Income tax – whether individual employed in and resident in UK for over three years was ordinarily resident in relevant year of assessment – on facts, yes – appeal dismissed
THE SPECIAL COMMISSIONERS
FABIO MASSIMO GENOVESE Appellant
- and -
THE COMMISSIONERS FOR HER MAJESTY'S
REVENUE AND CUSTOMS Respondents
Special Commissioner: JOHN CLARK
Sitting in public in London on 17 November 2008
The Appellant in person
Akash Newbatt of Counsel, instructed by the Solicitor for HM Revenue and Customs, for the Respondents
© CROWN COPYRIGHT 2009
Statement of Agreed Facts
(1) Mr Genovese is an Italian national and was born in Venice, Italy.
(2) He is an investment banker. In the relevant period he was specialising in mergers and acquisitions in relation to Italian and Swiss Financial Institutions.
(3) He joined JP Morgan in Milan in 1987 and, apart from a few months training in New York, continued working for the bank in Rome until 1990.
(4) In 1990 Mr Genovese was assigned by JP Morgan to work in London on expatriate terms. He continued to work for JP Morgan in London until he was made redundant in 1995. Following his redundancy Mr Genovese remained in London to find another job.
(5) In May 1995 Mr Genovese was offered a job with UBS and took up duties in Switzerland in August. His focus was on the Italian Financial Services market.
(6) On 2 December 1995 Mr Genovese married his wife. His first son was born in Zurich in 1997.
(7) In 1997 UBS merged with SBC.
(8) In March 1998 Mr Genovese sought and was offered employment by Salomon Brothers. This role would be in their London office. He did not accept the offer.
(9) In April or May 1998, following a post merger reorganisation, UBS offered Mr Genovese the opportunity to move to its Milan or London office. Mr Genovese chose to move to UBS' London office where he was engaged on expatriate terms and conditions. He continued to work on Italian Financial Services clients, and later expanded to Swiss, Austrian and on some German Financial Institutions.
(10) On arrival in the UK in 1998 Mr Genovese rented accommodation in London. His family moved to London and they shipped their furniture to London.
(11) In 1999 Mr Genovese's terms of employment were changed from expatriate terms and conditions to employment under a local UK contract of employment.
(12) Mr Genovese's second son was born in London at the end of 1999.
(13) In or around 2000 Mr Genovese put his children down for a private preparatory school.
(14) In the autumn of 2001 the lease on their flat expired. Mr Genovese renewed it on a one year lease with a three month notice period. Mr and Mrs Genovese then decided to invest in the UK property market and they identified a suitable family home in London. In March 2002 they arranged a mortgage and made a formal offer of £1.8 million to purchase [property address]. The purchase was completed at the end of July 2002.
(15) In May 2002 Mr Genovese was asked to take a role as Office Manager in UBS' Milan office. He accepted the role on a temporary basis and commuted to Milan from Monday to Friday each week. In September 2002 Mr Genovese returned to work full time in the London office.
(16) Mr Genovese continues to live and work in London.
(17) Mr Genovese has been resident in the UK since 1988-99 and ordinarily resident since, at least, 2002-03.
Mr Genovese's arguments
Arguments for HMRC
Discussion and conclusions
"I agree with Lord Denning M.R. that in their natural and ordinary meaning the words mean "that the person must be habitually and normally resident here, apart from temporary or occasional absences of long or short duration." The significance of the adverb "habitually" is that it recalls two necessary features mentioned by Viscount Sumner in Lysaght's case, namely residence adopted voluntarily and for settled purposes."
"The expression "ordinary residence" is found in the Income Tax Act of 1806 and occurs again and again in the later Income Tax Acts, where it is contrasted with usual or occasional or temporary residence; and I think that it connotes residence in a place with some degree of continuity and apart from accidental or temporary absences. So understood, the expression differs little in meaning from the word "residence" as used in the Acts".
"I do not attempt to give any definition of the word "resident". In my opinion it has no technical or special meaning for the purposes of the Income Tax Act. "Ordinarily resident" also seems to me to have no such technical or special meaning. In particular it is in my opinion impossible to restrict its connotation to its duration. A member of this House may well be said to be ordinarily resident in London during the Parliamentary session and in the country during the recess. If it has any definite meaning I should say it means according to the way in which a man's life is usually ordered."
(1) Following Levene and Lysaght, the words are to be construed in their natural and ordinary meaning as words of common usage in the English language (341H);
(2) The words are not to be interpreted as comparable with domicile (343C);
(3) They do not imply an intention to live in a place permanently or indefinitely (343E-F);
(4) Unless the statutory framework or legal context requires a different meaning, the words refer to a person's abode in a particular country which he or she has adopted voluntarily as part of the regular order of his or her life for the time being, whether of short or long duration (343G);
(5) The mind of the individual is relevant in two (and only two) particular respects. The residence must be voluntarily adopted, and there must be a degree of settled purpose, having sufficient continuity to be described as settled (344B-C);
(6) The purpose, while settled, may be for a limited period, and common reasons for a choice of regular abode include education, business or profession, employment, health, family, or merely love of the place (344C);
(7) The "real home" test is wholly inconsistent with the natural and ordinary meaning of the words as construed in Levene and Lysaght (345D);
(8) The test requires objective examination of immediately past events, and not intention or expectation for the future (345F-H).
"In my view a year is a long enough period for a person's purpose of living where he does to be capable of having a sufficient degree of continuity for it to be properly described as settled. Hence, depending on all the circumstances, the foreign country could be the place where for that period he would be ordinarily and not just occasionally resident."
Mr Genovese's position
"You will be treated as ordinarily resident from the beginning of the tax year after the third anniversary of your arrival if you come to, and remain in, the UK, but you
- do not originally intend to stay for at least three years, and
- do not buy accommodation or acquire it on a lease of three years or more."
"Any emoluments, in respect of duties performed in the United Kingdom, for any year of assessment in which the person holding the office or employment is not resident (or, if resident, not ordinarily resident) in the United Kingdom . . ."
"any emoluments for any year of assessment in which the person holding the office or employment is resident and ordinarily resident in the United Kingdom . . ."
This would include all emoluments, not merely those relating to duties performed in the UK.
RELEASE DATE: 18 March 2009
Authority referred to in skeleton and not referred to in the decision:
R (oao Wilkinson) v Revenue and Customs Commissioners (2005) 77 TC 78