LONDON: Stuart Gulliver, the HSBC chief executive, has failed in an attempt to stop the UK tax authorities from investigating how he has kept a tax domicile in Hong Kong since 1999, despite working in Britain for the past 13 years. The ruling from the Royal Courts of Justice this week — which rejected Mr Gulliver’s attempt to quash the probe by HM Revenue & Customs into his tax affairs — threatens to reopen the controversy over his non-domicile tax status.
The 58-year-old, who was born in Derby and educated in Oxford, acquired a tax domicile of choice in Hong Kong after he moved there with HSBC in 1980. This allowed him to keep his offshore income, including from a confidential Panama company, out of the British tax net. Judge Jonathan Richards ruled that “HMRC are, in principle, entitled to inquire into the question of whether Mr Gulliver acquired a domicile of choice in Hong Kong”. Mr Gulliver’s lawyer had argued that he did not need to answer all 123 questions or provide 33 categories of documents relating to his personal and professional life since 1981 — as requested by HMRC last October — because they were not relevant. His lawyer cited a letter sent to Mr Gulliver by HMRC in March 2003 confirming that he did not have to pay inheritance tax on a £273,677 transfer to a family trust the previous year because he was considered to be domiciled in Hong Kong for tax purposes.
The lawyer said this meant that HMRC was “stuck with” the consequences of that letter and could not re-examine the question of whether he was domiciled in Hong Kong. But HMRC dismissed the idea that it was “stuck with” the consequences of the letter and said it did not create a binding contract that stopped it from opening a fresh investigation into Mr Gulliver’s tax domicile for the 2013-2014 year, which it did on December 29 2015. The judge ruled in HMRC’s favour, while adding: “HMRC have not alleged any impropriety on Mr Gulliver’s part: their inquiry is limited to the factual question of whether he was domiciled in the UK for that tax year.”
The judge said he would not “express any view on whether information of which HMRC were not aware at the time they wrote the letter (for example the fact that he was previously married and divorced in 1998) was relevant to his domicile status in 2003”. But he pointed out that when Mr Gulliver was in contact with HMRC in 2002 about his return to the UK, he indicated it would be for a specific assignment of only two years, after which he would return to Hong Kong. But he has remained resident in the UK ever since, becoming chief executive in 2011. Mr Gulliver has lodged a separate appeal against HMRC’s notice requiring information and documents from him that he claims are not “reasonably required”, the judge said, adding that the HSBC chief could seek a judicial review of HMRC’s actions. HSBC said: “The hearing in question was an application for court guidance on a technical matter, being the effect of a tax ruling made at the time Mr Gulliver was posted to London in 2003.” HMRC declined to comment.
