QUOTE
Tax Press Release 14 July 2005
- Revenue clampdown on UK residency
- Case reveals 90-days or less rule is not sole factor
Individuals, who are not paying tax in the UK because they spend less than 90 days in the country, could be facing a hefty tax bill after a ruling given by Special Commissioners. Special Commissioners ruled that the 90-day rule was not the only factor determining whether a person is a UK-resident. In the case Shepherd v HMRC, the Commissioners ruled that despite Mr Shepherd, a professional pilot, spending 180 days in the tax year out of the UK on flights, 77 days in Cyprus where he rented a furnished flat, and 80 in the UK in the family home, he had not made a distinct break with his former life and therefore remained resident for UK tax purposes.
Narinder Paul, tax partner at KPMG in Birmingham said: “There is no doubt that this is the next stage of the Revenue’s clampdown on those individuals who are benefiting from favourable tax rates by basing their claim on the 90-day rule. “With increasing ease of travel and homes overseas becoming increasingly common, it is likely that more people may be considering that they could be a non-UK resident for tax. Many may have been led by Inland Revenue guidance notes into thinking that the important thing is to count days. However, as this case shows, this on its own is not enough to exempt an individual from paying tax within the UK.�
- Revenue clampdown on UK residency
- Case reveals 90-days or less rule is not sole factor
Individuals, who are not paying tax in the UK because they spend less than 90 days in the country, could be facing a hefty tax bill after a ruling given by Special Commissioners. Special Commissioners ruled that the 90-day rule was not the only factor determining whether a person is a UK-resident. In the case Shepherd v HMRC, the Commissioners ruled that despite Mr Shepherd, a professional pilot, spending 180 days in the tax year out of the UK on flights, 77 days in Cyprus where he rented a furnished flat, and 80 in the UK in the family home, he had not made a distinct break with his former life and therefore remained resident for UK tax purposes.
Narinder Paul, tax partner at KPMG in Birmingham said: “There is no doubt that this is the next stage of the Revenue’s clampdown on those individuals who are benefiting from favourable tax rates by basing their claim on the 90-day rule. “With increasing ease of travel and homes overseas becoming increasingly common, it is likely that more people may be considering that they could be a non-UK resident for tax. Many may have been led by Inland Revenue guidance notes into thinking that the important thing is to count days. However, as this case shows, this on its own is not enough to exempt an individual from paying tax within the UK.�
