Kevin McCabe v The Commissioners for HMRC

Persons and gains chargeable to capital gains tax, and allowable losses

(1) Subject to any exceptions provided by this Act, and without prejudice to sections 10 and 276, a person shall be chargeable to capital gains tax in respect of chargeable gains accruing to him in a year of assessment during any part of which he is resident in the United Kingdom, or during which he is ordinarily resident in the United Kingdom.”

“[40] Although the residence of a person in the UK may create a liability under statute to income tax and capital gains tax, there is no statutory definition of residence relevant to this appeal. Its meaning is to be derived from judicial decisions. The residence of a person under the common law may in certain circumstances be qualified by statutory provisions, in particular ss 334 and 336 of the Income and Corporation Taxes Act 1988, but those provisions are not directly applicable to the facts of this case.

[41] The authorities establish a number of relevant factors that have to be taken into account in deciding the question of a person’s residence. The task of the FTT is to make findings of fact on the evidence before it as regards all the relevant circumstances and, applying the factors identified in the authorities, to determine, having regard to all relevant circumstances, whether or not the person has in the relevant period been resident in the UK.

[42] It is here worth mentioning two general points, neither of which were in dispute, that are of particular relevance in the case of Mr Glyn. First, it is entirely possible for a person to have more than one country of residence. A person previously resident in one country may take up residence in another country without losing his status of residence in the first country. Secondly, the approach to whether a person resident in the UK has ceased to be so resident is in some respects different from the approach to whether a person previously resident in another country has become resident in the UK.

[43] In Revenue and Customs Comrs v Grace [2008] EWHC 2708 (Ch), [2009] STC 213 (at [3]), Lewison J summarised the relevant legal principles to be derived from earlier cases, which were largely agreed between counsel for the parties in that case. Although a number of propositions deal specifically with whether a person is ‘ordinarily resident’, rather than ‘resident’, it is I think nonetheless helpful to set out the summary in full:

‘i) The word “reside” is a familiar English word which means “to dwell permanently or for a considerable time, to have one’s settled or usual abode, to live in or at a particular place”: Levene v IRC (1928) 13 TC 486 at 505, [1928] AC 217 at 222. This is the definition taken from the Oxford English Dictionary in 1928, and is still the definition in the current online edition;

ii) Physical presence in a particular place does not necessarily amount to residence in that place where, for example, a person’s physical presence there is no more than a stop-gap measure: Goodwin v Curtis (Inspector of Taxes) [1998] STC 475 at 480, 70 TC 478 at 510;

iii) In considering whether a person’s presence in a particular place amounts to residence there, one must consider the amount of time that he spends in that place, the nature of his presence there and his connection with that place: IRC v Zorab (1926) 11 TC 289 at 291;

iv) Residence in a place connotes some degree of permanence, some degree of continuity or some expectation of continuity: Fox v Stirk; Ricketts v Registration Officer for the City of Cambridge [1970] 3 All ER 7 at 13, [1970] 2 QB 463 at 477; Goodwin v Curtis (Inspector of Taxes) [1998] STC 475 at 481, 70 TC 478 at 510;

v) However, short but regular periods of physical presence may amount to residence, especially if they stem from performance of a continuous obligation (such as business obligations) and the sequence of visits excludes the elements of chance and of occasion: Lysaght v IRC (1928) 13 TC 511 at 529, [1928] AC 234 at 245;

vi) Although a person can have only one domicile at a time, he may simultaneously reside in more than one place, or in more than one country: Levene v IRC (1928) 13 TC 486 at 505, [1928] AC 217 at 223;

vii) “Ordinarily resident” refers to a person’s abode in a particular place or country which he has adopted voluntarily and for settled purposes as part of the regular order of his life, whether of short or long duration: Shah v Barnet London BC [1983] 1 All ER 226 at 235, [1983] 2 AC 309 at 343;

viii) Just as a person may be resident in two countries at the same time, he may be ordinarily resident in two countries at the same time: Re Norris, ex p Reynolds (1888) 5 Morr 111, 4 TLR 452; Shah v Barnet London BC [1983] 1 All ER 226 at 235, [1983] 2 AC 309 at 342;

ix) It is wrong to conduct a search for the place where a person has his permanent base or centre adopted for general purposes; or, in other words to look for his “real home”: Shah v Barnet London Borough Council [1983] 1 All ER 226 at 236 and 239, [1983] 2 AC 309, 345 and 348;

x) There are only two respects in which a person’s state of mind is relevant in determining ordinary residence. First, the residence must be voluntarily adopted; and second, there must be a degree of settled purpose: Shah v Barnet London BC [1983] 1 All ER 226 at 235, [1983] 2 AC 309 at 344;

xi) Although residence must be voluntarily adopted, a residence dictated by the exigencies of business will count as voluntary residence: Lysaght v IRC (1928) 13 TC 511 at 535, [1928] AC 234 at 248;

xii) The purpose, while settled, may be for a limited period; and the relevant purposes may include education, business or profession as well as a love of a place: Shah v Barnet London BC [1983] 1 All ER 226 at 235, [1983] 2 AC 309 at 344;

xiii) Where a person has had his sole residence in the United Kingdom he is unlikely to be held to have ceased to reside in the United Kingdom (or to have “left” the United Kingdom) unless there has been a definite break in his pattern of life: IRC v Combe (1932) 17 TC 405 at 411.’

[44] The propositions in sub-paras (i)–(vi) and (xiii) are concerned with ‘residence’, while the remaining sub-paragraphs are concerned with whether a person is ‘ordinarily resident’. This summary was cited with approval on appeal: see Revenue and Customs Comrs v Grace [2009] EWCA Civ 1082, [2009] STC 2707 (at [6]).

[45] Grace was a case in which the taxpayer had been resident in the UK from 1986, with his only residential property being in the UK. He was employed as a pilot by British Airways, flying long haul flights from Gatwick and Heathrow airports. In 1997, for personal reasons, he decided that he wished to base himself in South Africa, where he at first rented an apartment and, a year later, bought a house. He retained his house in England where he would usually stay for two or three days before or after each long haul flight. The Special Commissioners decided that he had ceased to be resident in the United Kingdom in 1997, while Lewison J reversed that decision and held that the only possible conclusion from the primary facts found was that he remained resident in the UK. The Court of Appeal agreed that the Special Commissioner had misdirected herself but held that the case should be remitted to the FTT for re-determination.

[46] In considering whether Mr Grace remained resident in the UK after 1997, the nature of the enquiry was described by Lloyd LJ, giving the leading judgment in the Court of Appeal, at [18]:

‘Thus, the enquiry which she had to undertake involved assessing the duration of Mr Grace’s presence in the United Kingdom and the regularity and frequency of his visits, the nature of the visits and his connection with this country. Equally, she had to take into account also his connection with South Africa, including his ownership and use of a house there, and his activities, ties and other connections there. She could not regard his ownership and use of a house there as conclusive that he did not reside in the United Kingdom, but it was a relevant factor to be taken into account.’

[47] The Gaines-Cooper case to which I have earlier referred was primarily concerned with the effect of IR20. However, the judgments in the Supreme Court, particularly that of Lord Wilson, contain important observations on the issue of residence more generally. After referring to the decision of the House of Lords in Levene, Lord Wilson continued at [14]:

‘Since 1928, if not before, it has therefore been clear that an individual who has been resident in the UK ceases in law to be so resident only if he ceases to have a settled or usual abode in the UK. Although, as I will explain at [19], below, the phrase “a distinct break” first entered the case law in a subtly different context, the phrase, now much deployed including in the present appeals, is not an inapt description of the degree of change in the pattern of an individual’s life in the UK which will be necessary if a cessation of his settled or usual abode in the UK is to take place.’

[48] Lord Wilson further explained what was meant by a distinct break at [20]:

‘It is therefore clear that, whether in order to become non-resident in the UK or whether at any rate to avoid being deemed by the statutory provision still to be resident in the UK, the ordinary law requires the UK resident to effect a distinct break in the pattern of his life in the UK. The requirement of a distinct break mandates a multifactorial inquiry. In my view however the controversial references in the judgment of Moses LJ ([2010] EWCA Civ 83, [2010] STC 860 at [45]) in the decision under appeal to the need in law for “severance of social and family ties” pitch the requirement, at any rate by implication, at too high a level. The distinct break relates to the pattern of the taxpayer’s life in the UK and no doubt it encompasses a substantial loosening of social and family ties; but the allowance, to which I will refer, of limited visits to the UK on the part of the taxpayer who has become non-resident, clearly foreshadows their continued existence in a loosened form. “Severance” of such ties is too strong a word in this context.’

[49] Lord Wilson also discussed the concepts of a ‘settled purpose’ and a ‘settled abode’. At [18], he explained how Nicholls J in Reed (Inspector of Taxes) v Clark [1985] STC 323, [1986] Ch 1 had used the concept of residence for a settled purpose in contrast to ‘occasional residence’ for the purposes of what was then s 49 of the Income and Corporation Taxes Act 1970. The issue in that context was whether the taxpayer who had previously been resident in the UK had acquired more than ‘occasional residence’ abroad. It was not a test used to determine whether the taxpayer had retained residence in the UK. The concepts of settled purpose and settled abode were ‘clearly different’. As Lord Wilson said at [41]:

‘… Nicholls J was describing the settled purpose not as a route to becoming non-resident but as a means by which the taxpayer who had become non-resident escaped being treated otherwise under what is now s 829 of the [Income Tax Act 2007].’

[50] Lord Hope described the essential inquiry at [63]:

‘But the underlying principle that the law has established is that it must be shown that there has been a distinct break in the pattern of the taxpayer’s life in the UK. The inquiry that this principle indicates is essentially one of evaluation. It depends on the facts. It looks to what the taxpayer actually does or does not do to alter his life’s pattern. His intention is, of course, relevant to the inquiry. But it is not determinative. All the circumstances have to be considered to see what light they can throw on the quality of the taxpayer’s absence from the UK.’”

“(1) For the purposes of this Convention, the term “resident of a Contracting State” means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature; …

(2) Where by reason of the provisions of paragraph (1) of this Article an individual is a resident of both Contracting States, then his status shall be determined as follows:

(a) He shall be deemed to be a resident of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident of the State with which his personal and economic relations are closer (centre of vital interests);

(b) If the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be resident of the State in which he has an habitual abode;

(c) If he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident of the State of which he is a national;

(d) If he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.”

I had two witness statements from each of Mr McCabe and his two sons, Scott McCabe and Simon McCabe (whom with their permission I refer to throughout as “Scott” and “Simon” rather than by their title and surnames), all of whom gave evidence before me.

Patrick Vangoidsenhoven, Ian Cameron, John Burnley, Paula Coppard and David Sayers had provided witness statements and gave evidence before me.

I also had witness statements from John Millar, Dr David Oldroyd, Peter Watson, Darren Brining, David Sutherland and Linda Ross. HMRC did not require these witnesses to attend the hearing and be cross-examined on their evidence; their evidence was thus not challenged and is taken to be agreed.

Mr McCabe’s evidence was, at best, exaggerated and did not present a full and balanced picture, and at worst was not true. Mr Stone referred to the evidence which Mr McCabe had recently given in separate proceedings in UTB LLC v Sheffield United [2019] EWHC 2322 (Ch), in which Fancourt J had concluded that Mr McCabe’s evidence in that appeal demonstrated an ability to turn any question that he was asked into an argument of his choice, said he was only able to recall events through the prism of his own subjective beliefs and understanding of how things were and was at times “disingenuous and less than fully frank”. Mr Stone submitted that this was apt here as well – his submission was that Mr McCabe well understood the issues and the case he wants to present.

Scott and Simon have a personal interest in the outcome of the appeal and sought to protect Mr McCabe’s version of events.

Ms Coppard, who had been Mr McCabe’s personal assistant, was also focused on the evidence that she knew would assist Mr McCabe.

Ms Coppard would generally enter into the electronic diary meetings, conference calls and pre-planned events of which she was aware (and she would be aware of most as she would arrange the dial-in details for conference calls and video conferences). Ms Coppard had access to Mr McCabe’s handwritten diaries to enable her to keep the electronic diary up-to-date.

