In Kevin McCabe v HMRC [2020] UKUT0266, the Upper Tribunal (UT) upheld the decision of the First Tier Tribunal (FTT) that HMRC did not have to disclose documents from a ‘mutual agreement procedure’ to determine tax residency as they were of low relevance to the taxpayer's position.

Where there is an issue over an individual’s Tax Residency, the double tax treaty provides for a Mutual Agreement Procedure (MAP) between two tax authorities. The conclusions of MAPs are not made public and are not binding on the FTT.

Following enquiries into Mr McCabe’s tax returns, HMRC concluded that he was resident in the UK for two tax years and assessed him to Income Tax and Capital Gains Tax.

HMRC issued Closure Notices and he lodged an Appeal.

  • Mr McCabe maintained that he was not UK resident or, if he was, then he was also Belgian resident and under the tax treaty tie-breaker test his tax residency was solely in Belgium. He requested a MAP between the UK and Belgian tax authorities which concluded that he was UK resident.
  • He asked the FTT to direct HMRC to disclose certain documents relating to the MAP to assist him with his appeal.
  • The FTT refused on the basis that the documents had little relevance to his residence status.
  • Mr McCabe appealed. The FTT had applied the wrong test as to relevance, failed to understand why the documents sought were relevant and made errors in its analysis of the OECD’s Treaty guidance about confidentiality in MAPs.

The UT dismissed the appeal:

  • The FTT had not erred in law regarding the relevance of the documents. They were correct to consider the level of relevance and correct in judging the documents in question as being of low relevance to Mr McCabe’s residency status. The key issues were factual, such as where his permanent home, the centre of vital interests and habitual abode were situated.
  • The FTT’s assessment of the confidentiality issue and the weight to be given to it was made using the correct principles within the scope of its discretion. It was not for the UT to decide whether it might have reached a different conclusion on this point.
  • Any misanalysis of the OECD guidance by the FTT would not have materially affected its decision.

The Belgian authorities had originally objected to the documents on the grounds of confidentiality. This decision was later nullified by the Belgian Council of State. The UT judge explained that the Belgian authorities were to issue another decision refusing disclosure, making their position on confidentiality of continuing relevance to the decision here. Presumably, this is a matter of principle for the Belgian authorities since, according to both the FTT and UT, the information in question is not pertinent to the specific case.

Quite how relevant the undisclosed information really is may become clear when Mr McCabe’s appeal against the closure notices is finally heard by the FTT.


SRT: Statutory Residence Test
What is the statutory residency test? Why is it important and how does it work?

SRT: Statutory Residence Test Toolkit
This is an interactive tool to determine 'At a glance' whether you are UK resident or not in a tax year for 2013/14 onwards.

Tax treaties & EU: where do you live?
In 2017 the EU introduced new rules to facilitate the resolution of cross border tax disputes.

Non-residents’ tax toolkit
This toolkit covers the key UK tax issues for non-UK resident individuals holding UK assets and property and working in the UK.

Closure Notices
When does HMRC issue a closure notice? Can a taxpayer demand one? Are there appeal rights? 

How to Appeal 
What type of decision can you appeal? What are your different options when you disagree with HMRC? What are the key steps in making an appeal?

External link

Kevin McCabe v HMRC [2020] UKUT0266