InMark Carey v HMRC[2015] UKFTT 466 (14 September 2015), the FTT found that a taxpayer who had ceased to be UK resident, had remained ordinarily resident.
Mr Carey had been living and working in the UK. He had been resident and ordinarily resident there when he started a sabbatical leave from his employment with Sequel Business Solutions to work in Rwanda on 4 January 2011. He subsequently negotiated the termination of his employment and officially left Sequel on 9 December 2011. He also sold his employee shares back to Sequel.
In his 2011/12 return, Mr Carey included a claim for a capital loss of £145,827 on the sale of his shares to be set off against the corresponding employment income arising in that year (ITA 2007 ss 131 and 132).
It was accepted that Mr Carey had ceased to be UK resident in January 2011, so that the capital gain loss would only be allowable if he had remained ordinarily resident (TCGA 1992 s 2(1)). The FTT observed that it had to establish the point at which Mr Carey had ceased to have an abode in the UK that was ‘voluntarily adopted for settled purposes as part of the regular order or pattern of his life’.
The FTT found that Mr Carey had not ceased to have a voluntary abode in the UK at the time of his departure. Indeed, he had agreed with his employer to take a sabbatical unpaid leave while he established whether he could make a career in Rwanda. He had retained his shares and continued to own a home in the UK. He had, however, severed his ties with the UK when he left his employment and sold his shares in December 2011. He had retained his UK home, but this was not sufficient to make him UK resident. He had therefore been ordinarily resident for part of the relevant tax year, so that his loss was allowable.
Why it matters: The FTT noted that it may be ‘unusual’ for a person to be found to be ordinarily resident but not resident in the UK, but that there was no reason why this would not be possible. Ordinary residence ceased to be used in the Taxes Acts legislation from 6 April 2013.
InMark Carey v HMRC[2015] UKFTT 466 (14 September 2015), the FTT found that a taxpayer who had ceased to be UK resident, had remained ordinarily resident.
Mr Carey had been living and working in the UK. He had been resident and ordinarily resident there when he started a sabbatical leave from his employment with Sequel Business Solutions to work in Rwanda on 4 January 2011. He subsequently negotiated the termination of his employment and officially left Sequel on 9 December 2011. He also sold his employee shares back to Sequel.
In his 2011/12 return, Mr Carey included a claim for a capital loss of £145,827 on the sale of his shares to be set off against the corresponding employment income arising in that year (ITA 2007 ss 131 and 132).
It was accepted that Mr Carey had ceased to be UK resident in January 2011, so that the capital gain loss would only be allowable if he had remained ordinarily resident (TCGA 1992 s 2(1)). The FTT observed that it had to establish the point at which Mr Carey had ceased to have an abode in the UK that was ‘voluntarily adopted for settled purposes as part of the regular order or pattern of his life’.
The FTT found that Mr Carey had not ceased to have a voluntary abode in the UK at the time of his departure. Indeed, he had agreed with his employer to take a sabbatical unpaid leave while he established whether he could make a career in Rwanda. He had retained his shares and continued to own a home in the UK. He had, however, severed his ties with the UK when he left his employment and sold his shares in December 2011. He had retained his UK home, but this was not sufficient to make him UK resident. He had therefore been ordinarily resident for part of the relevant tax year, so that his loss was allowable.
Why it matters: The FTT noted that it may be ‘unusual’ for a person to be found to be ordinarily resident but not resident in the UK, but that there was no reason why this would not be possible. Ordinary residence ceased to be used in the Taxes Acts legislation from 6 April 2013.
