http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/LeavingOrComingIntoTheUK/DG_10026136
* if you're in the UK for 183 days or more in a tax year, you're a 'resident' for that year for tax purposes
* if you come to live in the UK permanently or to remain for three years or more you're resident from the date of arrival
* you're also treated as resident if you're in the UK for an average of 91 days or more in a tax year (worked out over a maximum of four consecutive tax years)
So over 91 days is fine (but always less than 183) as long as it's less than 91 days on average over up to 4 years.
I'm not even sure that that is still correct.
Below is an excerpt from PLC (legal database publisher) - it's part of a practice note on tax residency. The concerning bit following Gaines-Cooper is the re-invigoration of the residence available / general lifestyle factors the court can take into account, rather than slavishly looking only at days spent in the UK. Bottom line - I'd get specific advice on it if I were you!
:-
Residence and ordinary residence: definitions for UK tax purposes
Resource type: Practice note
Status: Maintained
Jurisdictions: England, Wales
This practice note covers the meaning of "residence" and "ordinary residence" of individuals in the context of UK taxation.
Gaines-Cooper v HMRC [2007] EWHC 2617 and R (on the application of Davies, James and Gaines-Cooper) v HM Revenue & Customs [2010] EWCA Civ 83
Mr Gaines-Cooper asserted that he had ceased to be resident, ordinarily resident and domiciled in England and had acquired residence and domicile status in the Seychelles. Although he always had homes and business interests overseas, including in the Seychelles, Mr Gaines-Cooper retained a house and business interests in England, and his wife and son lived here. He also spent a significant number of days in the UK, relative to the number of days he spent in the Seychelles and elsewhere.
The Special Commissioners decided that Mr Gaines-Cooper was resident, ordinarily resident and domiciled in the UK. He appealed to the High Court on the question of his domicile status (see Legal update, Internationally mobile businessman had not lost his domicile of origin (
www.practicallaw.com/5-379-0596)).
The High Court counted days of arrival and departure when assessing the ratio of days spent in the UK and elsewhere, in order to determine where Mr Gaines-Cooper spent most of his time. This was different to HMRC's stated practice in IR20, where (before 6 April 2008) days of arrival and departure were usually ignored. The High Court found that Mr Gaines-Cooper had not broken sufficient ties with the UK to demonstrate that he had established a domicile of choice in the Seychelles.
Mr Gaines-Cooper appealed the High Court's decision in relation to his domicile status. However, the Court of Appeal refused leave to appeal the High Court's decision (see, Gaines-Cooper v Revenue and Customs [2008] EWCA Civ 1502 (23 October 2008)).
As a separate issue, Mr Gaines-Cooper also applied to the High Court for a judicial review of HMRC's decision that he was resident and ordinarily resident in the UK during the tax years in question. The High Court refused the application. See Legal update, High Court refuses leave for Gaines-Cooper to apply for judicial review (
www.practicallaw.com/2-384-2380). The Court of Appeal granted leave for Mr Gaines-Cooper to appeal the High Court's decision (see Legal update, Gaines-Cooper gets permission to appeal against refusal of judicial review (
www.practicallaw.com/2-385-3038)) but has since dismissed the claim. However, the Court of Appeal's decision is helpful in that it confirms that where taxpayers fall within the terms of IR20 (and the same reasoning should apply to its successor, HMRC6), HMRC are bound to apply it. For further details about the Court of Appeal's decision, see Legal update, Court of Appeal dismisses Gaines-Cooper IR20 judicial review claim (detailed update) (
www.practicallaw.com/0-501-5015).
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HMRC guidance: residence
HMRC practice is set out in HMRC6 for tax years 2009/10 onwards and in HMRC: IR20 for earlier tax years.
While the tax tribunals will not generally have regard to HMRC's practice (for example, see Tuczka v HMRC [2010] UKFTT 53 (TC) discussed in Legal update, Taxpayer ordinarily resident after less than three years in UK (
www.practicallaw.com/8-501-5144)) the Court of Appeal has confirmed that where a taxpayer falls within the terms of IR20 (and the same reasoning should apply to HMRC), the taxpayer is entitled to rely on it (see, Legal update, Court of Appeal dismisses Gaines-Cooper IR20 judicial review claim (detailed update) (
www.practicallaw.com/0-501-5015)).
HMRC's practice is to use a series of tests to determine whether an individual is resident in the UK. HMRC's guidance is separated depending on whether the individual is coming to the UK or leaving the UK.
If an individual comes to the UK permanently or for at least three years, HMRC will treat the individual as resident in the UK rather than as a visitor to the UK. HMRC then apply the following tests to determine whether the "visitor" is or becomes resident.
The "183 day" test
Before 6 April 2009 (IR20)
IR20 provides that an individual will always be resident in the UK if they spend 183 days or more in the UK during a tax year.
HMRC based this test on case law where it was held that a significant amount of time spent in the UK may be enough to establish residence on its own (see Reid v IRC). HMRC's view is that a "significant amount of time" means 183 days or more.
This test is in line with section 831 of ITA 2007 and section 9 of TCGA 1992, which cover presence in the UK for a "temporary purpose" only (see below) and most double taxation treaties.
This does not mean that an individual will always be non-resident if they spend less than 183 days in the UK; if there are other factors linking them to the UK, they may well be found to be resident.
From 6 April 2009 (HMRC6)
The 183 day tests remains. However, when an individual is present in the UK for less than 183 days in a tax year, the guidance emphasises that HMRC will look at the individual's "pattern of lifestyle", including family, property, business and social connections, to determine whether that individual is resident in the UK (this approach is more in line with the approach taken in, for example, Gaines-Cooper v HMRC [2007] EWHC 2617).
