Tax & Accounting News

Non-residence - change of test?

17/11/2006

A recent Special Commissioners decision could have far-reaching consequences for individuals who regularly visit the UK.

One of the tests to decide whether an individual is 'resident and ordinarily resident' in the UK is whether the number of days spent in the UK is over 90, on average, during a 4-year period. In arriving at the number of days, it has been the practice, up to now, as set out in the HM Revenue & Customs IR20 booklet, to exclude days of arrival and departure.

However, in the Robert Gaines-Cooper case, HM Revenue and Customs argued that this method produced a distorted result where there were many visits lasting only 2 days, and that an overnight visit should be counted as one day.

In a 3-year period, annual visits of 68, 35 and 48 days under the previous method became 105, 71 and 94 days under the new method, which the Special Commissioners stated they "preferred".

There were other factors which also led the Special Commissioners to decide that the individual was resident and ordinarily resident in the UK for the years in question, but clearly HM Revenue and Customs will seek to treat this as a precedent, and rewrite their guidance accordingly.

Individuals can therefore no longer rely on days of arrival and departure being excluded, and must therefore ensure that no more than 90 days are spent wholly or partly in the UK annually.

Please contact us for further information if you are a regular visitor to the UK and are concerned about this ruling.

 

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