In Jonathan Oppenheimer v HMRC [2022] TC08443, the First Tier Tribunal (FTT) ruled that a non-UK domiciled individual was 'treaty resident' in South Africa despite long term residence and business interests in UK. As a result £20m of funds transferred to the UK were not 'remittances' and as such not subject to UK tax.

  • HMRC raised enquiries into Mr Oppenheimer's residence for Income Tax. 
  • It issued Discovery Assessments after finding that he was UK resident, to tax Remittances of funds made to the UK totalling £20 million.
  • The Non-domiciled individual, did not dispute that he was resident and ordinarily resident in the UK under common law, or latterly, under the provisions of the Statutory Residence Test (SRT) for the years in question, however, he contended that after considering the UK Double Tax Treaty with South Africa (RSA) he was treaty resident in RSA.  As a result, the remittances were not taxable.
  • He appealed to the FTT.

Where an individual is tax resident in two states under their respective domestic legislation, tax treaties determine the state in which the individual is tax resident. The provisions of individual treaties may differ and the Organisation for Economic Co-operation and Development (OECD) model treaty (on which the UK/RSA treaty, in this case, is based) provides that ‘tie-breaker’ clauses are applied in the following order until there is a result.

  1. The individual is resident in the state where they have their permanent home.
  2. They are resident in the state in which they have their centre of vital interests.
  3. They are resident in the state they have their habitual abode.
  4. They are resident in the state of which they are a national.
  5. The tax authorities are to agree the residence status of the individual.

The FTT found that:

  • It was common ground between the parties that the appellant had a permanent home in both the UK and RSA and that he was an RSA national. 
  • The FTT needed to consider the centre of vital interests and, if not conclusive, habitual abode.
  • The burden of proof was upon the appellant to establish that either:
    • His centre of vital interests was in RSA, which would make him treaty resident in RSA or;
    • He had a habitual abode in RSA. This would mean he would be treaty resident in the country where he was a national, RSA.
  • The FTT determined the approach for considering treaty residence:
    • The centre of vital interests (his personal and economic relations) was comparative between states.
    • The question of ‘personal and economic relations’ should consider both factors together when considering each country.
    • Vital meant necessary or essential; the things that are of greatest importance to the appellant. This meant finding facts about their thinking which is subjective.
    • The centre of vital interests is to be considered on an annual basis, intention alone is not sufficient to establish movement of that centre of vital interests. Albeit that intention is relevant in assessing the level of attachment to a state.
    • Habitual abode should be considered broadly and a view should be taken over a number of years to determine whether living in each state is habitual.
    • Personal and economic relations can change during the year, a change does not necessarily need unusual circumstances.
    • Personal and economic relations do not solely refer to employment or ownership of assets. Relations mean the way that things are connected.
  • The FTT considered that, on balance, the appellant’s centre of vital interests was in RSA. Facts which were considered included:
    • That the appellant spent less time in RSA than the UK was not determinative (over the period he spent approximately 25% of his time in RSA).
    • The appellant had permanent homes available for his occupation in RSA and the UK.
    • Time spent schooling in his formative years in the UK (boarding school and university) did not, of itself, give the appellant a deep rooted connection to the UK. Once terms had finished he frequently left the UK.
    • That the appellant came to the UK to educate his children was considered a temporary measure despite lasting a considerable number of years.
    • While he did undertake work in the UK, that was not the reason he came to the UK. His work, managing extensive family wealth, could be done anywhere.
    • While he had social connections in the UK, the majority of his friends and family resided in RSA.
    • While the split of personally owned assets between RSA and the UK was 4:1 in favour of the UK that was not the entire picture as:
      • Extensive family wealth was based in RSA although it was managed through trust structures based in other jurisdictions. The appellant’s main work was managing these funds.
      • The FTT considered that interactions with RSA (be it directorships and management of RSA corporates, or the family office based in RSA) were links to RSA even if the appellant’s interactions were undertaken from the UK.
      • Personal wealth needed to be viewed in context, if he requested further funds from the family trusts, he would likely get them.
    • The appellant never voted in the UK but did vote in RSA.
    • Activities based in RSA which signified a strong link to the country also included:
      • Extensive philanthropic work.
      • Patronage of a cricket team, a cricketing event and a cricket umpires association.
      • His principal doctor and dentist were in RSA.
      • Pursuing political interests.
  • Despite the decision on centre of vital interests being sufficient to allow the taxpayer’s appeal, the FTT went on to consider that the appellant had a habitual abode in RSA as:
    • The appellant had a complex, peripatetic, lifestyle which outside of the UK school term time had no settled routine.
    • He lived and worked in RSA, USA, UK, Luxembourg, Ireland and others.
    • Visits to RSA were part of the regular order of his life and were not transient in the context of a life permanently on the move.
    • Returns to RSA included various business, family, political, social and philanthropic activities.
    • Trips to RSA were of sufficient frequency, duration and regularity to constitute habitual abode.

Useful guides on this topic

Tax treaties: Where do you live?
Where do you live for the purposes of a double tax treaty? How can you resolve disputes and uncertainties over your tax residency?

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 a freeview interactive tool to determine 'At a glance' whether you are UK resident or not in a tax year for 2013/14 onwards.

Domicile and the remittance basis: At a glance (freeview)
This is a freeview 'At a glance' guide to Domicile and the Remittance basis

Non-domicile status, deemed domicile & tax
Who is non-UK domiciled? What does this mean for UK Income Tax, Capital Gains Tax and Inheritance Tax? What reliefs are available to non-doms?

Remittances: examples of remittances (freeview)
This checklist is an edited and expanded version of HMRC's guidance on what a remittance is, with practical examples. 

External links

Jonathan Oppenheimer v HMRC [2022] TC08443


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