New Guidance on Residence
23 October 2009Following changes in the tax legislation governing the income tax payable by non-domiciliaries, and some relevant tax cases, HM Revenue and Customs (HMRC) have issued a new guidance booklet (HMRC 6). This replaces the old guidance, which was contained in booklet IR20.
One of the main changes in approach is that HMRC are now taking a harder line on what has to be done to qualify as being non-resident. To cease to have UK residence, not only must you leave the UK, but you must, in effect, reduce your connection to the UK to a minimal level.
The new leaflet should be read carefully by anyone considering moving abroad who wishes to ensure that they become non-UK resident for tax purposes. HMRC’s guidance states that ‘you should always look at the pattern of your lifestyle when deciding whether you are resident in the UK. Things you should consider would include what connections you have to the UK such as family, property, business and social connections. Just because you leave the UK to live or work abroad does not necessarily prove that you are no longer resident here if, for example, you keep connections in the UK such as property, economic interests, available accommodation, and social activities or if you have children in education here. For example, if you are someone who comes to the UK on a regular basis and have a settled lifestyle pattern connecting you to this country, you are likely to be resident here.’
One particularly odd feature to note is that HMRC now seem to regard the whole of UK territorial waters and airspace as being in the UK for the physical presence test.
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