One of the fundamental principles of UK capital gains tax is that individuals are only liable if they are either resident or ordinarily resident in the UK.
In this case, a married couple had traded in the UK, in partnership, as restaurant proprietors. They subsequently emigrated and left their son to look after the day-to-day management of the restaurant, whilst retaining financial control themselves. They sold the restaurant a year later and the Inland Revenue issued capital gains tax assessments. The taxpayers appealed against the assessments on the grounds that they were neither resident nor ordinarily resident in the UK and, therefore, not liable to UK capital gains tax.
The Special Commissioners rejected the taxpayers’ appeal, holding that CGT was payable by virtue of TCGA 1992, s10, on the grounds that they were trading in the UK through a UK branch or agency, through the son who was acting as their UK agent.