances were that the taxpayer had decided to remain in the UK prior to 30 July, when he left for his holiday and was UK resident when the shares were disposed of on 12 August.

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View the case digest for Rupert Kimber v Revenue & Customs [2012] UKFTT 107 (TC)