Home thoughts from abroad
A British man who made his home in the Seychelles and carefully restricted the number of days he spent in the UK each year to 90 was surprised to find that HMRC still considered him taxable here. He believed that HMRC’s custom and practice, if not the law itself, was to treat people like him as non-resident for tax purposes. When the appeal commissioners agreed with the taxman, he took his case all the way to the Supreme Court to argue that HMRC were being unreasonable in not applying the practice published in their booklet IR20.
The judges decided (by 4-1) that he did not have a case. IR20 was poorly written, but people had read too much into it if they thought it was a promise of non-resident treatment in this man’s circumstances. It was necessary to have made a distinct break with the previous way of life as a UK resident. A property kept in the UK had to be ‘for use’ but not ‘a home’. The 90-day count referred to ‘visits’, which suggested something more irregular that would be done from a base that had shifted fundamentally to the foreign location.
Anyone who wants to become a tax exile has to take this new interpretation into account. HMRC have proposed a new statutory test of residence, but they’ve now decided to put that back to 2013. If you want to discuss your residence status in the meantime, we’ll be happy to help.
