UKFTT 384 (2009) Hankinson v HMRC

Residence, discovery, negligence - HMRC won

Case Summary:

Mr Hankinson took advice from his accountants as he hoped to avoid Capital Gains Tax by working in Holland. Substantial gains in Mr Hankinson’s non-resident trusts crystallised in March 1999.

Tax was due by Mr Hankinson on the gains if the answers to three questions were Yes, No and Yes.

1. Was he resident or ordinarily resident in the UK in 1998-99? (Yes).

2. Under the Double Taxation Treaty with the Netherlands, was he resident for the purposes of the Treaty in the Netherlands (No). 

3. If he was resident in the UK, whether the discovery assessment was valid (Yes- on normal discovery grounds and also because of his negligence)

Mr Hankinson lost the case, was criticised for the unreliability of his evidence, was found negligent and HMRC are now pursuing a penalty. He also insisted that he didn’t move abroad for tax reasons even though the First Tier Tribunal said his motive didn’t matter. However, because they didn’t believe him on this point they didn’t believe him on others.