UT/2023/000012 - [2024] UKUT 00280 (TCC)

This ground of appeal concerns the application of the first limb of Article 4(2)(a) of the DTC “tie breaker”, which asks whether the taxpayer has a permanent home available to them.

As set out above, it is common ground that Mr McCabe had a permanent home (within the meaning of the DTC) available to him in Belgium. The FTT found that Mr McCabe also had a permanent home available to him (within the meaning of the DTC) in the UK, at Deepdale. Ms Shaw took issue with the latter finding, relying in particular on the following paragraphs of the 2017 Commentary to Article 4 of the OECD Model Tax Convention on Income and on Capital, on which Article 4 of the DTC is based:

“11.

The Article gives preference to the Contracting State in which the individual has a permanent home available to him. This criterion will frequently be sufficient to solve the conflict, e.g. where the individual has a permanent home in one Contracting State and has only made a stay of some length in the other Contracting State.

12.

Subparagraph a) means, therefore, that in the application of the Convention (that is where there is a conflict between the laws of the two states) it is considered that the residence is that place where the individual owns or possesses a home; this home must be permanent, that is to say, the individual must have arranged and retained it for his permanent use as opposed to staying at a particular place under such conditions that it is evident that the stay is intended to be of short duration.

13.

As regards the concept of home, it should be observed that any form of home may be taken into account (house or apartment belonging to or rented by the individual, rented furnished room). But the permanence of the home is essential; this means that the individual has arranged to have the dwelling available to him at all times continuously, and not occasionally for the purpose of a stay which, owing to the reasons for it, is necessarily of short duration (travel for pleasure, business travel, educational travel, attending a course at a school, etc.). For instance, a house owned by an individual cannot be considered to be available to that individual during a period when the house has been rented out and effectively handed over to an unrelated party so that the individual no longer has the possession of the house and the possibility to stay there.”

The 2017 Commentary is an updated version of the 1977 edition of the OECD Commentary, which was the version of the commentary published at the time that the DTC was negotiated. In Fowler v HMRC [2020] UKSC 22, §18, a case which considered the UK/South Africa Double Taxation Treaty, Lord Briggs noted that the OECD commentaries “are updated from time to time, so that they may (and do in the present case) post-date a particular double taxation treaty. Nonetheless they are to be given such persuasive force as aids to interpretation as the cogency of their reasoning deserves …” We agree with the FTT’s comment at §228 that the same should apply where the current version of the Commentary post-dates the Relevant Period in a particular case. We refer, therefore, in this judgment to the 2017 version of the Commentary, as did both parties in their submissions.

Ms Shaw advanced various arguments on the basis of the Commentary. The emphasis of those changed as between her skeleton argument and her submissions at the hearing. Considering both her written and oral submissions, we understand her to have advanced essentially five arguments which she said meant that the FTT could not properly have concluded that Deepdale was a permanent home available to Mr McCabe during the Relevant Period:

We address these in turn.