As regards pre-planned events, the electronic diary is generally an accurate record. The electronic diary includes not only board meetings and dinners and more formal parties, but also what appear to be shorter catch-ups over coffee or pre-dinner drinks.

There are limitations to this approach, ie the diary will not record calls that Mr McCabe decided to make and then made at short notice by just making the call, or calls received.

Similarly, I recognise that as Mr McCabe had access to separate office and conference facilities at La Manga, some calls (including video calls) that he arranged whilst there and were organised by staff at La Manga may not have all been recorded in his electronic diary.

Mr McCabe’s evidence was that some leisure and social activities in Brussels would not necessarily have been recorded if they had been arranged at short notice and he had free time. I accept that; however, I also conclude that some leisure and social activities during his time in Scarborough would not have been recorded for this same reason.

The diary does not purport to record attendees for board meetings; I accept that where Scott and/or Simon were directors of the relevant company, they would have attended alongside the other directors.

However, the diary entries do seek to list attendees for other meetings, including meetings with Scott or Simon (eg a meeting with Scott and Simon in Paris on 26 April 2006, a meeting with Scott and another person in Paris in July 2006, a video conference with Scott and Simon when Mr McCabe was in Brussels in October 2007). It is not the case that meetings involving just family were not diarised or that their involvement was not recorded. I accept that if Mr McCabe had arranged a meeting in the London office of the Scarborough Group and Scott or Simon were around they would often have been expected to attend – Mr McCabe took a very hands-on approach to growing the business of the Scarborough Group and I infer he expected the same from his sons, and this was part of the learning curve. However, Scott was based in York not in the London office, so this mainly applies to Simon in this context. As for social engagements, the diary does contain family social events (eg dinner with Mrs McCabe, Scott and Simon in Paris in April 2006, dinner with Simon in May 2006).

I have already accepted that the diary may not capture all informal, short notice, engagements. This applies equally to personal engagements with Scott and Simon. However, given Mr McCabe’s busy diary, and multitude of travel plans, I do not accept that it is realistic that Simon would have been travelling regularly to see his father in Brussels and that this not be recorded at all in the diary – no travel documents were adduced in evidence, and it would have been unwise for Simon to assume at any time that his father would be in Brussels – he would have needed to make calls to check Mr McCabe’s own plans and I infer that meet-ups which ensued would have been in the diary. This is not to doubt Simon’s honesty – he recalls meeting up with his father in Brussels on more occasions than recorded; but his father was in Brussels for more years than are in issue before me.

I do note a specific limitation in the diary, which can be illustrated by the record of Mr McCabe having made a visit to Barcelona for two nights in March 2007. It is apparent from the evidence of the witnesses that this was Scott’s stag weekend. That fact is not evident from the face of the diary; I read nothing adverse into this, as Mr McCabe would have been well-aware of why he was flying to Spain. I do refer to it as it illustrates a limitation on the diary, namely that it records an answer to “where?” but not “why?”.

this is unrealistic as regards, eg, SUFC, an English football club (and I note in any event that Mr McCabe accepted where the meetings related to the relegation and Tevez affair);

in many instances, such description of the meeting did not reflect the formal job title of the relevant attendees (eg Didier Tandy was the Head of UK Property at the Scarborough Group); and

the passage of time since the Relevant Period, the fallibility of memory, particularly in circumstances where there were so many meetings with the key players and the difficulty of pin-pointing, years later, the subject-matter of a particular diarised meeting, means I am sceptical as to whether the subject-matter can be accurately recalled without diarised prompts, which were lacking in many instances.

this appeal did not involve a dispute as to the relevant facts; the disagreement between the parties was as to how the law applied to the facts. Mr McCabe has provided a vast amount of information to HMRC since the enquiries were opened; and

the very limited extent of Mr McCabe’s UK presence.

The best metric to use is that which had been set out in IR20, this being used by HMRC at the time with the result that this is the information required by tax returns – ignore days of arrival and departure, look at whole days in UK. This reflects the quality of a person’s presence.

The next best metric is to look at nights in the UK – this captures one important element of what it means to live somewhere, ie to sleep there. This midnight methodology has been adopted by the statutory residence test (not applicable for these tax years).

The least is to calculate every day and part day – this is not informative, and tells you nothing about the quality of the presence.

physical presence in a particular place does not necessarily amount to residence in that place, eg if physical presence is no more than a stop-gap measure – this is looking at the quality of the presence; and

where a person has had his sole residence in the UK, he is unlikely to be held to have ceased to reside in the UK unless there has been a “definite break in his pattern of life” (this being drawn from IRC v Combe). As to this principle:

The overwhelming majority of Mr McCabe’s time was spent outside the UK. This is in stark contrast with his whereabouts in 2004-05 (254 midnights in UK) and 2005-06 (273 midnights in UK). There was an 85% reduction in his UK presence on this metric.

The quality of his presence reduced dramatically, eg there was a 91% reduction in his presence in Scarborough compared to that in the two years before the move.

Look at his involvement in the businesses – he appointed and relied on management teams at Scarborough Group, Teesland/iOG and Sheffield United plc (“SUplc”) and SUFC; he reduced the number of directorships. These changes were vital to his ability to move to Brussels.

There was a significant reduction in his attendance at Sheffield United matches, and a reduction in his attendance at club-related events, with his role being passed on to others (family being represented by Mrs McCabe, usually accompanied by one or both of their sons).

no duration is prescribed by statute and it is necessary to take into account all the facts of the case; the duration of an individual’s presence in the UK and the regularity and frequency of visits are facts to be taken into account; also, birth, family and business ties, the nature of visits and the connections with this country, may all be relevant (Zorab); 

the fact that an individual has a home elsewhere is of limited consequence; a person may reside in two places but if one of those places is the UK, he is chargeable to tax here (Cooper v Cadwalader; Levene); 

there is a difference between the case where a British subject has established a residence in the UK and then has absences from it (Levene) and the case where a person has never had a residence in the United Kingdom at all, ie a difference between leavers and arrivers (Zorab; Brown); and

in order to be resident in the UK, it is not necessary for an individual to have any accommodation available to him (Lysaght; Levene). If an individual does have accommodation available to him to use, what matters for residence purposes is that substantive fact rather than legal ownership of the accommodation (Loewenstein v De Salis). 

physical presence is just one aspect of residence - it is necessary to understand the details of Mr McCabe’s life – his habits and his connections with the UK, including business, which remained;

Mr McCabe was essentially commuting to the UK to work, see family, watch Sheffield United matches and then returning to Brussels to sleep. He was able to do this as a result of the proximity of Brussels to the UK, and assisted by the existence of Eurostar and his use of a private plane. In consequence, looking at the number of nights spent in the UK is not the relevant lens. What he did is much more relevant than where he slept, compared with the position in the 1920s when a person must sleep where they worked; and

Mr McCabe also had the family home at Deepdale available to him; he used it during the day. This adds a different complexion to the authorities.

Mr McCabe had permanent homes available to him in both the UK and Belgium. His economic and social ties (his centre of vital interests) were closer to the UK and accordingly he was treaty-resident in the UK under Article 4(2)(a); or

if (which neither party suggests) the Tribunal finds that Mr McCabe’s centre of vital interests cannot be determined, he had habitual abodes in both the UK and Belgium under Article 4(2)(b) and, accordingly, was treaty-resident in the UK under Article 4(2)(c) because of his UK nationality.

Mr McCabe was born in Sheffield on 25 April 1948. He married Sandra McCabe on 14 August 1971. They have two sons – Scott (born in 1975) and Simon (born in 1977) – who live in the UK. As at 4 April 2006 they had one grandchild, Scott’s son Charles, who was born on 19 September 2004. Scott’s daughter Sophia was born on 11 January 2008.

Mr McCabe attended school at Duchess Road, Sheffield, then Hunters Bar Primary School and finally the Rowlinson Technical Modern School, Sheffield.

After leaving school at 16, Mr McCabe worked on a building site for a local contractor whilst attending night schools and training to become a Quantity Surveyor. He thereafter joined Ackroyd and Abbott who were bought by Bovis, a major national and international property developer, in the late 1960s, and joined Teesland Development Company Ltd (“Teesland”) in the early 1970s where he first worked on projects in continental Europe and in Saudi Arabia.

Mr McCabe subsequently established County Properties Ltd (“County”) in the mid-1970s which was the beginning of the longstanding relationship with the Bank of Scotland. County combined with Assam Trading Holdings Ltd in 1979 with the resulting entity focusing on international real estate.

In 1980 Mr McCabe established what would become Scarborough Property Group Plc (which together with members of its group from time to time is referred to hereafter as “the Scarborough Group”) to acquire real estate and carry out real estate services for third parties. The Scarborough Group’s business initially focussed on the UK before undertaking its first project in mainland Europe through a joint venture (United Scarborough Estates Limited) to develop property in Belgium at Amerika House, Antwerp. That property was sold in 2002. Mr McCabe first acquired an interest in Sheffield United Football Club (“SUFC”) in 1997 when he acquired an interest in approximately 1.4% of the shares in its parent company.

The Scarborough Group also acquired Teesland, which was subsequently listed on the London Stock Exchange in 2002 with the Scarborough Group retaining a significant interest. Teesland thereafter acquired iOGroup (“iOG”) – a property fund management company with offices in the Czech Republic, Denmark, France, Finland, Germany, Hungary, the Netherlands and Sweden.

The Scarborough Group and the Bank of Scotland established the joint ventures of Scarborough Continental Partners Ltd (“SCP”) and Sc€uro Ltd (“Sc€uro”) in late 2005 to acquire real estate assets in continental Europe. The Bank provided funds of over €700 million to SCP which acquired real estate in the Nordic countries, France, Germany, The Netherlands and elsewhere in mainland Europe. The principal activity of SCP was European commercial property investment.

…

An article in “Property Week” on 7 April 2006 reported Mr McCabe’s relocation to Belgium to create a European Headquarters in Brussels from which he would be responsible for managing the expansion of international business, particularly in Western and Central Europe and overseeing Teesland’s European expansion.”

Forsyth plc, which was established in 1991 to offer serviced offices. It initially operated only in the UK only (and had over 40 venues in the UK), but in the early and mid-2000s it expanded to the Far East.

Fairbriar Plc was a developer that had been placed into administration under previous owners, and which the Scarborough Group had then assisted Bank of Scotland (“BoS”) with rescuing in the 1990s. In May 2005, Fairbriar (with Mr McCabe as chairman) had secured financing from Fraser & Neave (“F&N”) (which was based in Singapore), who took a one-third interest in Fairbriar. F&N became an important international business partner of Mr McCabe and the Scarborough Group as they looked to more international and Far Eastern business opportunities.

Teesland - After Teesland became a wholly-owned subsidiary of the Scarborough Group it was re-shaped into a fee-earning fund, asset development and property services group, and was listed on the London Stock Exchange in 2002. Mr McCabe remained as Chairman, and the Scarborough Group held a significant interest.

the purchase by Teesland of iOG in 2004 with its network of offices in mainland Europe, and

the joint venture between the Scarborough Group and BoS in late 2005, pursuant to which SCP was formed to invest in income-producing real estate within mainland Europe. BoS provided a large funding facility (of €700 million). Mr McCabe was responsible for leading and managing this project – SCP was to find and develop properties, and Teesland’s funds could invest in and manage those properties.

The financial statements of SCP record turnover and assets for the year ended 30 September 2007 of €47.2 million and €1 billion respectively, up from €18million and €845million for the (longer) accounting period ended 30 September 2006. By geographical region, the vast majority (99%) of this turnover related to the rest of Europe.

Teesland/iOG also recorded growth over this time. The operational highlights for the year ended 30 June 2006 refer to the European funds, acquisition of commercial property in Nordic region and Germany, and the Chairman’s statement refers to the pace of transformation into a pan European property fund. Turnover grew from £30.6 million for the year ended 30 June 2006 to £38.4 million for the year ended 30 June 2007, but whereas turnover for the first period was £20.5/£10.1 between UK and rest of Europe, this proportion changed significantly to £17.9 million/£20.5 million the following year.

he had decided that he needed to move overseas, and in particular to Brussels, to develop and grow this European business; and

this decision led to the need to transfer responsibility for the UK businesses to others.

