Mutual agreement disagreement: tax residence issues

Where you are resident for tax purposes is an important factor in deciding your tax liabilities.  It is, however, possible to be resident in more than one country at any given time.  (It’s also possible to be resident nowhere, but that’s another story for another day.)

Where this happens, any double taxation treaty between the two countries involved normally provides that you will be treated by both countries as tax-resident in only one of them.  Which country gets to ‘win’ residence status will be determined by rules set out in a ‘tie-breaker’ clause contained in the treaty – rules which may vary slightly from treaty to treaty.

Kevin McCabe was tax-resident in Belgium under Belgian domestic law.  That much does not seem to have been in dispute.  He asserted that he was not also resident in the UK; but that if he was, the application of the ‘tie-breaker’ clause in the UK/Belgium treaty placed him as resident only in Belgium.  In HMRC’s view, not only was Mr McCabe tax resident in the UK but the result of the ‘tie-breaker’ clause was that he was treated as resident only in the UK.

Mr McCabe had invoked his right to require HMRC and its Belgian counterpart to agree under the ‘mutual agreement procedure’ (‘MAP’) the result of applying the ‘tie-breaker’ clause to his circumstances; and the Belgian authorities had agreed with HMRC.

The matter came before the First-tier Tribunal [2019] UKFTT 317 (TC) and more recently, on appeal, the Upper Tribunal [2020] UKUT 266 (TCC).  But the Tribunals were not at this stage being asked to determine Mr McCabe’s residence status: the question was whether HMRC were obliged to disclose the contents of the discussions they had had with their Belgian counterparts in arriving at the MAP decision.

Curiously the most important practical matter to emerge from the case is the underlining of a point of general application that was not disputed by either side – namely that the outcome of any MAP is not binding on the taxpayer concerned.  Thus, despite the outcome of the MAP, Mr McCabe remained free, as the First-tier Tribunal put it, ‘to argue in FTT proceedings that the Belgian tax authorities and HMRC are wrong and that the tie-breaker provisions of the treaty result in him being resident in Belgium.’

Furthermore, as the Upper Tribunal said, in those proceedings ‘the issues which will fall to be determined … will be whether during the relevant periods Mr McCabe was resident and ordinarily resident in the UK; and if he was, whether he had a permanent home in the UK; whether his centre of vital interests was in the UK or Belgium, and the location of his habitual abode. ’  Crucially, the discussions between HMRC and the Belgian authorities would have no probative value in relation to those issues.  In layman’s terms, what HMRC had or hadn’t said to the Belgians in considering the issues many years later was simply irrelevant in the sense that it would not help a tribunal to determine the relevant facts.

Principally for that reason, the Upper Tribunal upheld the First-tier Tribunal ruling that it was not appropriate to make any direction that disclosure should be made.

For more information, please get in touch with your usual BKL contact or use our enquiry form.

This article has also been published in Tax Journal Issue 1506 and is available on the Tax Journal website.



Sam Inkersole

In 2022, Sam won the Taxation’s Rising Star award at the Taxation Awards in and was named in the Accountancy Age 35 Under 35.

Jon Wedge

While Jon’s client work focuses on the financial services sector, he also oversees the firm’s assurance service, as well as supporting the trainees following in his footsteps.


Elana joined us in 2017 as an ACA trainee, after graduating from Durham University where she had studied languages. She is now a manager in our assurance team.


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