JONATHAN OPPENHEIMER v Revenue & Customs (INCOME TAX - whether resident in UK or RSA - Article 4 of the Republic of South Africa/UK Double Tax Treaty 2002) -[2022] UKFTT 112 (TC)- (24 March 2022)

BAILII

Automated Summary

Key Facts

The case centered on determining Mr. Oppenheimer's tax residency under the UK/South Africa Double Tax Treaty. Key facts include his birth and deep family roots in South Africa, ownership of properties in both countries (Folly Farm in the UK and Isibindi/Tswalu in South Africa), and extensive economic and philanthropic ties to South Africa. The Tribunal found his personal and economic relations were closer to South Africa, leading to the appeal being allowed.

Tax Type

Personal Income Tax under the UK/South Africa Double Tax Treaty

Issues

  • The Tribunal must determine in each tax year during the Relevant Period whether Mr. Oppenheimer's personal and economic relations (centre of vital interests) are closer to the UK or South Africa (RSA) under Article 4(2)(a) of the Double Tax Treaty. If the UK is determined, the appeal fails; if the RSA is determined, the appeal succeeds.
  • If Mr. Oppenheimer is deemed a UK resident, the Tribunal must assess whether the tax assessments are excessive. However, the parties agreed to defer this issue to negotiation if UK residency is confirmed.
  • If the centre of vital interests cannot be determined, the Tribunal must assess whether Mr. Oppenheimer had an habitual abode in the RSA. UK habitual abode is not disputed, but RSA habitual abode would determine Treaty residency and the appeal's outcome.

Tax Years

  • 2014
  • 2017
  • 2015
  • 2011
  • 2013
  • 2012
  • 2016

Holdings

  • we find that throughout the Relevant Period Mr Oppenheimer's personal and economic relations were closer to the RSA rather than the UK. Therefore his appeal succeeds.
  • We find that he did have an habitual abode in the RSA and as he is a national of that country the answer to the tiebreaker is that he is Treaty Resident in the RSA.

Remedies

Appeal Allowed

Tax Issue Category

  • Residence / Source
  • Tax Treaty Interpretation

Legal Principles

  • The tribunal interpreted Article 4 of the UK/South Africa Double Tax Treaty using the purposive approach under the Vienna Convention on the Law of Treaties (Articles 31 and 32). This involved considering the ordinary meaning of treaty terms in their context, the treaty's object and purpose, and subsequent practice between the parties. The Commentary on the OECD Model Tax Convention was referenced to resolve ambiguities and ensure the interpretation aligned with the treaty's intended purpose of resolving dual taxation conflicts.
  • Mr. Oppenheimer bore the burden of proof to establish that his 'centre of vital interests' was in South Africa or, alternatively, that he had an habitual abode there. The tribunal emphasized that this required demonstrating closer personal and economic ties to South Africa over the UK, including through evidence of family, social, economic, and political connections, as well as the settled routine of his life.

Disputed Tax Amount

10119586.05

Precedent Name

  • Hertel
  • Pike
  • Gaudreau
  • Cooper
  • Shah
  • Anson
  • Kimathi
  • Mackay
  • Yates
  • Hankinson
  • Yoon
  • Fowler
  • Smallwood
  • Gaudreau 2

Cited Statute

  • OECD Model Tax Convention
  • Taxes Management Act 1970
  • Vienna Convention on the Law of Treaties 1969
  • UK/Republic of South Africa Double Taxation Convention 2002 (as amended by 2010 protocol)
  • United Nations Model Double Taxation Convention

Judge Name

  • Helen Mierscough
  • Anne Scott

Passage Text

  • The correct approach is to consider both [personal and economic] ties together and then determine with which State both economic and personal ties are closer.
  • We find that throughout the Relevant Period Mr Oppenheimer's personal and economic relations were closer to the RSA rather than the UK.
  • For all these reasons the appeal succeeds.