In February and March 2006, Mr McCabe visited Belgium on five days prior to travelling to Brussels on 4 April 2006:

• on 16 and 17 February 2006 with Mrs McCabe when he viewed potential temporary living accommodation at The Golden Tulip Residence Parnasse and Marriott Executive Apartments;

• on 22 February 2006 when he viewed potential office accommodation including that at Bastion Tower where he established an office; and

• on 1 and 2 March 2006 when he stayed overnight at the Marriott Apartments where he lived for over three months from 4 April 2006.

…

For the period 4 April 2006 until 21 July 2006, Mr McCabe stayed in a rented apartment at the Marriot Executive Apartments, Brussels which he had viewed on 17 February 2006. The accommodation was leased for a three month period with an option to renew for a further three months. It comprised two en-suite double bedrooms and living/dining room with kitchen area.

…

In May 2006, Mr and Mrs McCabe viewed a residential property at 1150 Woluwe St Pierre, Brussels and began the purchase process. However, on 30 August 2006 his lawyer advised him of significant problems with the title which would delay the purchase. On 16 October 2006 Mr McCabe offered to purchase a residential property, Ave Louise 541, Ixelles, Brussels, and on 27 October 2006 entered into an agreement to purchase the property within 4 months for €1.4 million. The property comprised 2 bedrooms, a sitting/dining room and kitchen. He moved there on 3 November 2006 following a down payment of €225,000 and completed the purchase on 19 February 2007. In May 2008 he sold that property and acquired another residential property of similar size at Franklin Roosevelt, Brussels at a cost of €900,000 which he occupied as a residence from that time. Mr McCabe sold the property in February 2014.

From 22 July 2006 until 9 November 2006 Mr McCabe stayed in an apartment at Le Meridien, Brussels which was available for the exclusive use of Mr McCabe throughout the period at a rate of €2,411 per week and was paid for by SRE as part of his taxable remuneration from the company.”

On 8 March 2006 a firm of Belgian lawyers, CMS DeBacker, began work to set up a Belgian company, Scarborough Realty (Europe) SPRL (“SRE”) for Mr McCabe. The Company’s Constitution was signed by Mr and Mrs McCabe at a meeting in Brussels on 5 April 2006 and registered with the authorities on 7 April 2006.”

A consultancy agreement between SPC Group Plc and Scarborough Realty (Europe) SPRL dated 31 May 2006 was agreed under which Mr McCabe provided services to SPC Group Plc “in respect of (but not limited to) European and other non-UK property markets including undertaking research on behalf of the Company into the nature and state of those markets, the identification of potential acquisition and development opportunities within those markets and, with the approval of the Board, developing such opportunities on behalf of the Company, and establishing relationships with European property specialists and advisers on the Company’s behalf, and providing such other services as may from time to time be agreed by the Company and SRE.”

The above consultancy agreement was amended on 11 September 2008, with effect stated to be from 1 March 2008, to increase the fee of Scarborough Realty (Europe) SPRL to reflect the increased level of service provided in respect of the property interests of SCP Group Ltd. For the year ended 28 February 2009 the fee was to be allocated to the activities in:

• The Far East €325,000

• Hungary €50,000

• India €25,000

• Australia €25,000

• Canada €25,000

• Europe (HBOS/Valad joint venture) €25,000.”

A consultancy agreement with SUplc dated 9 May 2006 which referred to SUplc wanting to appoint SRE to provide various (according to the recitals) consultancy services in respect of European and other non-UK property markets. Clause 3 then provided that the services to be provided by SRE included making Mr McCabe available to act as executive director and Chairman of SUplc, making Mr McCabe available to carry out duties for any group company, or act as director of any group company, and such other activities as may be agreed. SRE agreed that Mr McCabe would be available for a minimum of 12 hours each week (and such hours as may reasonably be required by SUplc).

A consultancy agreement with SDG Management Ltd dated 24 May 2006, with the same background as above, describing the services in clause 3 as the provision of consultancy services in respect of the European and other non-UK property markets, including research into the nature and state of those markets and identifying potential acquisition and development opportunities. No minimum number of hours per week was specified; instead, SRE agreed that Mr McCabe would be available for such number of hours as may reasonably be required. This agreement is very similar form to that with SPC Group Plc described in the SoAF.

A consultancy agreement with Teesland plc dated 24 May 2006, again with the same background, and the services to be provided by SRE included making Mr McCabe available to act as executive director and Chairman of Teesland, making Mr McCabe available to carry out duties for any group company, or act as director of any group company, providing consultancy services in respect of the European and other non-UK property markets, including research into the nature and state of those markets and identifying potential acquisition and development opportunities and such other activities as may be agreed. SRE agreed that Mr McCabe would be available for a minimum of 12 hours each week (and such hours as may reasonably be required by Teesland).

“11.On 29 March 2006 various items of luggage were transported from Scarborough to Mr McCabe’s rented accommodation at the Marriott Executive Apartments, Brussels.

On 4 April 2006 Mr and Mrs McCabe travelled on the 14:13 (UK time) Eurostar to Brussels, arriving at 17:37 (Belgian time).

…

Mr McCabe travelled to Brussels on 4 April 2006. He made the following arrangements:

a) He engaged the services of Serge Gielbartowicz, a Brussels resident, of FECAM SPRL, Clos de la petite Suisse, 1 – B-1140 Evere, as a driver. FECAM SPRL, which provided the services of Mr Gielbartowicz and the car he drove, was initially engaged from 4 April 2006 through the Marriot Executive Apartments for Mr McCabe and then directly by Mr McCabe from 1 May 2006. The monthly invoices for Mr Gielbartowicz’s services averaged over €5,000.

b) He registered with Dr Zeiger, a local medical practitioner, of 26 Bd Maria Groeninckx de May, 1070 Brussels on 27 July 2006.

c) He registered with Dr Woitchik, a local dentist, of Avenue George Bergmann 113, 1050 Brussels on 27 July 2006.

d) He ceased to use and/or closed, as noted, the following UK bank and credit card accounts:

• Barclays account 8934 – closed 3 April 2006,

• Bank of Scotland account 5807 (joint) – account transferred into sole name of spouse 6 April 2006,

• Barclays account 9973 – closed 14 July 2006,

• American Express account 3742 895464 – closed 13 November 2006,

• Barclaycard account 4423 5000 (joint) – ceased to use 18 May 2006; spouse ceased to use December 2006; closed 1 March 2007,

• American Express account 3742 001017 – ceased to use May 2006; closed March 2007,

• Barclays account 4767 – closed 4 March 2008,

• Halifax PEP, share dealing account – no contributions made after 5 April 2006; closed 28 March 2008.

e) He did not close the following UK account:

• Halifax Cash ISA – no contributions made in the relevant years.

f) He opened the following accounts in Brussels:

• ING Euro Current account 310-1755565-48 – opened 8 May 2006,

• ING Euro Green savings account 375-4431914-63 – opened 8 May 2006,

• ING Credit card ref B/03-04916768-8 – opened 25 May 2006.

g) He terminated his Vodafone contract on 1 October 2006 and set up a Belgian phone from the Phone House on 22 June 2006.

…

Mr McCabe was a member of the Bath & Racquets Club in London and the associated George Club before he moved to Brussels. On 20 March 2006, Mr McCabe notified both clubs of his new address in Brussels and requested the Bath & Racquets Club to change his membership to that of an overseas resident. In June 2010 both clubs confirmed that Mr McCabe’s membership ceased in March 2006.”

Letters to key contacts sent in February 2006 to, eg, Ray Robertson, Head of Corporate Banking at BoS, and Dr Stanley Quek, the chief executive of F&N. The letter to Mrs Robertson included the statement “Rest assured however I will still be leading the UK team, albeit from a European base, for many years to come.”

At a board meeting of SUplc on 3 March 2006 Mr McCabe informed the board that he was moving from Scarborough to Brussels, and that if activities in Brussels progressed as he expected it would become impractical for him to continue as Chairman, such that within 12 months it would be necessary for him to step down and hand over the role to his replacement.

The article in Property Week (at [15] of the SoAF), which operated as a notification to the wider business community.

[27] of the SoAF refers to the Bath & Racquets Club and George Club in London. This notification of change of address is not a cancellation of membership, but I accept Mr McCabe’s evidence that he had not intended to continue to use these clubs as a member after this time (ie any visits would be as a guest of another member) and regarded his membership as having been cancelled from this point, and that he no longer paid membership fees to these clubs.

In March 2006, he cancelled his membership of Holmes Place.

He cancelled his membership of The Cricketers Club.

He notified the Royal Institute of Chartered Surveyors of his change of address.

He notified The RAC Club of his change of address, and in December 2006 confirmed that he did not want to take up Out of Town membership.

He and Mrs McCabe had lived at Deepdale since 1990. They purchased the property in joint names, and on 11 June 2004 Mr McCabe transferred ownership of his share of the property to Mrs McCabe.

He spent the majority of his time (whether measured by reference to midnights in the UK, or whole days or part days) in the UK. This remained the case in the two tax years immediately preceding the Relevant Period (as is described further under Whereabouts).

Mr McCabe worked long hours, but tried to leave weekends free for social and family time in Scarborough – he would try to be in the Scarborough office at Europa House on a Friday, and finish in time for squash matches with friends (including Dr Oldroyd, Mr Watson, Mr Brining and others). They would have a drink and sometimes be joined by other friends, including Mr Cameron (another friend and near neighbour of Mr McCabe). The rest of the weekend routine evolved over the years, but was devoted to family and friends, and he tried to attend significant sporting events eg the Scarborough Cricket Festival and international cricket fixtures.

In 2004-05 and 2005-06 Mr McCabe was spending more time during the working week in London, staying at a flat on Blandford Street in London. He had various social club and gym memberships in London (including The RAC Club, and squash club).

He did travel overseas on business. In 2005-06 he travelled to India (for Forsyth), Singapore (for F&N and FairBriar), Hong Kong and China (for Scarborough Group), Hungary, Poland, Germany, Spain and Denmark (for Teesland).

Mr McCabe had owned a villa at La Manga in Spain since the mid-1980s, and this was where he and Mrs McCabe would travel on holiday, albeit that for Mr McCabe this would usually be a working holiday. He maintained an office there, separate from the villa, and had access to staff. They were often joined by Scott and Simon, and their long-standing family friends would sometimes join them there as well.

From the mid-1990s Mr McCabe attended the vast majority of Sheffield United home and away matches. The SoAF records the following:

He made this decision in late 2005.

Scarborough was not a suitable place from which to lead and manage an international group of companies.

He considered the physical relocation necessary partly to give confidence to Scarborough’s principal partner, BoS, that he would be wholly committed to their joint venture and would not be distracted by other aspects of the business, and in order to lead, drive and make a success of the European expansion, in particular by leveraging the benefits provided by the Teesland/iOG merger in 2004.

Brussels was an ideal location for living and as a headquarters because of its links to European cities (road, rail and air). He was familiar with the city, having been involved in an earlier development project there, and for him Brussels, ie not other cities in mainland Europe such as Paris or Frankfurt, was where he wanted and needed to be. It was the only location he had in mind.

On the basis of advice received, Mr McCabe also concluded that the tax regime in Belgium would be suitable to his circumstances. He accepted that he knew that Belgium would not assess tax on a transfer of his shares in the Scarborough Group to his sons, describing this as a welcome consequence (but denying that this was his motive for relocating).

Letter from Mr Downie of Mazars to Mr McCabe dated 6 February 2006, setting out advice on residence and dealing with points which had (it said) been raised by Mr McCabe, including advising that:

There was then a conference with Patrick Way KC on 4 April 2006, which considered proposals set out as to the relocation, and emphasised:

The note made clear that Mr McCabe’s explanation was that he would be carrying out his duties for Teesland exclusively from outside the UK. Counsel also advised that Mrs McCabe did not need to sell Deepdale, but Mr McCabe must not stay there.

