The authorized case displaying why SARS is rising its deal with these taxpayers

The tax residence standing of a pure particular person with a cellular way of life lately shaped the subject material of a tax courtroom dispute within the United Kingdom (UK), writes Doelie Lessing, tax director at Werksmans Attorneys.

The first-tier tribunal tax chamber, within the matter of Oppenheimer v HMRC [2022] UKFT 00112 (TC) thought of, intimately, the tiebreaker check within the double tax settlement between South Africa and the UK, and the findings of the courtroom are vital and related for South African tax functions.

The taxpayer’s place was that he was tax and treaty resident in South Africa, and he accepted that he was additionally tax resident, however not treaty resident, within the UK.

In the UK, not like in South Africa, the truth that a person is treaty resident elsewhere doesn’t override UK tax residence beneath home regulation – though the treaty might restrict the UK’s taxing rights. HMRC (the UK income authority) alleged that the taxpayer was treaty resident within the UK.

The tiebreaker provision within the double tax treaty between South Africa and the UK determines {that a} pure one that is tax resident in each South Africa and the UK, is a treaty resident:

  • In the jurisdiction the place he has a everlasting house obtainable;
  • If he has a everlasting house obtainable in each South Africa and the UK, within the jurisdiction with which the taxpayer’s private and financial relations are nearer (centre of important pursuits);
  • If the centre of important pursuits can’t be decided, within the jurisdiction wherein the taxpayer has an recurring abode; and
  • If he has an recurring abode in each South Africa and the UK, his nationality will decide his treaty residence.

The taxpayer had a everlasting house obtainable in each South Africa and the UK, and he accepted the view of HMRC that he had an recurring abode within the UK.

The taxpayer’s case was that he’s a treaty resident in South Africa as a result of his private and financial relations (centre of important pursuits) are nearer to South Africa than to the UK.

Alternatively, whether it is discovered that the centre of important pursuits can’t be decided, the taxpayer relied on his treaty residence being South Africa on the premise that he additionally had an recurring abode in South Africa, which signifies that his South African nationality will decide his treaty residence.

The courtroom present in favour of the taxpayer, and certainly that:

  • His private and financial relations had been nearer to South Africa, and on that foundation he was treaty resident in South Africa through the interval in dispute.
  • Even if his centre of important pursuits wouldn’t have been in South Africa, then it could have been undetermined (it was not within the UK), in order that it grew to become related to find out whether or not the taxpayer had an recurring abode in South Africa. It was discovered that, regardless of his having an recurring abode within the UK, he additionally had an recurring abode in South Africa, such that his South African nationality would outcome within the tiebreaker breaking in favour of South African treaty residence.

The judgment was detailed, and the courtroom rigorously thought of, and acquainted itself with, the taxpayer’s circumstances in respect of quite a few points of his life – a completely holistic strategy was adopted.

The courtroom thought of the proof of witnesses and the taxpayer, however measured their testimony in opposition to documentary proof which was obtainable following a prolonged and ongoing investigation launched by HMRC way back to 2013.

The judgment completely analysed the taxpayer’s way of life, household historical past and relationships, financial pursuits, hobbies, philanthropic causes supported, political involvement, well being service suppliers, and lots of extra. It demonstrates how strongly the residence standing of a taxpayer relies on the info.

Although every enquiry into an individual’s tax residence is closely dependent by itself distinctive set of info, the broad classes of the points of the taxpayer’s life, way of life, actions and wealth thought of giving a flavour of how multi-dimensional such an enquiry could be.

Aspects thought of by the courtroom included:


The taxpayer and his household had an extended and deep-routed relationship with South Africa.

His household has a historical past of attending secondary faculty and college within the UK. Although the taxpayer and his spouse had put their first little one’s title down for colleges in South Africa and the UK, the eventual resolution to coach their kids within the UK triggered their transfer to the UK.

The transfer didn’t outcome of their uprooting from South Africa – their South African houses, possessions and pets had been retained.

The taxpayer is a household man and his actions through the interval into consideration had been, to a big extent, knowledgeable by his spouse and kids’s presence within the UK for functions of the youngsters’s schooling. The taxpayer spent as a lot time as potential with them within the UK throughout faculty time period, and commonly attended their faculty actions over weekends.

The cause for transferring to the UK, being the youngsters’s schooling, was thought to be momentary in nature “in the whole scheme of things”, and it grew to become extra sophisticated when one of many kids attended faculty within the US and the taxpayer’s spouse fell in poor health. The cause for concerning the aim for transferring to the UK as momentary is as a result of there was no slicing of ties with South Africa.

Given the shut relationship between the taxpayer and his spouse, the courtroom regarded intently on the taxpayer’s spouse’s pursuits and actions and took account of the truth that regardless of her stick with the youngsters within the UK throughout faculty time period, and regardless of her involvement in organising an in depth house for the household within the UK, she was additionally very concerned within the household’s houses in South Africa.

She additionally had a eager curiosity within the South African conservation tasks of the household, and her charitable actions had been focussed on South Africa and Africa – made it clear that, though she was American, she adopted South Africa as her house.


The taxpayer will not be a typical worker, and his earnings from employment was very modest within the context of the household wealth from which he benefited. He by no means derived a wage from the UK, however he paid UK tax on his wage resulting from his residence within the UK.

The allocation of taxing rights in respect of an individual’s wage takes account of the jurisdiction the place the employment providers are bodily rendered, however that check is inappropriate when a taxpayer’s financial relations are decided for functions of the tiebreaker – the latter seems to be at the place the work carried out has an impression, and the relationships created by, and inherent to, the work, quite than the place the place the work is carried out.

