Non-residency should be simple. You are allowed a maximum of 91 midnights in the UK, in a single tax year. For longer periods of non-residency some flexibility is available and a four year average of 90 days per annum is available. However, the Revenue believes that residency has more subjective connotations. They can contend that you remain UK resident if you have a home available for use or family in the UK. High profile cases are being contested on these grounds. The Gaines-Cooper judgement, which found against the taxpayer, is now scheduled to go to the Supreme Court.
The Government have announced their intention to put residence on a statutory footing. A consultative process got underway in June 2011. It is their intention to enact new legislation to come into effect from 6th April 2012. This will not be retrospective.
The proposals, so far, suggest a decision tree approach. There is a presumption of non-residence if you work full time abroad and spend no more than 91 midnights in the UK. This is then complicated by new challenges. Accessible accommodation as a place of residence in the UK could compromise non-residence. Equally having family in the UK could be detrimental. Family is defined as a spouse, civil partner or common law equivalent. In the case of children, under the age of 18, who are UK resident, the draft suggests that spending 60 days or more with them in the UK or elsewhere would undermine non-residence.
Clearly there is on-going subjectivity. The final enactment will hopefully remove some of the uncertainty.
For our clients we:-
- Complete and lodge Form P85, which establishes non-resident status.
- Set up Class 3 NI contributions to protect your future.
- Deal with HM Revenue & Customs in your absence.