In Mark Carey v HMRC [2015] TC04634, the taxpayer successfully claimed share loss relief after HMRC had doubted his intentions over residency.


  • Mr Carey left the UK on a sabbatical in January 2011, claiming split year treatment under what was then ESC A11 (this is now part of the Statutory Residence Test rules) for 2010/11.
  • He realised a capital loss of £145,827 on shares in 2011/12 and he claimed share loss relief on his tax return against his income under s131 ITA 2007.
  • HMRC refused the loss claim on the basis that he was no longer UK resident and issued an assessment.

HMRC said that the loss could not be an allowable loss, as the taxpayer was not resident during 2011/12, evidenced by his reliance on the split year treatment in 2010/11.

Mr Carey contended that at the end of 2011/12 his intentions were unclear, and therefore his absence from the UK should be viewed as temporary.

HMRC argued that the key was his intention when he departed, and the decision shouldn’t depend on what then transpired.


In deciding whether a person is entitled to relief for capital losses accruing in a year of assessment the FTT took a purposive view of the legislation which allowed relief if a taxpayer was ordinarily resident in the UK during any part of that year of assessment.

The FTT found that the taxpayer was resident until December 2011 when he negotiated the termination of his UK employment (from which he was on sabbatical). Only at that point was the permanence of his departure assured enough to fully sever himself from the UK for ordinary residence purposes. The loss was therefore allowed.


We now have a Statutory Non-Residence Test and the concept of ordinary residence has been abolished which makes the issue of residence and split year treatment clearer for taxpayers. The rules on residence and CGT are neverthess complicated and share loss relief (if applicable) should be carefully considered by anyone who is thinking of leaving the UK: once non resident there may be no scope for relief. 

Link: Mark Carey v HMRC [2015] UKFTT TC04634