Last week, the millionaire business man Robert Gaines-Cooper lost his final appeal in his residency court battle. The case illustrates the difficultly in advising clients in this area.

Robert Gaines-Cooper's advisers followed the guidance on residency contained in HMRC's old booklet IR20 (which has now been withdrawn). They ensured that he was physically present in the UK for no more than 90 days each tax year and this way he would not be resident in the UK for tax purposes.

That test, was not valid say the courts, because in order to determine the residency of a UK domiciled individual you need to consider the facts of a case in the round. All things considered, Gaines-Cooper had retained substantial links in the UK (his son was schooled here, and his wife resident here, as well as owning substantial property). He is deemed to have actually to have never left for tax purposes.

HMRC has now issued Booklet 6 and we have summarised the rules following the Gaines-Cooper case.

It all has interesting ramifications for advisers and their clients. HMRC can go back and reassess the tax of many wealthy non-residents. It may also affect the lifestyle of many high earners.