UK Residence for Income Tax purposes
Originally sent: November 18, 2005Most of you will by now have heard the name Dr Brice, Special Commissioner. She of the infamous Arctic Systems decision.
No, this is not yet another report on Arctic Systems, important and far reaching though that case is. It is about another case decided by Dr Brice which also has important implications for income tax planning.
It concerns a British Airways pilot by the name of Ian Shepherd. Mr Shepherd thought to rely on the indication in the Revenue publication IR 20 that he would not be regarded as resident for Income Tax purposes as long as he did not stay in the UK for more than 183 days.
Whilst there was some dispute about exactly how many days Mr Shepherd had been in the UK in one of the years, it was clear he had met the requirements if the 183 days rule were interpreted rigidly. Over the period in question, it was also not disputed that his average stay in the UK was less than 91 days a year.
Nevertheless, Dr Brice found in favour of HMRC and decided that Mr Shepherd was tax resident in the UK.
There does appear to be a little science fiction in this particular case. At one point the precedent of an Indian civil servant, Mr Brown, was considered. Here is what is said about Brown at paragraph 51 of the report:
?Brown also concerned an Indian civil servant who retired in 1983 and came to the United Kingdom where he took a house and lived until February 1918. He then gave up his house and lived in hotels in the United Kingdom until October 1919. He then spent nine months of each year in hotels in Europe and three months in the United Kingdom visiting his friends. The issue was whether he was resident in the United Kingdom for the year 1924-25 and the Special Commissioners held that he was not. Their decision was upheld by Rowlatt J.?
Levity aside, this is an important case for any advisers who have clients intending to establish non-UK residence for Income Tax purposes. Perhaps the Revenue will now be looking very closely at those numerous individuals who claim to reside in the Channel Islands, but spend every weekend in England, maintaining significant social ties here.
Adviser Breakthrough Training Solutions Ltd. takes no responsibility for loss occasioned by any person acting or refraining from action, or in consequence of any other person acting or refraining from action, as a result of the material in this article.
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