AC-2024-LON-001902 - [2025] EWHC 2848 (Admin)

It is sufficient for Mr Houldsworth to show his claim is arguable.

I am satisfied that the reasonable expectation argument based on paragraph 2.2 of IR20 is sufficiently arguable to satisfy the requisite merits test. Significant in this regard are the observations of Lord Wilson concerning that paragraph in Gaines-Cooper v Revenue and Customos Commissioners [2011] UKSC 47. At [21] he explained the background to paragraph 2.2 of IR 20 as follows:

“It became clear from decisions like Combe that, if a taxpayer left the UK in order to pursue employment abroad which was full-time, it was likely not only that he would cease to be a UK resident but also that he would escape being deemed still to be a UK resident under the statutory provision. For, from the fact that the employment was full-time, it was likely to follow that he had made a distinct break in the pattern of his life in the UK. By section 11 of the Finance Act 1956 the position of the full-time employee or other worker abroad was strengthened by a provision (now in effect contained in section 830 of the 2007 Act) that, in determining whether he remained resident in the UK, regard should not be had to any place of abode in the UK which he maintained for his use. As I will demonstrate in para 36 below, the revenue also sought to eliminate any remaining element of doubt about the proper treatment of the full-time employee abroad by providing in the booklet that, subject to specified conditions of ostensibly simple application, he would—definitely—be treated as not resident, nor ordinarily resident, in the UK. In his case, therefore, the revenue was dispensing with the need for the multifactorial inquiry.”

HMRC’s “Summary Grounds of Resistance” relies on paragraph 1.1 of IR20 stating that “the terms ‘residence’ and ‘ordinary residence’ are not defined” and “we can only make a decision on your residence status on the facts of your particular case”.

However, it is at least arguable that paragraph 2.2 was stating that HMRC would treat someone who met its specified requirements as resident abroad without the need for, and irrespective of, any wider enquiry into other “facts in your particular case.” The issue of whether paragraph 2.2 of IR20 only applied if the tax payer had otherwise made “a distinct break” with the UK, or whether HMRC was stating that it would treat compliance with paragraph 2.2 as sufficient to establish any requisite “distinct break”, is also arguable.

Mr Houldsworth advances alternative grounds based on Wednesbury unreasonableness and abuse of power. These are essentially alternative means of making the same point as the legitimate expectation ground. While it is not easy to see how they might succeed if the primary ground fails, I am satisfied that the court hearing Mr Houldsworth’s judicial review challenge should not be prevented from considering these alternative formulations of the same basic complaint.