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

Ms Shaw’s next submission was that the FTT had misunderstood the decision of the Supreme Court in Gaines-Cooper and in particular the reference to a “substantial loosening of ties” so as to amount to a distinct break in the taxpayer’s pattern of life in the UK. In particular, she said that a connection should only be regarded as a “tie” for this purpose if it requires the taxpayer to be physically present in the UK.

On that basis, although Mr McCabe retained various interests in UK businesses, Ms Shaw said that he was able to manage those interests from outside the UK, and noted that the majority of meetings for his UK businesses (including board meetings) were held outside the UK. She therefore contended that the FTT erred by regarding Mr McCabe’s ongoing UK business interests as relevant connections to the UK which indicated continuing UK residence.

We were not persuaded by Ms Shaw’s submissions. In considering whether a taxpayer has substantially loosened their ties to the UK, while the primary focus must be on their physical presence in the UK, the enquiry is a holistic one which encompasses the nature and purpose of their visits to the UK, and the extent of their continued connection with the country. There is no reason why, in considering those matters, the court or tribunal should disregard any connection which does not require presence in the UK. Indeed, as the facts of the present case illustrate, to do so may lead to an analysis which is highly artificial, discounting a connection which can in principle be maintained from overseas (e.g. through holding business meetings remotely or otherwise outside the UK), even if in fact the evidence shows it to have involved presence in the UK on a significant number of occasions. The relevant question is therefore not whether a connection requires presence in the UK, but rather the extent of the taxpayer’s actual presence and their reasons for that.

Turning to the Decision, as the FTT recorded at §147, during the Relevant Period Mr McCabe attended 98 board meetings, of which 24 (almost 25%) were in the UK. A significant number of the board meetings were therefore in the UK during that time. The FTT then went on to describe, at §§149–150, Mr McCabe’s attendance at other business meetings during the Relevant Period, which took place both in the UK and elsewhere. The FTT had also already set out at §§104–122 Mr McCabe’s travel pattern from 4 April 2006 to 5 April 2008, which included reference to numerous meetings which he attended in the UK during that time.

The FTT then summarised the position at §198(5), taking account specifically of the extent to which Mr McCabe did in fact return to the UK for business purposes, even if (as the FTT had repeatedly acknowledged) much of his business was conducted outside of the UK:

“198.

Whilst Ms Shaw submitted that the reasons for Mr McCabe’s visits were not ties to the UK, the reality is that Mr McCabe did return to the UK, and his activities in the UK covered a variety of reasons reflecting various types of connections to the UK:

…

(5)

Looking at the business:

(a)

Mr McCabe was owner of the Scarborough Group, and this UK incorporated and UK resident company represented his main asset.

(b)

Mr McCabe was director of the holding companies and some of the other companies within the group, and he was Chairman of SUplc. Whilst the number of directorships reduced, he retained significant influence both as owner and director.

(c)

Whilst Mr McCabe’s evidence included that all of the Scarborough Group’s activities had some form of international element, and Ms Shaw submitted that the majority of Mr McCabe’s work engagements were related to non-UK activities, the practical reality was that Mr McCabe conducted a wide range of activities in the UK. He did hold discussions and briefings in relation to the sale of a large part of the business to an Australian counterparty, but the target business was both UK and non-UK. However, it is readily apparent that he also attended meetings in the UK with key UK contacts (eg Mrs Robertson and Ms MacCagnan), he attended board meetings of UK companies in the UK, had meetings in the UK in relation to UK-specific matters, including the Tevez affair, developments in Leeds, the re-generation of Sheffield, legal disputes in relation to old projects, and met with international business partners (eg Dr Quek) in the UK.

(d)

I have found that I was not satisfied that Mr McCabe had handed over responsibility for running the UK businesses; but in any event, the extent of his involvement, and the number of trips he made to the UK for business meetings and their breadth of subject-matters, illustrates a key part of his connection to the UK throughout the Relevant Period.”

It is therefore clear that the FTT analysed the extent to which Mr McCabe’s business meetings were in fact held in the UK as opposed to in Brussels or elsewhere. It was the result of this analysis that led to the FTT’s conclusion at §198(5)(d), which then fed into its overall conclusion as to the nature of Mr McCabe’s residence (particularly at §207, which we have summarised at §28(3) above). We find no error of law in that approach.