Mr Downie wrote to Mr McCabe on 26 June 2006. In that letter, Mr Downie noted the advice that had been received from counsel but did set out his opinion that it was best that Mrs McCabe sell Deepdale and the Scarborough Group sell the flat it owned on Blandford Street (which had previously been used sometimes by Mr McCabe when he was staying overnight in London).

A further conference with Mr Way was held on 25 October 2006 to discuss the facts and circumstances.

There no documentary evidence, and after so many years, and without such contemporaneous documentary evidence, I do not accept the reliability of this recollection from Mr McCabe.

Mr Downie’s letter of 6 February 2006, sent after a meeting with Mr McCabe, does not reflect Mr McCabe having told Mr Downie that he was only prepared to move to Brussels, or that this was his chosen place for relocation.

Furthermore, Mr Sayers’ witness statement (that which had been prepared for the judicial review) said Ms Treacy had been asked to consider whether there were jurisdictions in Europe that would suit Mr McCabe’s requirements and that Mazars suggested a number of locations including Belgium. Mr Sayers confirmed that the files suggested that Belgium was not the only jurisdiction being considered; but said that he reached this conclusion based on the narrative for time entries which he had seen. Mr Sayers’ evidence that Ms Treacy had been asked to consider whether there were suitable jurisdictions is not necessarily reliable – he was not involved at that time, and advice may have been sought to compare Belgium as an intended new home against other jurisdictions to ensure complete information as to advantages and disadvantages. Mr Sayers’ phrasing in his witness statement was potentially speculation, in particular as to whether anyone had asked Ms Treacy to obtain this information, and giving evidence he sought to distance himself from this. I accept that Ms Treacy had asked Mazars for comparative information about different jurisdictions - I consider it is unlikely that Mazars would have spent time producing such information otherwise. She was discussing Mr McCabe’s proposed relocation with him and I infer she would not have requested this information if by this time Mr McCabe had told her that Brussels was the only potential jurisdiction involved.

“28.According to the entries in Mr McCabe’s diaries:

• During the 2004/05 tax year, Mr McCabe spent 254 midnights in the UK and 111 midnights outside the UK.

• During the 2005/06 tax year, prior to travelling to Brussels on 4 April 2006, Mr McCabe spent 276 midnights in the UK and 89 midnights outside the UK (3 of which were in Belgium).

During the 2006/07 tax year, Mr McCabe spent 129 midnights in Belgium, 55 midnights in Spain and 37 midnights in Australia. He spent 33 midnights in the UK. According to entries in Mr McCabe’s diaries and supported by invoices from the various hotels and a witness statement 28 of these were spent in 5 different hotels, 4 were spent at the home of a friend and 1 at the home of his son Simon in London.

During the 2007/08 tax year, Mr McCabe spent 98 midnights in Belgium, 66 midnights in Spain and 44 midnights in Australia. He spent 43 midnights in the UK. According to entries in Mr McCabe’s diaries and supported by invoices from the various hotels 42 of these were spent in 10 different hotels and 1 was spent at the home of a friend.

On 30 April 2006 Mr McCabe travelled from Brussels to the UK. He arrived in the UK at 10:30 en route to Hong Kong, departing that evening at 21:15. While in the UK he watched SUFC play Crystal Palace in the final game of the season in which they secured promotion to the Premiership.

Mr McCabe did not visit the UK again until 5 October 2006.

Mr McCabe visited the UK on 46 occasions between 6 April 2006 and 5 April 2007. These visits resulted in Mr McCabe being present in the UK for some part of the day on 79 days and a further 4 occasions in transit where he did not leave the airport. During 2006/07 Mr McCabe was present in Belgium for some part of the day on 175 days. There were 223 entries in his diary relating to visits to the UK out of a total of 834 entries during the year to 5 April 2007.

In the 2007/08 tax year, Mr McCabe visited the UK on 53 occasions. These visits resulted in Mr McCabe being present in the UK for some part of the day on 94 days and a further 5 occasions in transit where he did not leave the airport. During 2007/08 Mr McCabe was present in Belgium for some part of the day on 135 days. There were 229 entries in his diary relating to visits to the UK out of a total of 816 entries during the year to 5 April 2008. These entries included business meetings, contact with business acquaintances, audio and video conferences and attending SUFC matches, amongst other matters.”

Days/part days in the UK (excluding part days in transit) – In 2006-07 Mr McCabe was present in the UK for some part of 79 days (compared with 175 part days in Belgium, 65 part days in Spain and 62 part days in Australia). In 2007-08 Mr McCabe was present in the UK for some part of 95 days, compared with 135 part days in Belgium, 74 part days in Spain and 72 part days in Australia. This is a tabular representation of the information in the SoAF (albeit with a correction, not apparently disputed, of 95 part days in the UK rather than 94 in the second year of the Relevant Period).

Nights in the UK and nights in Scarborough –

Whole days of presence – When calculated on the basis of whole days spent in a particular place (ie the IR20 methodology assessing days where Mr McCabe both woke up and went to sleep in that place), Mr McCabe spent 18 whole days in the UK in 2006-07 and 13 whole days in the UK in 2007-08. This contrasted with 234 whole days in 2004-05 and 251 whole days in 2005-06.

Aggregation of part days – The number of days of any presence in the UK was recorded in the SoAF. There were two representations of this:

In 2004-05, Mr McCabe stayed in the UK for a period of more than ten nights on 11 occasions; the following year (ie immediately prior to the Relevant Period), he spent more than ten continuous nights in the UK on 13 occasions. There were no stays of this length of time in the Relevant Period.

During the Relevant Period most trips to the UK involving an overnight stay were for just one or two nights.

This was also the case for Belgium, albeit that there were then more stays of three or four nights (and a few for longer periods). During the Relevant Period there were 32 occasions where Mr McCabe spent three or more nights in Belgium, and within this there were six occasions where he spent seven or more nights in Belgium.

Looking at visits not involving an overnight stay – there were 98 visits to the UK, 53 of which did not involve an overnight stay; whereas for Belgium there were 85 visits, but only two of these did not involve an overnight stay.

in 2008-09 he spent 74 work days in the UK, and was in the UK on 57 occasions; and

in 2009-10 he spent 76 work days in the UK and was in the UK on 62 occasions.

He left their home in Scarborough, and scaled down real and meaningful ties with family, friends and business associates in the UK. Contact with family mainly took place abroad when they came to visit him in Brussels or at the family’s villa in La Manga.

His visits to the UK were short, at irregular intervals, and he rarely visited Scarborough, and did not stay at Deepdale.

His visits to the UK reflected the importance of the financial involvement of BoS in the European project – he reported to their personnel in the UK, as they were restricted in their foreign travel.

Some business contacts did visit him in Brussels, and there were conference calls he conducted from Brussels, but it was sometimes convenient or courteous to meet them in London. London was a major draw for international contacts, and he is a great believer in developing relationships face-to-face.

He established a life and a home in Brussels. Moving to Brussels enabled him to remove the shackles of the UK day-to-day business. He remained as owner and retained responsibility and involvement as owner.

The electronic diary records calls and meetings; but it does not record all activities undertaken, eg reviewing papers, making unscheduled calls, receiving calls, preparing reports, and conducting research.

On Thursday 6 April he travelled to Luxembourg, meeting with Mr Tandy and Michael Chidiac of RealCorp and making a site visit to Ikaros Business Centre, returning to Brussels later that day before having drinks with two contacts who lived and worked in Brussels.

He spent 7 April to 17 April 2006 at La Manga.

On 17 April he travelled from La Manga to Frankfurt, stayed overnight, met with Gary McCabe (no relation), Director of Real Estate at BoS on Tuesday 18 April, travelled from Frankfurt to Berlin that afternoon, had a meeting with Patrick Reich (of Bauwert, one of Teesland/iOG’s JV partners in Germany) that evening, stayed in Berlin overnight, had meetings with Teesland/iOG on Wednesday 19 April, including the European board meeting and a board dinner, travelled back to Frankfurt on Thursday 20 April, inspected a property there, and met with Paul Mathias of BoS. On Friday 21 April he travelled from Frankfurt to Paris, had a meeting with Pierre Gevassi, BoS Head of European Real Estate, that evening, stayed in Paris that weekend, with a meeting (with Mr Burnley and Peter Gilman) in relation to Thorpe Park, a development in Leeds and two dinners in the diary. On Monday 24 April had several meetings in Paris, including with Dr Quek, and board meetings (for FairBriar and Teesland). Mrs McCabe, Scott and Simon had joined him in Paris and they had dinner together on Tuesday 25 April. He had a meeting with Scott and Simon on Wednesday morning, then met with various individuals from BoS. Mr McCabe travelled back to Brussels on Wednesday 26 April.

On Thursday 27 April Mr McCabe travelled to Amsterdam, returning to Brussels, with a medical appointment in Brussels that evening (and on Saturday 29 April). Sunday 30 April was the date of the Sheffield United match at Bramall Lane, and he flew from Brussels to Sheffield, attended the game at Bramall Lane, flew to Heathrow that evening and then an overnight flight to Hong Kong.

In Hong Kong in May 2006 he met with representatives from HSBC, Top Spring, Treasure Land, Mazars and Bank of China. He attended a cocktail party to celebrate SUFC’s promotion.

He flew back to Brussels on Friday 5 May, and spent the weekend in Brussels. There were various meetings, including on Monday 8 May the board meeting of SUFC/SUplc, which took place at Bastion Tower; the other directors had flown out. He flew to La Manga on Tuesday 9 May, then to Hong Kong on Sunday 14 May, returning to Brussels on 17 May.

Mr McCabe spent 17 May to 26 May in Brussels. In that time he inspected properties in Belgium, had dinner with Simon on 18 May, and Mr Cameron visited him that weekend. During the following working week he met with Mickola Wilson (CEO of Teesland/iOG), attended board meetings for Teesland and FairBriar, and hosted a reception for the opening of the SRE office, and had a meeting with Mr Warnock, and dinner with Mr Warnock that evening accompanied by Mrs McCabe.

Following another trip to La Manga at the end of May, Mr McCabe returned to Brussels (having dinner with Mr Tandy, met with Simon Capper (Finance Director of SUFC) in relation to SUFC China, and attended board meetings of Forsyth and SPC), went to Amsterdam for meetings, viewed properties in Belgium, travelled to Frankfurt (where he had meeting with BoS), returned to Brussels where he had dinner with the SUFC executive team, and went on holiday to Portugal with Mrs McCabe for a few days. Mr McCabe flew directly from Portugal to Hong Kong on 11 June (where he had various business meetings) and then flew from Hong Kong to Paris on Thursday 15 June (spending the weekend with family at Eurodisney) and returned to Brussels on Sunday 18 June.

On Monday 19 June Mr McCabe travelled to Amsterdam (where meetings included some with Mr Rockett, a telephone call with Stephen McBride (Finance Director at Scarborough), a meeting in relation to Teesland and a meeting with Dr Quek in relation to Teesland and FairBriar). On returning to Brussels, he had meetings with Suzie MacCagnan of UBS and Ms Wilson, had a call with Mr McBride and Mr Rockett in relation to SUFC and attended a ServCorp cocktail party in the evening.

Mr McCabe then travelled to Valencia (for a working dinner in relation to a Spanish joint venture, followed by sailing and spending time with business associates), Berlin, Paris (where engagements included a SUFC dinner, SUplc board meeting, a meeting with Scott, and a family dinner on 3 July), Frankfurt, and went to La Manga from Thursday 13 July to Sunday 23 July,

Mr McCabe returned to Brussels then had busy week in Brussels with meetings Monday 24 to Thursday 27 July (including property viewings, and a video conference with Scott and Simon in relation to family trusts), and travelled to Germany on Friday 28 July, Budapest in August, then a short holiday to Geneva with Mrs McCabe from Friday 11 to Monday 14 August.

