The Court of Appeal has upheld the right of HM Revenue & Customs to tax a businessman, Robert Gaines-Cooper, who has lived in the Seychelles since 1976. The judges said that he had never been exempt from UK taxes as a non-resident citizen.
Although he had abided by the rules to spend fewer than 91 days here, he had still not cut his ties with the UK. Mr Gaines-Cooper may now have to pay a tax bill of £30m, for the years from 1993 to 2004.
A key feature of the Revenue's old guidance on whether someone was resident in the UK for tax purposes - known as IR20 - was whether they spent, on average, fewer than 91 days here each year. The 91-day rule, they said, did not in fact establish non-residency, and was "important only to establish whether non-resident status, once acquired, has been lost".
However, the three Appeal Court judges ruled that it had always been the case that any would-be tax exile, such as Mr Gaines-Cooper, first had to show they had really left the country.
There are six million UK citizens living abroad. If upheld, the effect of the ruling will be to expose thousands of the richest, who wish to be tax exiles, to unexpected retrospective tax bills, not just ones for future years.
