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Newsletter | Articles HMRC Moves the Goalposts on Non-Residency Rules A ruling by the Special Commissioners has called into question traditional ways of counting the days that a non-resident spends in the UK. The case featured Robert Gaines-Cooper, a British born millionaire businessman based in the Seychelles. For the last 13 years he has travelled to London on a Monday, taken care of his business affairs and left again on a Wednesday, 50 weeks of the year. Traditionally, and in line with HMRC’s guidance notes, days of arrival and departure have not been counted when calculating whether someone has spent an average of more than 90 days in the UK in four consecutive tax years, or more than 183 days in one tax year. (Anyone exceeding either limit is liable to UK tax.) So Robert and his accountant had always considered that he spent only 50 days a year in the UK. Now the Special Commissioners, who rule on tax disputes, have agreed that the guidance should change to count the number of nights spent in the UK as the determining factor. Surprisingly, the Special Commissioners’ ruling went against the Revenue guidelines, a move which they rarely make as it tends to undermine their credibility. Robert’s 50 days suddenly became 100 days, placing him on the wrong side of 90 days for 13 consecutive years. In addition, certain aspects of his lifestyle attracted attention. The guidance notes mention, ‘Lifestyle factors such as club memberships, social events and family ties will also be taken into account when deciding non-residency status.’ Robert is a member of the UK Rolls-Royce Owners’ Club, owns two Berkshire farms, attends Royal Ascot, goes pheasant shooting, has enrolled his eight year old son to attend Eton College and has paid all his fees in advance. Draw your own conclusions about his intentions for the future. The ruling will remain in dispute for some time yet. The Special Commissioners’ decision requires ratification by a High Court judge. It is to the High Court that Robert intends to take his case to appeal the decision. Ironic, is it not, that both Robert’s parents were tax inspectors. Also ironic is the fact that if the ruling is approved, it will be retrospective. 13 years of unpaid UK tax could prove quite a burden to Robert and hundreds more ‘Monaco Millionaires’. The ruling may also have an effect on non-domiciled individuals living in the UK who believed they were non-resident in previous tax years: the new method of counting nights of residency could change their status to resident. As a consequence, such individuals could find they have been tax resident for 17 of the previous 20 years, leading to them being deemed domiciled for inheritance tax (IHT) purposes, meaning that their worldwide assets will be subject to IHT. |