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

On his account, in April 2004, Mr Houldsworth left the UK to take up a contract of full-time employment in Switzerland. He says at the time of leaving, he intended to leave the UK for a period of at least three years.

On 19 April 2005, Mr Houldsworth returned permanently to the UK. Mr Houldsworth says that he spent fewer than 91 days in the UK in the 2004/2005 tax year.

On 8 June 2018, HMRC assessed that Mr Houldsworth was liable for income tax in respect of the 2004/2005 tax year in the sum of £323,528.32.

On 6 July 2018 Mr Houldsworth appealed against the closure notice. On 15 August 2019, HMRC offered an independent review. That review upheld HMRC’s position on 10 October 2019.

On 22 January 2020, Mr Houldsworth appealed to the First Tier Tribunal (“FTT”) on three grounds:

It is helpful to say a little more about Ground 3. IR20 was a 70-page guidance note published by HMRC (and since withdrawn). The Preface states:

“The notes in this booklet reflect the law and practice at October 1999. They are not binding in law and do not affect rights of appeal about your own tax. You should bear in mind that the booklet offers general guidance on how the rules apply, but whether the guidance is appropriate in a particular case will depend on all the facts of that case. If you have any difficulty in applying the rules in your own case, you should consult an Inland Revenue Tax Office.”

Paragraph 1.1 states:

“The terms ‘residence’ and ‘ordinary residence’ are not defined in the Taxes Acts. The guidelines to their meaning in this Chapter and in Chapters 2 (residence status of those leaving the UK) and 3 (those coming to the UK) are largely based on rulings of the Courts. This booklet sets out the main factors that are taken into account, but we can only make a decision on your residence status on the facts in your particular case.”

Paragraphs 2.2 and 2.3 provide:

“Working abroad

2.2

If you leave the UK to work full-time abroad under a contract of employment, you are treated as not resident and not ordinarily resident if you meet all the following conditions

• your absence from the UK and your employment abroad both last for at least a whole tax year

• during your absence any visits you make to the UK

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total less than 183 days in any tax year, and

-

average less than 91 days a tax year. (The average is taken over the period of absence up to a maximum of four years - see paragraph 2.10. Any days spent in the UK because of exceptional circumstances beyond your control, for example the illness of yourself or a member of your immediate family, are not normally counted for this purpose.)

2.3

If you meet all the conditions in paragraph 2.2, you are treated as not resident and not ordinarily resident in the UK from the day after you leave the UK to the day before you return to the UK at the end of your employment abroad. You are treated as coming to the UK permanently on the day you return from your employment abroad and as resident and ordinarily resident from that date. If there is a break in full-time employment, or some other change in your circumstances during the period you are overseas, we would have to review the position to decide whether you still meet the conditions in paragraph 2.2. If at the end of one employment you returned temporarily to the UK, planning to go abroad again after a very short stay in this country, we may review your residence status in the light of all the circumstances of your employment abroad and your return to the UK If you do not meet all the conditions in paragraph 2.2, you remain resident and ordinarily resident unless paragraphs 2.8 - 2.9 apply to you. Special rules apply to employees of the European Community (see paragraph 2.14).”

In its statement of case served 7 March 2022, HMRC specifically took the point that Ground 3 could not be raised before the FTT, but only by way of proceedings for judicial review.

On 6 February 2023, HMRC applied to strike out Ground 3 on that basis. Mr Houldsworth responded on 18 April 2023.

The FTT gave directions for the hearing of the strike out application, which took place on 13 September 2023. The FTT struck out the claim on the ground of lack of jurisdiction on 13 March 2024.

On 24 April 2024, Mr Houldsworth sent his pre-application protocol letter in the judicial review claim, which culminated in the commencement of judicial review proceedings.

HMRC responded on 14 May 2024. That response noted that IR20 reflected practice as at October 1999 and that the document said it was not binding in law.

There is no dispute that the claim was not brought within the 3-month time period stipulated by CPR 54.5(1). Mr Houldsworth seeks an extension of time.