The "91- day" test
Before 6 April 2009 (IR20)
IR20 provides that short-term visitors to the UK (who do not meet the 183 day test) may become resident in the UK, if their visits average 91 days or more per tax year. The same test was used by HMRC to determine ordinary residence (see HMRC guidance: ordinary residence).
HMRC based this test upon case law (see Lysaght v IRC [1928] 13 TC 511 and Kinloch v IRC [1929] 14 TC 736) although factors other than mere presence were taken into account in those cases (HMRC's IR20 91 day test only looks at presence in the UK).
The test was taken over a period of four tax years, starting with the tax year of arrival.
This factual day-counting test was partly combined with an "intention" test:
If the individual intends to spend an average of 91 days or more per tax year in the UK, they are treated as resident from the tax year of arrival, as long as they carry out their intention.
If the individual comes to the UK with no definite intentions but averages 91 days in the UK per tax year, they are treated as resident from the fifth tax year.
If the individual comes to the UK with no definite intentions, then decides (before the fifth tax year) that their visits will average 91 days per tax year, they are treated as resident from the tax year in which the decision is made, as long as they carry out their intention.
The 91 day test was also applied to individuals leaving the UK. If the individual left the UK permanently, for more than three years or to work full-time abroad for at least a whole tax year, the individual was treated as not resident from the date of departure. However, the individual was treated as remaining resident if visits to the UK averaged 91 days or more a year.
As with the 183-day test (see above), if an individual spends less than 91 days (on average) in the UK, this does not mean that they cannot be found to be resident if there are other factors that link them to the UK.
From 6 April 2009 (HMRC6)
The 91 day test remains (and applies to both short term and longer term visitors). However, as with the 183 day test (from 6 April 2009), there is greater emphasis on an individual's "pattern of life" (and not just on mere presence in the UK, which was misleading in IR20).
It is interesting to note that the Special Commissioner in Grace v HMRC [2008] UKSPC00681 did not apply the 91 day test.
Day-counting
The above tests require the individual to keep a record of their days spent in the UK.
Before 6 April 2008
Before 6 April 2008, days of arrival and departure were excluded from the calculation. This was HMRC's stated practice, as set out in IR20 (but see Legal update, High Court refuses leave for Gaines-Cooper to apply for judicial review (
www.practicallaw.com/2-384-2380) for an example of HMRC not applying its practice). Any days spent in the UK because of exceptional circumstances beyond the individual's control (for example, their illness or illness of a member of their immediate family) were also not normally counted.
From 6 April 2008
For tax year 2008/09 and onwards, a day is counted if the individual is in the UK at the end of the day (that is, at midnight). Any days spent in the UK in transit (that is, travelling between two destinations outside the UK) do not count, provided that the individual does not engage (to a substantial extent) in activities that are unrelated to their passage through the UK. For example, if the individual takes time out from their journey to attend a business meeting in the UK, the "transit" exemption does not apply. HMRC's practice of not counting days spent in the UK because of exceptional circumstances beyond the individual's control, will continue.
This change was brought about by an amendment to sections 831 and 832 of ITA 2007 and section 9 of TCGA 1992 (by the Finance Act 2008), which relate to individuals in the UK for a temporary purpose only (see Income tax: in the UK for a "temporary purpose" only and Capital gains tax: in the UK for a "temporary purpose" only). As there is no general statutory definition of residence, the Finance Act 2008 could not make any wider changes. However, HMRC confirmed that it would apply the new day counting test in all cases, including when calculating days spent in the UK for the "91 day" tests (seeThe "91- day" test for residence, and HMRC guidance: ordinary residence, for the test for ordinary residence).
This new day counting test will have effect from 6 April 2008. Accordingly, the old test (of ignoring days of arrival and departure) may continue to be used for tax years prior to 6 April 2008. Detailed guidance is set out in HMRC6.
From 6 April 2009 (HMRC6)
The day-counting test from 6 April 2008 remains.
The "purpose" test (IR20 and HMRC6)
If an individual comes to the UK for a settled purpose (for example, employment), which means that they will remain in the UK for at least two years, HMRC will treat the individual as resident from the day they arrive.
The "accommodation" test
Before 6 April 2009 (IR20)
If in the tax year of arrival, an individual owned or leased accommodation in the UK for three years, HMRC treated the individual as resident from the tax year of arrival, even if the individual was present in the UK for less than 183 days during that tax year.
After 6 April 2009 (HMRC6)
If an individual spends less than 183 days in the UK, the guidance emphasises that HMRC will look at the individual's "pattern of lifestyle", including accommodation available in the UK (which may point towards residence) (see paragraph 1.5.22 of HMRC6). This guidance applies whether the individual is coming to or leaving the UK.
The "full time" work abroad test
Paragraph 2.2 of IR20 provided and paragraph 8.5 of HMRC 6 provides that if an individual leaves the UK to work abroad full-time, he will be treated as not resident and not ordinarily resident from the day after the day of departure if:
He leaves to work abroad under a contract of employment for at least a whole tax year.
His absence from the UK lasts at least a whole tax year.
Visits to the UK total less than 183 days in any tax year and average less than 91 days a tax year.
HMRC and the First-tier Tribunal will scrutinise how much time an individual spends in work abroad (and in work in the UK) to determine whether employment is full-time. For a recent decision of the First-tier Tribunal, see Legal update, Hankinson residence case fails at First-tier Tribunal and likely to fail on judicial review (
www.practicallaw.com/2-501-2544).
