Charman v Revenue & Customs (INCOME TAX/CORPORATION TAX : Employment income) [2018] UKFTT 765 (TC) (20 December 2018)

Charman v Revenue & Customs (INCOME TAX/CORPORATION TAX : Employment income) [2018] UKFTT 765 (TC) (20 December 2018)

The Tribunal determined the date Mr Charman ceased to be UK tax resident based on a factual analysis of his working pattern, personal circumstances, and intention to break the pattern of life in the UK. The Tribunal applied the statutory tests for residence and the territoriality principle to decide which income was properly chargeable to UK tax. The Tribunal also considered whether the discovery assessments were valid and whether certain income had been taxed twice, ensuring only income arising during UK residence was assessed.

Citation
[2018] UKFTT 765 (TC)
Parties
Appellant: Mr John Charman; Respondents: The Commissioners for Her Majesty’s Revenue & Customs
Jurisdiction
United Kingdom
Judgment Date
20 December 2018
Procedural Posture
Appeal Against Tax Assessments (first Tier Tribunal Tax) / Final Judgment
Outcome
Appeal allowed in part, dismissed in part
Legal Topics
Income Tax, Residence for Tax Purposes, Employment Income, Discovery Assessments, Share Options, Restricted Shares, Founder's Fee, Territoriality Principle
Tax Law Income Tax Residence for Tax Purposes Employment Income Discovery Assessments Share Options Restricted Shares Founder's Fee +1 more

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Parties

Mr John Charman

Appellant

The Commissioners for Her Majesty’s Revenue & Customs

Respondents

Procedural Posture

Appeal Against Tax Assessments (first Tier Tribunal Tax) / Final Judgment

Legal Issues

  1. 1 Whether Mr Charman ceased to be UK tax resident before 20 November 2003 and, if so, when;
  2. 2 Whether Mr Charman was UK tax resident when he received salary, bonus, and expenses from Axis Specialty;
  3. 3 Whether the Founder’s Fee paid by MMC is taxable and under which schedule;

Ratio Decidendi

The Tribunal determined the date Mr Charman ceased to be UK tax resident based on a factual analysis of his working pattern, personal circumstances, and intention to break the pattern of life in the UK. The Tribunal applied the statutory tests for residence and the territoriality principle to decide which income was properly chargeable to UK tax. The Tribunal also considered whether the discovery assessments were valid and whether certain income had been taxed twice, ensuring only income arising during UK residence was assessed.

Court Disposition

Appeal allowed in part, dismissed in part

Orders

  • HMRC assessments to be amended to reflect the Tribunal’s findings on the date of cessation of UK residence and to avoid double taxation of income.
  • Income arising after Mr Charman ceased to be UK resident not chargeable to UK tax; income arising before cessation remains taxable.