Kevin McCabe v The Commissioners for HMRC

UK residence is determined by a multifactorial assessment of all relevant circumstances. A taxpayer who has previously had sole residence in the UK becomes non-resident only where there is a definite break, involving a sufficient loosening of the pattern of life in the UK. Full-time work abroad may be an important factor, but it creates no bright-line rule or presumption and need not be separately determined in every case. Physical presence, overnight stays, business activities, family and social connections must be assessed together.

For the purposes of the UK/Belgium double tax convention, a permanent home is available where it is practically at the taxpayer’s disposal; legal ownership and actual overnight occupation are unnecessary. Where permanent homes exist in both states, the centre of vital interests requires a comparison of personal and economic relations in those two states. The tests operate sequentially.

The appellant appealed against the decision of the First-tier Tribunal (Tax Chamber), released on 30 September 2022, which dismissed his appeal against closure notices issued by HMRC under section 28A of the Taxes Management Act 1970 for the tax years 2006/7 and 2007/8.

He argued that he had ceased to be UK-resident when he moved to Brussels on 4 April 2006. Alternatively, he argued that the UK/Belgium double tax convention made him resident only in Belgium. The central issues were whether the common law residence test was correctly applied, whether a permanent home remained available to him in the UK, and where his centre of vital interests lay.

1. Appeal dismissed. The FTT had applied the correct legal tests. Its evaluative findings were not challenged under [1956] AC 14.
2. The common law test required a multifactorial inquiry into whether there had been a definite break or sufficient loosening of the appellant’s established pattern of life in the UK. Full-time employment abroad was not a rebuttable presumption or bright-line indicator of non-residence. Nor was the FTT legally required to make a separate finding on that issue. It had properly considered where the appellant worked, his travel, and his UK business activities.
3. Residence was not determined by a mathematical formula or by counting only whole days or nights. Overnight stays were relevant, but day trips and other periods of physical presence could not be disregarded. Residence in the UK did not require residence in a particular building, and accommodation in hotels or other people’s homes did not prevent UK residence.
4. The FTT was entitled to treat continuing UK business interests, UK meetings, family and social connections, and attendance at Sheffield United matches as relevant ties. A connection remained relevant even if it could be maintained from abroad. The FTT’s conclusion that the changes after April 2006 did not sufficiently loosen the appellant’s UK ties disclosed no error of law.
5. Under Article 4(2)(a) of the DTC, “available” meant capable of being used by, or at the disposal of, the taxpayer. Legal ownership was unnecessary. The FTT was entitled to find that the family home at Deepdale remained available to the appellant because he could use it whenever he wished, notwithstanding the transfer of ownership, removal of possessions, handover of keys, and absence of overnight stays.
6. Having found permanent homes available in both Belgium and the UK, the FTT correctly compared the appellant’s personal and economic relations in those two contracting states. The centre-of-vital-interests test did not require consideration of relations with Spain or Australia, or comparison with the appellant’s position before the relevant period. Habitual abode was a later, separate stage in the Article 4(2) sequence and was irrelevant to the centre-of-vital-interests assessment.

• Upper Tribunal (Tax and Chancery Chamber): appeal against the FTT decision dismissed on 12 September 2024.
• First-tier Tribunal (Tax Chamber): appeal against HMRC closure notices for 2006/7 and 2007/8 dismissed; decision released on 30 September 2022.