The taxpayer was concerned in quite a lot of work-related actions. During the interval into consideration, he held a minimum of 18 directorships in South African firms and two in UK firms.

When the household moved to the UK for functions of the youngsters’s schooling, he continued to do what he did earlier than, usually working remotely from his home within the UK.

He didn’t go to the UK to work. The courtroom discovered that he labored in, and from, the UK “doing what he has previously done in, and from, the RSA simply because of his children’s education and his wife’s presence in the UK supporting that…”. The courtroom discovered that, all that modified, was his bodily location.

His involvement in quite a lot of South African household companies (as buyer, as director, as member of the family taking care of the household’s pursuits) was discovered to represent shut financial ties with South Africa, even when the taxpayer might have been concerned in these whereas he was bodily current within the UK.


The foremost houses of the taxpayer in each South Africa and the UK had been totally staffed, excellently maintained, they provided related amenities and had been all the time obtainable for the taxpayer and his household to occupy. The taxpayer and his spouse had been each very concerned in making all of the houses occupied by the household, “homes”.

Time spent

During the interval into consideration, and resulting from his spouse and kids’s presence within the UK, the taxpayer spent extra time within the UK than in South Africa. Due to additional problems in private circumstances, there have been occasions when the taxpayer spent extra restricted time bodily in South Africa.

When the courtroom thought of his financial and private ties, it focussed on the contact which the taxpayer saved together with his South African household and household companies, flying pursuits, philanthropic involvement, funding workforce in relation to personal fairness tasks focussed on Africa, different leisure pursuits, and so on. quite than the place the place he was current in doing so.

The indisputable fact that the taxpayer was in common contact with South African buddies and enterprise associates was essential – even when the taxpayer was exterior South Africa on the time when he was involved with the South Africans.

In figuring out whether or not the taxpayer might have retained an recurring abode in South Africa even when he spent far more time within the UK, the courtroom discovered that within the context of the taxpayer’s mode of life, which entailed frequent travelling to quite a few jurisdictions, his returns to South Africa for household, enterprise, philanthropic, political and social functions was a standard, common and essential a part of his life.

Assets and wealth

The worth of the UK property owned by the taxpayer in his personal title exceeded the worth of all different property held by the taxpayer. That needed to be seen, although, within the context of the taxpayer’s household wealth from which he benefited, being far more vital than the property owned by him outright.

The courtroom discovered that, when an individual’s “economic relations” are to be thought of, the phrase must be given a broad that means by trying on the manner wherein the taxpayer is linked to issues – and it isn’t essentially restricted to employment or possession of property.

Significant occasions and friendships

The taxpayer obtained married to his spouse, a US citizen, within the UK, not a lot due to a robust relationship with the UK however extra so as a result of the UK was roughly equidistant between his South African household and his spouse’s American household.

Their kids had been born in South Africa (the primary two while the household lived in Zimbabwe), and all the youngsters have South African nationality.

The taxpayer’s spouse’s funeral happened within the gardens at their UK household house, and memorial providers had been held in SA, the UK and the US. The variety of folks attending her memorial service in SA was considerably greater than the folks within the UK and the US.

Landmark birthdays of the taxpayer had been celebrated to a way more vital extent in South Africa than within the UK.

The taxpayer and his spouse had a lot of shut buddies in South Africa, and this was additionally the place the taxpayer’s prolonged household lived. They additionally had quite a few buddies within the UK however on a a lot smaller scale.


Consideration was given to the taxpayer’s actions reminiscent of flying, taking pictures, golf (member of golf equipment in each jurisdictions, however he performed extra golf in South Africa), cricket (he performed extra commonly in South Africa however practised at house in each the UK and South Africa, he has a cricket workforce in South Africa, he sponsors a cricket week in South Africa for prime faculty cricket groups, he has been a patron of the Gauteng Cricket Umpires Association) and squash.

Political, Philanthropic, Cultural, Business involvement

The taxpayer by no means voted within the UK however does vote in South Africa. He had vital contact with politicians in South Africa, however minimal within the UK.

The taxpayer and his spouse had been very concerned in philanthropic initiatives in relation to how South Africa might take care of financial transformation, in addition to dialogues amongst African political leaders. The courtroom discovered these actions to represent household, social and political relationships with South Africa.

He was a member of three enterprise advisory councils/boards within the UK, two of that are registered charities within the UK to deal with key problems with human lives in Africa.

The taxpayer’s spouse was considerably concerned in UK cultural occasions, however the taxpayer was not. By distinction, he supported and actively promoted South African cultural initiatives and took concrete steps on this regard.

Health service suppliers

The taxpayer had his major physician and dentist in South Africa, though he has used UK-based well being providers.

Takeaways from the case

The case demonstrates that an individual’s tax residence standing must be decided by taking account of all related info and circumstances.

Time spent in a jurisdiction might not be the important thing issue. For a cellular taxpayer who doesn’t reduce ties with a jurisdiction, you will need to decide the explanations for spending extra time in one other jurisdiction, the mindset and emotional attachments of the taxpayer, the relationships between the taxpayer and the competing jurisdictions, and so on.

The enquiry entails a complete and private train.

SARS lately elevated its deal with taxpayers claiming to stop their South African tax residence, asking for added data earlier than it’ll recognise the cessation of residence.

More frequent and detailed enquiries in relation to the tax residence standing of pure individuals can thus be anticipated, particularly with the impression which a change in tax residence standing these days has on an individual’s alternate management standing.

This UK courtroom resolution demonstrates simply how complete, intrusive and sophisticated such an enquiry could be.

  • By Doelie Lessing, tax director at Werksmans Attorneys

Read: SARS is ramping up its programs to go after these taxpayers

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