The decision handed down by the Court of Appeals in the case of Robert James-Cooper has had some very detrimental effects on the international business climate in the U.K.
In November 2009, the Court ruled that the wealthy entrepreneur did not qualify for a non-resident business tax rate due to his presence in the U.K. for more than the established number of 90 days during a given tax year.
Following that ruling, which James-Cooper’s attorneys argued was inconsistent and discriminatory, foreign investors have been much more leery of the U.K. as a place to invest or do business. Peter Vaines, of the law firm Squire, Sanders & Dempsey, said he believes that the ruling has caused the number of new investors in the U.K. to fall off by half.
Mr. Vaines said that HMRC had re-interpreted the tax laws, specifically the “90-day rule” set out in section IR20. That rule has been understood by everyone concerned to mean that if a taxpayer was not in residence in the U.K. for more than 90 days during a tax year, he or she would qualify for non-resident taxpayer status.
HMRC argued that James-Cooper did not sever his ties with the U.K.; his family home in Henley-on-Thames, visits to Ascot racecourse and a collection of Rolls-Royces based in the country were cited as evidence that he had not adhered to the letter of the law. This is the crux of the argument, since it is not clear exactly what “the letter of the law” means in this case.
Gaines-Cooper remarked that he has dealt with 16 different countries’ tax laws, and those in the U.K. “.took more time and cost more money than the 15 others put together.” He plans to appeal the judgment.