Mr McCabe returned to Brussels, and had meetings there on Monday 14 August (including with Mrs Robertson of BoS, and Ms Treacy and Mr Capper, Paul Richardson and Andy Richardson in relation to various Scarborough Group matters), he flew to Stockholm on Wednesday 16 August where he inspected various properties, then travelled on to Copenhagen before returning to Brussels on 17 August, and then travelled to Frankfurt the following day. Mr McCabe flew to Shanghai on Saturday 19 August, then to Hong Kong for various meetings, returning to Paris on Friday 25 August before flying to La Manga that evening.

In September 2006 Mr McCabe flew from La Manga to Munich then to Hong Kong on Wednesday 13 September, with meetings with Mr Tandy and Mr McBride (and others), then flying to Perth on Friday 15 September, on to Sydney and it was in Sydney on Friday 17 September that he met with Clem Salwin of UBS (to whom he was introduced by Ms MacCagnan) and then being introduced to Steve Day of Valad on Monday 18 September. On Saturday 23 September he flew from Sydney to Singapore, met with Dr Quek and further meetings with F&N, and returned to Brussels on 26 September.

He remained in Brussels, where meetings included a Thorpe Park board meeting, a meeting with Jane Gwillim-David (Chairwoman at Forsyth), Mr McBride and Cesidio di Ciacca (an in-house lawyer and adviser at Scarborough Group) in relation to the Scarborough Group, a conference call with UBS, and a meeting with Ms Wilson). Mrs McCabe joined him on Monday 2 October and on Thursday 5 October he flew from Brussels to Rufforth.

On 5 October 2006 Mr McCabe attended the launch event of the Lumiere development in Leeds; he had attended a meeting with the developer, KW Linfoot, and with the contractor on another project. He stayed overnight at a hotel in Leeds.

The following morning he had a conference call with Mr Salwin of UBS. He then had a meeting with Paul Richardson in relation to the Scarborough Group.

He travelled to Scarborough, where he spent the weekend, played squash on Friday afternoon, staying at a hotel in Scarborough for two nights before flying to Brussels at 5pm on Sunday 8 October.

Mr McCabe spent Monday 9 October in Brussels (his meetings in Brussels were SUplc audit committee, then SUplc and SUFC board meetings, followed by a meeting with Mr Vangoidsenhoven and Fortis about a new office opportunity), travelled to London on Tuesday morning (and had a meeting with John Rosenheim and Mr di Ciacca about two legal disputes, Ian Robertson in relation to SCAMP, and Andrew Darling in relation to SCP), flew to Amsterdam that afternoon (where he conducted a radio interview with Radio Sheffield in relation to SUFC, had dinner with representatives of Top Spring, stayed overnight in Amsterdam, had meetings with various people from Teesland on Wednesday), travelled to Berlin on Wednesday, flew to Brussels on Thursday, then flew to Rufforth on Friday morning, went to Leeds (where he had a conference call with Mr Salwin, Mr di Ciacca and Mr McBride, a meeting with David Wells in relation to the e-campus and finalised settlement of an old dispute with a contractor) then on to Scarborough to celebrate Simon’s birthday (where he stayed overnight, and played squash), then to Manchester (watching Sheffield United play Manchester City, having meetings before the match with Terry Robinson and Mr Warnock), returning to Scarborough on Saturday evening, flew to Brussels on Sunday where he inspected a possible property to acquire in Zaventern as well as the apartment in Avenue Louise.

Meetings in London in March 2007 had included an integration meeting (in respect of the Valad transaction), management presentation on SCAMP/Teesland, a presentation on a new German fund, he met with Mr McBride and Paul Oliver, had meetings with Dr Quek and Ms MacCagnan, and gave a talk to the team in Edinburgh.

April 2007 included a long weekend at La Manga from 7 to 11 April, with a longer trip there from 28 April to 8 May 2007. His visits to the UK in April (of which there were 11 short visits, the longest being for two nights) included meetings with Paul Richardson and Reade Griffith (of Polygon), Mrs McCabe’s 60^th birthday party in Kensington, a conference call on the Valad transaction, he watched Sheffield United play West Ham in the FA Cup semi-final and attended the Player of the Year dinner in Sheffield.

In June, he was already in the UK at the beginning of the month (having arrived on 31 May), but was in the UK on just three occasions that month. There were two separate trips to Australia that month, and he was in Brussels on just three short occasions, none for more than two nights.

In July, there was just one visit to the UK, involving one overnight stay. He was at La Manga until 14 July and flew to Australia on 22 July. Coupled with other trips to Germany and the Netherlands, this meant there were just two occasions when he was in Brussels, each involving one overnight stay.

August involved travelling to a greater number of destinations, but there were no prolonged visits. Mr McCabe was in the UK on five occasions, and in Brussels the same number of times (but the Brussels trips were longer, and included spending six nights there at the end of the month).

There were two visits to the UK in September. It is noticeable that he had stayed overnight in the UK on 15 August, made a day trip to the UK on 30 August but did not then return until 26 September (for just one night) before making another day trip on 29 September. He had made a trip to the Far East at the beginning of the month, then two visits to La Manga (of ten and six nights).

Scott and Simon had already moved out of Deepdale several years before the Relevant Period – they had not all lived there together since 1996.

Mrs McCabe had been the sole legal owner of Deepdale since 11 June 2004.

Whilst there was evidence that Mrs McCabe had put Deepdale on the market, and Mr McCabe’s explanation was that she was looking for a smaller home in Scarborough but did not receive a satisfactory offer for Deepdale, I am not satisfied that she had a firm intention to sell Deepdale and move elsewhere. In any event, she intended to retain a home in Scarborough.

Whilst Mr McCabe relocated to Brussels on 4 April 2006, in theory meaning that any time Mrs McCabe spent at Deepdale would be on her own, in fact both sons effectively moved back to stay with her at Deepdale for several months at different times and for different reasons:

I accept that most of the time Mr and Mrs McCabe spent together was outside of the UK, primarily at La Manga (where they spent 48 nights together in 2006-07 and 59 in 2007-08). Mrs McCabe did regularly visit Brussels (spending 38 nights there in 2006-07, and 13 to 20 nights there in 2007-08), they went on holiday together overseas, eg to Portugal in June 2006 and Geneva in August 2006, and Mrs McCabe sometimes accompanied Mr McCabe on business trips, notably those to Australia and to Hong Kong in January 2007.

They spent a lot less time together in the UK than in the preceding tax years:

They did celebrate significant family events together in the UK, including Mrs McCabe’s 60^th birthday party in April 2007 and Simon’s birthday.

Although Mr McCabe spent time at Deepdale when he was in Scarborough during the Relevant Period, he did not sleep there, an arrangement that was referred to by Simon as “bizarre”. This decision not to sleep at Deepdale was solely attributable to Mr McCabe following the tax advice he had received from Mazars and Mr Way; Mrs McCabe knew that Mr McCabe had been advised not to sleep at Deepdale during the Relevant Period, and would have given permission for Mr McCabe to sleep there if Mr McCabe had asked.

They spent most time together during holidays at La Manga.

Scott still saw his father in the UK - there were several business meetings together, they spent a handful of weekends together in Scarborough, attended Sheffield United matches at Bramall Lane, and spent Christmas together both years and Mrs McCabe’s birthday party.

They did spend some time together in Brussels, but these occasions were less frequent. Whilst Scott’s evidence was that he saw his father on more occasions in Brussels then those that were diarised, there was no documentary evidence of this and whilst I accept that there many have been some instances where Scott visited and it did not make it into the electronic diary, this would have been rare.

There were also occasions where they met up elsewhere, eg in Paris in April 2006; the short break at Eurodisney in June 2006.

They continued to spend the most time together on holiday at La Manga.

Simon met with his father in Brussels, both for meetings and had dinner together there. There were ten such occasions recorded in the electronic diary; I accept that there may have been a few additional occasions that were not recorded but, as with Scott, do not accept that there were further regular visits that neither Mr McCabe nor Ms Coppard recorded.

Simon was based at Carlos Place in London, and Mr McCabe’s diary shows he attended a large number of meetings there over the two years (almost one hundred). Both Mr McCabe’s and Simon’s evidence was that it was important to Mr McCabe (and Scott and Simon) that they join him for meetings as much as they were able, and given Simon’s proximity I infer this would have happened on lots of occasions. This indicates that Simon would have seen Mr McCabe in London more often than he saw him in Brussels over the two years.

They also met up elsewhere, including in Paris in April 2006.

He was able to meet up with friends whilst in Scarborough over Christmas in both years.

Many of their long-standing friends attended Mrs McCabe’s birthday party in April 2007.

Mr McCabe did play squash with friends on a few occasions in the UK (either in Scarborough or in London), although this was a substantial reduction in comparison to preceding years.

Mr McCabe attended key events including the launch event for the Lumiere project in Leeds in October 2006, the Player of the Year Dinner at SUFC in April 2007, the dinner celebrating the 150^th anniversary of the football club in November 2007, and the Creative Sheffield event in January 2008.

Mr McCabe’s attendance at Sheffield United matches is set out in the SoAF. It is clear from the diary that he was able to attend not only home matches but also various away games (including at Liverpool, Manchester City and Portsmouth).

There were a couple of headline events, both in the early weeks in Brussels, namely a reception to celebrate the opening of SRE’s offices, and a ServCorp party in June 2006

He would sometimes have lunch with Mr Vangoidsenhoven at weekends in Brussels, he met with Mr Gielbartowicz socially, having dinner with him and his family in November 2007.

He regularly had drinks and dinner engagements with friends and colleagues from the UK (including Mr Tandy, Mr Rockett, Mr Burnley and Mr Cameron).

In 2006-07 he bought the apartment at Ave Louise in Brussels – after the Relevant Period he sold this apartment and bought that at Franklin Roosevelt.

Following the transaction with Valad, he held redeemable loan notes in Valad as well as shares in the Australian parent company.

He handed over responsibility for Scarborough’s UK businesses, including to his sons, supported by the experienced real estate team in the UK led by Mr Tandy (Head of UK Property) and Mr McBride (Finance Director), and he appointed Mr Rockett as CEO of SUFC, who brought on board a senior management team at the football club.

He nevertheless retained responsibilities as owner of the Scarborough Group.

“40.Between January 2006 and 4 April 2006, Mr McCabe reduced his UK directorships from 184 to 35, and was appointed to 4 other UK directorships during this time resulting in 39 UK directorships on 4 April 2006.

From 5 April 2006 to 5 April 2007 Mr McCabe resigned a further 14 UK directorships, leaving 25 as at the latter date.

Mr McCabe held the following directorships throughout the two tax years ended 5 April 2008:

• Scarborough Property Group (appointed 31/07/1991)

• SPC Group Ltd (appointed 04/11/1991)

• Scarborough Property Inv. Co. (appointed 01/12/1994)

• Sheffield United Plc (appointed 21/11/1998)

• Scarborough Property Company Ltd (appointed 30/10/2001)

• Scarborough Group Holdings Ltd (appointed 01/12/2005)

• Le Leman International (Yuhang) Ltd (Hong Kong) (appointed 08/12/2005)

• SIL Ltd (Hong Kong) (appointed 08/12/2005)

• Scarborough Group Ltd (appointed 02/03/2006)

Scarborough Group Ltd and Scarborough Group Holdings Ltd were formed as part of a group restructuring in February 2005 in which they became respectively the new parent company of the Scarborough Group and the immediate subsidiary of the new parent.

Following its acquisition of the entire share capital of Scarborough Group Ltd on 13 May 2007, Mr McCabe was appointed a director of Scarborough Group International Ltd on 12 September 2007.

Subsequent to his move to Brussels, Mr McCabe was appointed as a director of the following companies:

• Scarborough Realty (Europe) SPRL (Belgium) (appointed 05/04/06)

• Valad Commercial Management Ltd (Australia) (appointed 25/07/2007, resigned 30/11/2009)

• Valad Funds Management Ltd (Australia) (appointed 25/07/2007, resigned 30/11/2009)

• Mariners Blades Developments Pty Ltd (Australia) (appointed 05/03/2008)”

“39.According to the entries in Mr McCabe’s diaries, he attended Board Meetings as below:

• During the 2005/06 tax year, prior to travelling to Brussels on 4 April 2006, Mr McCabe attended 56 board meetings of which 52 were in the UK.

