A couple from Salford face a £600,000 tax bill after a tribunal found they were still UK residents despite moving to Portugal more than 10 years ago.
Stephen and Pauline Rumbelow left England after Mrs Rumbelow suffered a breakdown. The couple had hoped to spend their retirement in a villa they built for themselves in Silves, southern Portugal.
But a long-running dispute with HMRC [Rumbelow v commissioners for HMRC, TC03022] meant that they faced a tax bill of almost £600,000 (in income tax and capital gains tax) after a judge ruled that the UK farmhouse they owned remained "essentially a family home".
Stephen Rumbelow, who made his fortune in building and property development, was “deeply suspicious” of HMRC, the tribunal heard.
After briefly living in an unfurnished flat in Belgium the couple built themselves a mansion in Portugal. But their plans for a relaxing retirement were challenged when HMRC refused to accept that they were resident abroad in the tax years 2001-2005. HMRC charged the couple with retrospective tax demands.
The Rumbelows lived at Yew Tree Farm, Crowton, before moving abroad. In the tribunal they argued that they had intended to move permanently abroad when they boarded a Europe-bound train in April 2001.
They said they had only since returned to England as visitors to see friends and family – and never for more than the 90 days a year, the threshold then applied by HMRC for overseas residence.
When dismissing the couple's appeal, Judge Cannan noted Mr Rumbelow's "deep suspicion" of the tax authority and found that their departure had not marked "a distinct break" with the UK.
Although the couple protested that their intention to make their permanent home abroad "could not have been more distinct or clear", the judge said that Yew Tree Farm had "remained, essentially, a family home". The couple made frequent trips home.
Although there had been some "loosening" of their social and family bonds with Northwich it was not "substantial" enough to make them non-UK residents, the tribunal ruled.
The £600,000 figure is based on disputed income tax and capital gains tax from the years 2001 to 2005 for both Mr and Mrs Rumbelow.