Centre of vital interests tiebreaker test saves taxpayer over £10 million

25 May 2022

In Oppenheimer v HMRC [2022] UKFTT 122 (TC), the First-tier Tribunal (FTT) found that a businessman with personal and economic connections with South Africa and the UK was deemed treaty resident in South Africa, based on the centre of vital interests tiebreaker test contained in the UK/South Africa Double Tax Treaty.


Between 2010/11 and 2016/17, Jonathan Oppenheimer (the taxpayer) received c£20m from a family trust. HMRC issued closure notices and, for certain years, discovery assessments, to the taxpayer on the basis that he was treaty resident in the UK during the period in which he received the payments from the family trust. If he was deemed treaty resident in the UK, the trust money would be subject to UK income tax amounting to over £10m. If he was deemed treaty resident in South Africa, there would be no additional tax to pay.

The taxpayer appealed on the basis that under Article 4(2) (the 'tiebreaker' test) of the Double Taxation Relief (Taxes on Income) (South Africa) Order 2002 (SI 2002/3138), taxing rights belonged to South Africa because:

(i) that was the state with which his personal and economic relations were closer (his ‘centre of vital interests’) (Article 4(2)(a)); and 

(ii) if it was not possible to determine that question, as he had habitual abodes in both territories, then he should be treated as resident in the state of which he was a national and that was South Africa (his 'habitual abode') (Article 4(2)(c)).

FTT decision

The appeal was allowed.

The FTT had to determine the country with which the taxpayer's  personal and economic relations (centre of vital interests) were closer. If the centre of the taxpayer's vital interests could not be determined, the tiebreaker test would fall to be settled by whether the taxpayer had a habitual abode in South Africa. The burden of proof was on the taxpayer.

The FTT concluded that throughout the period in question, the taxpayer's personal and economic relations were closer to South Africa. In reaching this conclusion, the FTT looked at various factors, including the location of the taxpayer's wealth, his residential properties, his social ties, places of work and family ties, including his childrens' place of education.

In case the FTT was wrong on the centre of vital interest point, it also considered the question of habitual abode and decided that question in the taxpayer’s favour.


For high-net-worth individuals with ties to multiple jurisdictions, this decision provides helpful guidance on the types of factors that will be taken into account when applying the 'centre of vital interests' test. Specifically, the facts relevant to the centre of vital interests test were links that were 'more than temporary' to the respective jurisdictions and included family ties, residential properties available to the taxpayer, hobbies undertaken by the taxpayer and presence on the electoral roll. In cases of this nature, the ability to present persuasive evidence is crucial in establishing a taxpayer's ties to a particular jurisdiction.

The decision can be viewed here.

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