• During the 2006/07 tax year, Mr McCabe attended 42 board meetings of which 9 were in the UK.

• During the 2007/08 tax year, Mr McCabe attended a total of 56 board meetings of which 15 were in the UK.”

Teesland – In addition to attending 12 board meetings, Mr McCabe regularly met with Ms Wilson. He met with Mr Burnley in relation to various UK projects, including in Brussels and Frankfurt.

Valad transaction - Mr McCabe flew to Australia on 16 September 2006 and had meetings with Mr Salwin of UBS who introduced him to Mr Day of Valad. This introduction to Valad led into discussions and then negotiations which resulted in the sale of a major portion of Scarborough’s business (including the European business and part of the UK business) to Valad in July 2007 for an enterprise value of AUD2 billion, a transaction which had been unexpected, and the consideration for which included shares and loan notes in Valad. The transaction is described at [45] to [48] of the SoAF, and Mr McCabe was appointed as an independent non-executive director of two companies in the Valad group. His duties included “to oversee management on behalf of Valad, to monitor Valad’s business results and to set goals and formulate strategy”, ie it was not UK or Europe specific:

SUFC – Mr McCabe attended 18 board meetings of SUplc and board meetings of SUFC. On occasions when Mr McCabe was watching a Sheffield United match he would generally meet briefly with Mr Rockett or Mr Robinson and the team manager beforehand. Mr McCabe participated in many of the key meetings in relation to the Tevez affair. The Tevez affair was undoubtedly extraordinary, and Mr McCabe’s evidence was that these events meant he needed to spend more time in the UK than could have been anticipated. Whilst I find that he was heavily involved in the strategy meetings, and attended meetings with legal advisers, there was no noticeable increase in Mr McCabe’s presence in the UK from May 2007 onwards (indeed this coincides with the months he spent the least amount of time in the UK).

Non-UK football clubs – Mr McCabe met with various non-UK clubs, usually in their “home” jurisdiction:

Forsyth – Mr McCabe attended board meetings and met with Ms Gwillim-David. Some meetings were in the UK, others in Brussels.

FairBriar – Mr McCabe attended management meetings as well as nine board meetings, and he met with legal advisers in relation to the High Court case against the former director.

Thorpe Park – This was the development in Leeds, and Mr McCabe attended meetings in relation to this project with Mr Burnley and Mr Gilman in Paris, and had meetings in Brussels as well as in the UK.

Lumiere – This was another project in Leeds, and Mr McCabe attended meetings with Mr Burnley and KW Linfoot (the joint developer) whilst in La Manga, and the launch event in the UK the following month.

BoS – This was a key relationship for Mr McCabe, and he regularly met with Mrs Robertson. Most of those meetings were in the UK, but she did also visit him in Brussels.

He became managing director of Forsyth, which had previously been led by his father.

He took a more active role in relation to SUFC – he liaised with academy management, worked with budgets and contract management. He had regular meetings with the CEO and senior management, represented the club in negotiating headline commercial and sponsorship deals, attended matches, and represented the club at events.

His father would previously have been first port of call for any business issues. After the move, he and Simon instead worked with and learned from the experienced teams Mr McCabe had built up.

Simon took on full responsibility for the UK investment portfolios, and more responsibility (along with senior colleagues) for the development division in the UK. He also had responsibility for the teams within each division. This was previously managed by Mr McCabe.

Simon also met with BoS on UK projects, working alongside Mr di Ciacca, and took over the relationships that Mr McCabe previously had, meeting with Mrs Robertson, Laura Milligan, Isobel Stevenson and others.

Simon took on responsibility for certain matters in relation to SUFC, including the Tevez affair where he was responsible for managing the proceedings, including instructing legal advisers. He met with counsel and the various witnesses, and co-ordinated the preparation of financial submissions by Mr Capper. He discussed these matters regularly with Mr McCabe. He conducted interviews for the new team manager.

Mr McCabe was no longer as readily available as the voice of experience. Simon relied on the team of experienced senior personnel, including Mr Burnley and Mr Tandy.

There was a significant increase in the number of directorships held by Scott and Simon after 5 April 2006, increasing from 9 to 47 and from 13 to 116 respectively.

There was no documentary evidence of additional executive responsibilities having been handed over to Scott and/or Simon ahead of Mr McCabe’s relocation to Brussels. I recognise that this is no more than neutral in the context of a family-owned company.

There were occasional strategy meetings between Mr McCabe and his sons (eg a meeting in Paris in April 2006).

Scott had been appointed as director of Forsyth in 2001 and had been managing director of the company for a couple of years before the Relevant Period. Forsyth represents a small portion of the Scarborough Group’s turnover, but it is an intensive business; Scott was visiting the various venues throughout the UK.

Simon was in regular dialogue with the (non-family) senior management team. His father was not present at all of the meetings which Simon attended with them, and Simon increasingly took on the responsibility for the “meet and greet” of sponsors and visiting directors at Sheffield United games. Simon was closely involved in some aspects of the disputes arising out of the Tevez affair. Once Mr Tandy and Mr McBride transferred to Valad (in August 2007), Simon was one of the main contacts for construction projects in the UK (eg for Mr Burnley).

“[43] In Revenue and Customs Comrs v Grace [2008] EWHC 2708 (Ch), [2009] STC 213 (at [3]), Lewison J summarised the relevant legal principles to be derived from earlier cases, which were largely agreed between counsel for the parties in that case. Although a number of propositions deal specifically with whether a person is ‘ordinarily resident’, rather than ‘resident’, it is I think nonetheless helpful to set out the summary in full:

‘i) The word “reside” is a familiar English word which means “to dwell permanently or for a considerable time, to have one’s settled or usual abode, to live in or at a particular place”: Levene v IRC (1928) 13 TC 486 at 505, [1928] AC 217 at 222. This is the definition taken from the Oxford English Dictionary in 1928, and is still the definition in the current online edition;

ii) Physical presence in a particular place does not necessarily amount to residence in that place where, for example, a person’s physical presence there is no more than a stop-gap measure: Goodwin v Curtis (Inspector of Taxes) [1998] STC 475 at 480, 70 TC 478 at 510;

iii) In considering whether a person’s presence in a particular place amounts to residence there, one must consider the amount of time that he spends in that place, the nature of his presence there and his connection with that place: IRC v Zorab (1926) 11 TC 289 at 291;

iv) Residence in a place connotes some degree of permanence, some degree of continuity or some expectation of continuity: Fox v Stirk; Ricketts v Registration Officer for the City of Cambridge [1970] 3 All ER 7 at 13, [1970] 2 QB 463 at 477; Goodwin v Curtis (Inspector of Taxes) [1998] STC 475 at 481, 70 TC 478 at 510;

v) However, short but regular periods of physical presence may amount to residence, especially if they stem from performance of a continuous obligation (such as business obligations) and the sequence of visits excludes the elements of chance and of occasion: Lysaght v IRC (1928) 13 TC 511 at 529, [1928] AC 234 at 245;

vi) Although a person can have only one domicile at a time, he may simultaneously reside in more than one place, or in more than one country: Levene v IRC (1928) 13 TC 486 at 505, [1928] AC 217 at 223;

vii) “Ordinarily resident” refers to a person’s abode in a particular place or country which he has adopted voluntarily and for settled purposes as part of the regular order of his life, whether of short or long duration: Shah v Barnet London BC [1983] 1 All ER 226 at 235, [1983] 2 AC 309 at 343;

viii) Just as a person may be resident in two countries at the same time, he may be ordinarily resident in two countries at the same time: Re Norris, ex p Reynolds (1888) 5 Morr 111, 4 TLR 452; Shah v Barnet London BC [1983] 1 All ER 226 at 235, [1983] 2 AC 309 at 342;

ix) It is wrong to conduct a search for the place where a person has his permanent base or centre adopted for general purposes; or, in other words to look for his “real home”: Shah v Barnet London Borough Council [1983] 1 All ER 226 at 236 and 239, [1983] 2 AC 309, 345 and 348;

x) There are only two respects in which a person’s state of mind is relevant in determining ordinary residence. First, the residence must be voluntarily adopted; and second, there must be a degree of settled purpose: Shah v Barnet London BC [1983] 1 All ER 226 at 235, [1983] 2 AC 309 at 344;

xi) Although residence must be voluntarily adopted, a residence dictated by the exigencies of business will count as voluntary residence: Lysaght v IRC (1928) 13 TC 511 at 535, [1928] AC 234 at 248;

xii) The purpose, while settled, may be for a limited period; and the relevant purposes may include education, business or profession as well as a love of a place: Shah v Barnet London BC [1983] 1 All ER 226 at 235, [1983] 2 AC 309 at 344;

xiii) Where a person has had his sole residence in the United Kingdom he is unlikely to be held to have ceased to reside in the United Kingdom (or to have “left” the United Kingdom) unless there has been a definite break in his pattern of life: IRC v Combe (1932) 17 TC 405 at 411.’

[44] The propositions in sub-paras (i)–(vi) and (xiii) are concerned with ‘residence’, while the remaining sub-paragraphs are concerned with whether a person is ‘ordinarily resident’. This summary was cited with approval on appeal: see Revenue and Customs Comrs v Grace [2009] EWCA Civ 1082, [2009] STC 2707 (at [6]).”

“As Lloyd LJ said in Grace at [18],… the enquiry which the FTT had to undertake involved assessing the duration of Mr Glyn’s presence in the UK and the regularity and frequency of his visits, the nature of the visits and his connection with this country. The reasons for those visits are, in my judgment, relevant but what is irrelevant is whether they demonstrated any settled purpose.”

“Of course it is perfectly right to say that a man has not got to have a residence in the shape of a building to be resident in this country. That is quite clear. But I think that one has to consider not only the time that he is in this country but the nature of his visit and his connection with the country.”

“This gentleman seems to be a mere traveller. That is how the Commissioners have looked at it and I think they are entitled to look at it in that way without going wrong in law. He is a native of India, he has retired from his work there and he really travels in Europe. All that can be said about it is that in the course of his habitual travels he spends a considerable period every year in England. That is really all that can be said about it and I cannot see that the Commissioners were bound under those circumstances.”

“When in England the Appellant generally stays at the Spa Hotel, Bath, at which the meetings of the directors of the Company are held. Occasionally he has stayed at his brother's house at Chepstow. These visits to England are solely for business purposes, and the Appellant's wife never accompanies him on these visits. He owns a field of about three acres near Burnham, purchased many years ago, which he is anxious to sell. He has a few relatives and many friends in England. He has also relatives and friends abroad.”

“I think one must simply consider him as a gentleman who, one now knows, (whatever his past) has his residence in Ireland, and just comes over here. Secondly one must remember -and it is rather a hard thing to bear in mind, because it qualifies one's natural ideas in connection with the word "residence" - that one must not look for an establishment. As the Lord President pointed out, a tramp has a ''residence'' in this country. One must not look for an establishment. If a man chooses to live at hotels instead of in his own house, or even to stay with friends, it really does not affect the question of residence. What I really have to decide in this case, and what the Commissioners had to decide - and I have to see whether they were wrong-is whether or not he was a mere visitor.”

Viscount Sumner said that property is not a conclusive test – whether Mr Lysaght resides in his own or in a hired house in Ireland cannot have much to do with it, nor is a person precluded from being resident because he puts up at hotels, and not always the same hotel, and never for long together. Keeping up an establishment abroad and none in the UK is not incompatible with being resident here if there is other sufficient evidence of it. He noted that it was the shortness of the aggregate time during which here was here that constituted the principal, though not the only, point in his favour; but the question of a longer or shorter time is one for the Commissioners; their decision cannot be interfered with.

Lord Buckmaster, with whom Lord Atkinson agreed, said that a man might well be compelled to reside here against his will; the exigencies of business often forbid the choice of residence “and though a man may make his home elsewhere and stay in this country only because business compels him, yet none the less, if the periods for which and the conditions under which he stays are such that they may be regarded as constituting residence”, it is open to the Commissioners to find that in fact he does so reside.

Lord Warrington said that the “most material fact” in favour of a finding of non-residence was that Mr Lysaght had a permanent family home in Ireland. His visits to the UK were for business purposes; they were frequent and regular. He concluded that he could not say there was no evidence on which the Commissioners could properly arrive at their conclusion, but was not sure that he should have taken the same view.

Viscount Sumner said “What he actually did was to come back to England after an absence of about seven months, and he remained for nearly five. In the meantime he had not set up an establishment abroad but had lived in hotels…”.

Lord Warrington described the pattern of Mr Levene’s movements, and noted that in no year of assessment did their stay in the UK extend to six calendar months, and that while abroad and in England they lived in hotels.

Viscount Cave LC described the position of a wanderer as the most difficult case; noting that the question is then one of fact and degree.

In referring to a “distinct break” Nicholls J, as he acknowledged at p 14F, was adopting a phrase first used in this context in the decision of the Court of Session in Inland Revenue Comrs v Combe (1932) 17 TC 405. Until 1926 Captain Combe was resident and ordinarily resident in the UK. Then he went to New York to work as a broker for a firm on Wall Street. The objective was that he should become its European representative and, in furtherance of it, he returned to the UK, staying in hotels, for 52 days, 175 days and 181 days during each of the following three years. In upholding the conclusion that he was not liable to tax as a UK resident for those years the court proceeded straight to the statutory provision (which then remained in General Rule 3) and concluded that the captain had not left the UK for the purpose only of occasional residence abroad. It was implicit in its conclusion that he had left the UK in the sense of becoming non-resident in it. When, therefore, Lord Sands observed, at p 411, that “there was a distinct break” in what he described as the captain’s “residence” in the UK, it was with a view to explaining his conclusion that the captain’s residence abroad had been more than occasional….”

“The distinct break relates to the pattern of the taxpayer’s life in the UK and no doubt it encompasses a substantial loosening of social and family ties; but the allowance, to which I will refer, of limited visits to the UK on the part of the taxpayer who has become non-resident, clearly foreshadows their continued existence in a loosened form.”

Mr McCabe spent a limited number of nights in the UK – 33 in the first year, 43 in the second. This fact alone does not give an accurate picture of the amount of time he spent in the UK, as he was present in the UK for 79 days or part days in the first year and 95 in the second.

He made 98 visits to the UK throughout the Relevant Period, 53 of which did not involve an overnight stay.

Whilst Mr and Mrs McCabe spent most of their time together outside of the UK (primarily at La Manga, but also on short holidays and longer business trips, and when Mrs McCabe visited Brussels), Mr McCabe did return to the UK and spend time with his wife in the UK, in Scarborough (particularly over Christmas, and where he was a welcome visitor at Deepdale), in Sheffield watching football and attending key social events (such as the Player of the Year dinner) and in London.

He saw both Scott and Simon in the UK, both as family members and in business meetings. They spent most of their time together at La Manga, but it had been the pattern before the Relevant Period that La Manga was a place where the family spent social time together, since Scott and Simon no longer lived at Deepdale.

I accept that Mr McCabe’s relationships with long-standing friends changed following 4 April 2006. He was, quite simply, able to see some less frequently, and lost touch with others.

However, Mr McCabe was still able to attend a large number of Sheffield United matches, both home and away, and as well as offering enjoyment (or disappointment) of the games themselves, they also provided opportunities to meet with friends or family, and to have brief catch-ups with the manager and Mr Rockett.

Looking at the business:

Mr McCabe retained accommodation throughout in Brussels – Whilst HMRC did not accept that this was Mr McCabe’s “home” for the purposes of the common law test of residence (as opposed to it being a “permanent home” for the purposes of the DTC), I accept that the accommodation Mr McCabe chose met his needs, and he moved when he was not satisfied (which can be seen from both the move from the Marriott to the Meridien apartments and then his decision to sell Ave Louise). Mrs McCabe visited him and stayed there with him, as did friends (eg Ian Cameron).

He had a permanent office in Brussels, at which not only did he do his own work (whether of reading briefings, research, or strategizing) but also held meetings - with Mr Vangoidsenhoven and others based outside of the UK, and also with colleagues and contacts who travelled from the UK to meet with him (including Mr Tandy and Mr Burnley).

Friends and family from the UK visited Mr McCabe in Brussels; and he attended some social events locally and he had local gym membership.

Mr McCabe spent regular time in Brussels (whether that be measured by reference to nights or using a part-days methodology). This was not just time at weekends, or in the evenings – Mr McCabe spent 134 part weekdays in Brussels in the first year, and 96 in the second (compared to 44 and 63 respectively in the UK).

Mr McCabe pursued various non-UK projects – with football clubs (including Royal White Star FC, Anderlecht FC and Ferencvaros FC), a retail JV with Cortefiel in Madrid, a building scheme in Malaga, serviced apartments in Paris, developments in Shanghai and Shenzhen, and looking at the recovery of distressed assets in the US.

Mr McCabe travelled extensively on business – trips to Australia were necessarily longer, but there were short trips (sometimes just for one night) to, eg, Amsterdam, Germany, and Hungary.

[31] and [32] of the SoAF record the number of engagements in Mr McCabe’s diary during the period, and the significant majority of these were outside the UK. Whilst there are some individuals whom Mr McCabe met on the majority of occasions in the UK (eg Ms MacCagnan and Dr Quek), there are others where the reverse was true, eg Mr Salwin.

[39] of the SoAF records the board meetings attended by Mr McCabe, and 74 out of 98 were outside of the UK.

Mr McCabe was working with people in the UK.

There were fewer face-to-face meetings in Brussels compared to those on days he was in London.

The meetings that were held whilst Mr McCabe was physically present in Brussels had nothing to do with Belgium (with the exception of a few inspections of potential properties in the first few months, particularly in July and October 2006) - these meetings could have been held anywhere in Europe.

Even in Brussels some of his meetings related to UK businesses (eg Thorpe Park and SUplc/SUFC board meetings).

When Valad bought SCP and the UK businesses, Mr Hurley relocated to London, showing that Valad did not consider it necessary to run this business from Brussels.

I agree that Mr McCabe’s diary was fuller (with more pre-planned business and family or social engagements) on days that he was in London compared to days he was in Brussels. I also accept Mr McCabe’s evidence that this does not mean he was not busy working whilst in Brussels.

Mr Stone’s submissions included that Mr McCabe could have run the business from, eg, London, Amsterdam (where Teesland/iOG had a physical presence) or Paris (which was a hub for long-haul flights unlike Brussels). I do not consider that the possibility of any of these alternative options is relevant to the assessment of whether or not Mr McCabe remained resident in the UK. Instead, I focus on the actions he did and did not take.

I conclude that the tax advice Mr McCabe obtained from Mazars and Mr Way was the main reason for some of his actions taken, including:

the amount of time Mr McCabe was physically present in the UK during the Relevant Period (referring here to actual time spent, and looking at this in the context of the number of nights and the brevity of individual visits); and

the extent of his overseas activities - I accept that Mr McCabe did establish himself in Brussels during this time, maintaining a home and office there; and the importance of time spent at La Manga for family and social relationships.

The totality of his ongoing business relationships with and within the UK – his attendance at meetings and board meetings of key UK companies, including Teesland plc and SUplc, his involvement in UK projects, his maintaining of key business contacts in the UK, eg Mrs Robertson and Dr Quek.

The ongoing importance of “headline” roles in respect of the business of the Scarborough Group, eg remaining Chairman of SUplc and a key public face of the football club, being seen to lead the response to the Tevez affair, and also his involvement in regeneration projects which were important to his connection to Sheffield.

Mr McCabe continued to spend time with his family – with the whole family across the Christmas periods, birthdays, catching up with his sons, spending time with Mrs McCabe and/or his sons at football matches. These occasions were fewer than in previous years, but not an insignificant amount of time.

The frequency of his attendance at Sheffield United matches – again, it is clear from the SoAF that he attended fewer matches, but he did attend both home and away matches, met with directors of their opponent, and some were social occasions with, eg, Mr Cameron.

Whilst Mr McCabe’s visits to the UK were generally fairly short, and usually involved no more than two nights in the UK (other than at Christmas and for Scott’s wedding), they were frequent and, having regard to his activities in the UK (both business, family and social), productive. His physical presence was by no means a stop-gap measure – it was time he used efficiently and well to do activities in the UK that were important and of value to him. That is an important quality of his presence in the UK.

Even before the Relevant Period, Mr McCabe travelled regularly on business, and was accustomed to spending significant amounts of family and social time at La Manga. This was particularly important as regards his non-working time spent with Scott and Simon.

4 October 2006 - by this point, Mr McCabe had been physically absent from the UK for six months, apart from the visit on 30 April, had firmly established himself in Brussels and already started to develop the European business.

31 January 2007 - by this point, Mr McCabe was in discussions with Valad about the disposal of part of the UK business of the Scarborough Group and its European business. He had also further established himself in Brussels by purchasing and moving into the apartment on Ave Louise.

1 August 2007 - by this date, Mr McCabe had sold his interests in Scarborough Property Holdings Limited, Scamp Holdings Limited (which included its interest in SCP), Teesland plc and Scarborough Development Group to Valad. Those interests amounted by value to the greater part of his interest in the Scarborough Group, and on 25 July 2007 he was appointed as a non-executive director of Valad Commercial Management Limited and Valad Funds Management Limited, two Australian companies (with effect from 1 August 2007).

30 September 2007 – the financial statements for SCP and Teesland plc for the periods ended on this date show the significance of the European business.

3 April 2008 – Mr McCabe gifted the remainder of his ordinary shares in Scarborough Group to his sons in equal shares. This gift resulted in him divesting himself of the remainder of his financial interest in the Scarborough Group.

It is clear from the authorities that an absence from the UK of several months is not itself sufficient. The difficulty which Ms Shaw faces on the facts, and which I have concluded is not surmounted, is that during the six months from 4 April to 4 October 2006 (and leaving aside the return to the UK on 30 April 2006, which does not and should not dictate the conclusion), Mr McCabe retained some of his connections to the UK throughout whilst not physically present in the UK (eg attending board meetings of several of the UK companies, both in Brussels and Paris), and was continuing to hold meetings in relation to UK developments (eg Lumiere in Leeds). After six months, Mr McCabe returned to the UK and the pattern of his life continued, albeit with him spending time in Brussels as well as the UK, Spain and elsewhere. Mr McCabe’s physical absence from the UK was a consequence of the tax advice which he had received, and was treated by him as a hurdle to overcome. He did remain absent for the time advised, but when viewed in the context of all the surrounding facts which I have relied on above, but I am not satisfied that Mr McCabe had made a sufficient loosening of ties by this date.

I had accepted that Mr McCabe had found for himself suitable accommodation in Brussels, ie have not counted the use of serviced apartments in Brussels as a factor against non-UK residence. Similarly, I do not consider that the purchase of Ave Louise changes matters.

The transaction with Valad had a clear impact on Mr McCabe’s non-UK travel during the Relevant Period, it being the explanation for the visits to Australia. However, the fact of that transaction, and its effects on the shape of the Scarborough Group, did not otherwise have a material effect on the factors which I consider support the conclusion that he remained UK resident. Mr McCabe did, in consequence of this transaction, acquire assets which were investments in a non-UK group and additional directorships in non-UK companies; but this does not detract from the strength and extent of his UK connections. The fact of the transaction with Valad did not result in an overall reduction in Mr McCabe’s physical presence in the UK.

I had accepted (and HMRC had not challenged) Mr McCabe’s efforts to grow the European business, the results of which are shown in the financial statements.

The gift of shares in the Scarborough Group to Scott and Simon was a substantial transaction, and had a material impact on Mr McCabe’s wealth. However, bearing in mind that the burden of proof is on Mr McCabe, I do not have sufficient evidence to accept that there was a distinct break or sufficient loosening of ties at this point. There was minimal evidence of Mr McCabe’s presence, actions and relationships after this date (largely confined to nights in the UK and visits in the UK as recorded in his tax returns).

The Article gives preference to the Contracting State in which the individual has a permanent home available to him. This criterion will frequently be sufficient to solve the conflict, e.g. where the individual has a permanent home in one Contracting State and has only made a stay of some length in the other Contracting State.

Sub-paragraph a) means, therefore, that in the application of the Convention (that is, where there is a conflict between the laws of the two States) it is considered that the residence is that place where the individual owns or possesses a home; this home must be permanent, that is to say, the individual must have arranged and retained it for his permanent use as opposed to staying at a particular place under such conditions that it is evident that the stay is intended to be of short duration.

As regards the concept of home, it should be observed that any form of home may be taken into account (house of apartment belonging to or rented by the individual, rented furnished room). But the permanence of the home is essential; this means that the individual has arranged to have the dwelling available to him at all times continuously, and not occasionally for the purpose of a stay which, owing to the reasons for it, is necessarily of short duration (travel for pleasure, business travel, educational travel, attending a course at a school, etc.).”

“For instance, a house owned by an individual cannot be considered to be available to that individual during a period when the house has been rented out and effectively handed over to an unrelated party so that the individual no longer has the possession of the house and the possibility to stay there.”

“The OECD Commentaries are updated from time to time, so that they may (and do in the present case) post-date a particular double taxation treaty. Nonetheless they are to be given such persuasive force as aids to interpretation as the cogency of their reasoning deserves…”

I recognise that Deepdale was owned solely by Mrs McCabe throughout the Relevant Period and Mr McCabe did not have any legal ownership interest in the house. However, that had been the case since June 2004 and Mr McCabe had continued to live there from then until 4 April 2006.

Mr McCabe was a welcome visitor at Deepdale whenever he was in Scarborough. Deepdale was available to him to use, and he did use it throughout the Relevant Period.

Mrs McCabe would have given him permission to stay overnight whenever he wanted, and for as long as he wanted. The only reason he did not do so was that he had been advised not to for tax purposes.

Given the purposes of the DTC, I do not consider that I should place any weight on the artificial step of handing over his set of keys to Mrs McCabe when considering whether the house was available to Mr McCabe.

If the individual has a permanent home in both Contracting States, it is necessary to look at the facts in order to ascertain with which of the two States his personal and economic relations are closer. Thus, regard will be had to his family and social relations, his occupations, his political, cultural or other activities, his place of business, the place from which he administers his property, etc. The circumstances must be examined as a whole, but it is nevertheless obvious that considerations based on the personal acts of the individual must receive special attention. If a person who has a home in one State sets up a second in the other State while retaining the first, the fact that he retains the first in the environment where he has always lived, where he has worked, and where he has his family and possessions, can, together with other elements, go to demonstrate that he has retained his centre of vital interests in the first State.”

Mr McCabe’s establishment of an office there, from which he worked on his own, attended meetings in person and by video conference;

His only employment income until August 2007 was from SRE, a Belgian company, and even in August 2007 it was supplemented not by employment income from UK companies but from an Australian company (and thus I take not account for the purposes of assessing his COVI).

He explored potential business property opportunities in Belgium, albeit decided not to pursue them as they did not make good business sense, concluding that the market was too stagnant;

Mr McCabe bought the apartment at Ave Louise in 2007;

Mr McCabe attended social events in Brussels, long-standing friends visited him there (Mr Cameron socially, Mr Burnley for a combination of business/social), and he started to develop new friendships during this time (including with Mr Vangoidsenhoven); and

Mr McCabe spent some time with Mrs McCabe, Scott and Simon in Brussels when they visited him there.

Mr McCabe spent time in the UK with family and with long-standing friends – in Scarborough at Christmas and at other times during the year, in Sheffield watching football and attending social events including the Player of the Year dinner, at away matches elsewhere in the UK (including Manchester and Liverpool) and in London (including at Mrs McCabe’s birthday party which Simon had organised);

He attended a significant number of Sheffield United matches in the UK, which were important to him as a fan as well as a means of spending time with friends and family.

Mr McCabe was the controlling shareholder of the Scarborough Group, and was a director of the holding companies and key subsidiaries within the group.

Mr McCabe conducted a substantial amount of business for the various parts of the Scarborough Group in the UK – this included board meetings and relationship meetings, his involvement in UK projects including in Leeds and re-generation projects in Sheffield.

Whilst Mr McCabe’s employment income was from SRE, all of SRE’s income was from UK companies within the Scarborough Group.

In the first situation, the case where the individual has a permanent home available to him in both States, the fact of having an habitual abode in one State rather than in the other appears therefore as the circumstance which, in case of doubt as to where the individual has his centre of vital interests, tips the balance towards the State where he stays more frequently. For this purpose regard must be had to stays made by the individual not only at the permanent home in the State in question but also at any other place in the same State.”

The application of the criterion provided for in subparagraph b) requires a determination of whether the individual lived habitually, in the sense of being customarily or usually present, in one of the two States but not in the other during a given period; the test will not be satisfied by simply determining in which of the two Contracting States the individual has spent more days during that period. The phrase “séjourne de façon habituelle”, which is used in the French version of subparagraph b), provides a useful insight as to the meaning of “habitual abode”, a notion that refers to the frequency, duration and regularity of stays that are part of the settled routine of an individual’s life and are therefore more than transient. As recognised in subparagraph c), it is possible for an individual to have an habitual abode in the two States, which would be the case if the individual was customarily or usually present in each State during the relevant period, regardless of the fact that he spent more days in one State than in the other. Assume, for instance, that over a period of five years, an individual owns a house in both States A and B but the facts do not allow the determination of the State in which the individual’s centre of vital interests is situated. The individual works in State A where he habitually lives but returns to State B two days a month and once a year for a three-week holiday. In that case, the individual will have an habitual abode in State A but not in State B. Assume, however, that over the same period of five years, the individual works short periods of time in State A, where he returns 15 times a year for stays of two weeks each time, but is present in State B the rest of the time (assume also that the facts of the case do not allow the determination of the State in which the individual’s centre of vital interests is situated). In that case, the individual will have an habitual abode in both State A and State B.”

I do not accept Mr Stone’s submission that the test is not comparative; it is plainly comparative, albeit that it is clear from the final limb of the tie-breaker and the 2017 Commentary, and illustrated by the decision in Hankinson v HMRC [2009] UKFTT 384 (TC), that an individual can have a habitual abode in both states.

I agree with Ms Shaw that the references to where an individual “stays” makes it clear that for this limb of the tie-breaker I should not only be looking for physical presence in a state but also placing weight on where Mr McCabe spent his nights. This is emphasised by [19] of the 2017 Commentary, with its explanation that the notion of a habitual abode refers to the frequency, duration and regularity of stays that are part of the settled routine of an individual’s life and are therefore more than transient.

I have made findings as to Mr McCabe’s whereabouts during the Relevant Period, and described his travel pattern throughout this time. I have no hesitation in concluding that he had a habitual abode in Belgium – Mr McCabe spent 129 nights in Brussels in 2006-07 and 98 the following year; of the 85 occasions he was in Brussels, only two did not involve an overnight stay; the pattern of his travel is such that it was Brussels to where he was returning after his many overseas visits. His presence there was more than transient; he was customarily or usually present there.

This is not the case for the UK. When reaching this conclusion, I take account of all of the facts in relation to Mr McCabe’s physical presence in the UK (including the number of visits to the UK and days or part days in the UK) but pay particular regard to the limited number of nights spent in the UK (33 in 2006-07 and 43 the following year), and that the visits to the UK were generally for just one or two nights. The visits were frequent, but short and irregular. On balance, I conclude that he was not customarily present in the UK and did not have a habitual abode in the UK.

• on 16 and 17 February 2006 with Mrs McCabe when he viewed potential temporary living accommodation at The Golden Tulip Residence Parnasse and Marriott Executive Apartments;

• on 22 February 2006 when he viewed potential office accommodation including that at Bastion Tower where he established an office; and

• on 1 and 2 March 2006 when he stayed overnight at the Marriott Apartments where he lived for over three months from 4 April 2006.

a) He engaged the services of Serge Gielbartowicz, a Brussels resident, of FECAM SPRL, Clos de la petite Suisse, 1 – B-1140 Evere, as a driver. FECAM SPRL, which provided the services of Mr Gielbartowicz and the car he drove, was initially engaged from 4 April 2006 through the Marriot Executive Apartments for Mr McCabe and then directly by Mr McCabe from 1 May 2006. The monthly invoices for Mr Gielbartowicz’s services averaged over €5,000.

b) He registered with Dr Zeiger, a local medical practitioner, of 26 Bd Maria Groeninckx de May, 1070 Brussels on 27 July 2006.

c) He registered with Dr Woitchik, a local dentist, of Avenue George Bergmann 113, 1050 Brussels on 27 July 2006.

d) He ceased to use and/or closed, as noted, the following UK bank and credit card accounts:

• Barclays account 8934 – closed 3 April 2006,

• Bank of Scotland account 5807 (joint) – account transferred into sole name of spouse 6 April 2006,

• Barclays account 9973 – closed 14 July 2006,

• American Express account 3742 895464 – closed 13 November 2006,

• Barclaycard account 4423 5000 (joint) – ceased to use 18 May 2006; spouse ceased to use December 2006; closed 1 March 2007,

• American Express account 3742 001017 – ceased to use May 2006; closed March 2007,

• Barclays account 4767 – closed 4 March 2008,

• Halifax PEP, share dealing account – no contributions made after 5 April 2006; closed 28 March 2008.

e) He did not close the following UK account:

• Halifax Cash ISA – no contributions made in the relevant years.

f) He opened the following accounts in Brussels:

• ING Euro Current account 310-1755565-48 – opened 8 May 2006,

• ING Euro Green savings account 375-4431914-63 – opened 8 May 2006,

• ING Credit card ref B/03-04916768-8 – opened 25 May 2006.

g) He terminated his Vodafone contract on 1 October 2006 and set up a Belgian phone from the Phone House on 22 June 2006.

• May to June 2006: Orthopaedic Surgeon Dr Louis Kinnen Chirec (Parc Leopold), Rue Froissart 38, 1040 Brussels for an injury to his elbow;

• 9 June 2006: dental treatment at Clinica Dentaria, Fietz & Fietz, Portugal;

• 13-15 June 2007: Emergency GP, Sydney Gateway Quayside Medical Centre, Circular Quay, Australia.

• During the 2004/05 tax year, Mr McCabe spent 254 midnights in the UK and 111 midnights outside the UK.

• During the 2005/06 tax year, prior to travelling to Brussels on 4 April 2006, Mr McCabe spent 276 midnights in the UK and 89 midnights outside the UK (3 of which were in Belgium).

• During the 2005/06 tax year, prior to travelling to Brussels on 4 April 2006, Mr McCabe attended 56 board meetings of which 52 were in the UK.

• During the 2006/07 tax year, Mr McCabe attended 42 board meetings of which 9 were in the UK.

• During the 2007/08 tax year, Mr McCabe attended a total of 56 board meetings of which 15 were in the UK.

• Scarborough Property Group (appointed 31/07/1991)

• SPC Group Ltd (appointed 04/11/1991)

• Scarborough Property Inv. Co. (appointed 01/12/1994)

• Sheffield United Plc (appointed 21/11/1998)

• Scarborough Property Company Ltd (appointed 30/10/2001)

• Scarborough Group Holdings Ltd (appointed 01/12/2005)

• Le Leman International (Yuhang) Ltd (Hong Kong) (appointed 08/12/2005)

• SIL Ltd (Hong Kong) (appointed 08/12/2005)

• Scarborough Group Ltd (appointed 02/03/2006)

• Scarborough Realty (Europe) SPRL (Belgium) (appointed 05/04/06)

• Valad Commercial Management Ltd (Australia) (appointed 25/07/2007, resigned 30/11/2009)

• Valad Funds Management Ltd (Australia) (appointed 25/07/2007, resigned 30/11/2009)

• Mariners Blades Developments Pty Ltd (Australia) (appointed 05/03/2008)

• The Far East €325,000

• Hungary €50,000

• India €25,000

• Australia €25,000

• Canada €25,000

• Europe (HBOS/Valad joint venture) €25,000.