More NewsNo guarantees on 90-day rates

No guarantees on 90-day rates

Special Commissioner overturns accepted wisdom on UK residency

There has been a rash of crucial tax decisions in recent weeks. The Dextra
case handed a crucial victory to HM Revenue & Customs in its battle against
employee benefit trusts.The negligence suit between BE Studios and Smith &
Williamson also yielded interesting points about the tax system.

One case that slipped below the radar is Shepherd versus HMRC.

The case challenged a crucial aspect of tax law: rules on residence.

The taxpayer, an airline pilot, spent fewer than 90 days in the UK, but was
resident for tax purposes as ‘there was no distinct break’ in his lifestyle, the
Special Commissioner ruled.

Inland Revenue guidance has always given a view that if an individual lived
in the UK for fewer than 90 days, he or she would not be classified as resident
here for tax purposes. Now a ‘distinct break’ will have to be proved.

‘Taxpayers will need to prove not just that they are here for less than 90
days but whether they still have a job in the UK, where their family are, and
what has happened to their property,’ said Narinder Paul of KPMG.

So if a ‘distinct break’ needs to be proved, does that mean you could live in
the UK for longer than 90 days and have made the crucial break?

Paul thinks the Revenue is unlikely to accept that argument.

There is a whole range of taxpayers affected by the move, not just the very
rich who move around in order to avoid tax.

The taxpayer in the case itself was a pilot, demonstrating the range of those
affected.

Advisers say that tens of thousands of people are likely to be impacted.

Paul 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.’

Related Articles

Amazon UK halves its corporation tax bill despite increased turnover

More News Amazon UK halves its corporation tax bill despite increased turnover

4m Alia Shoaib, Reporter
Increase in UK business confidence despite Brexit, according to ICAEW

More News Increase in UK business confidence despite Brexit, according to ICAEW

7m Alia Shoaib, Reporter
Live blog: Spring Budget 2017

Corporate Tax Live blog: Spring Budget 2017

9m Accountancy Age editorial
The Curious Incident of the Insolvency Sector in the Light of Economic Turbulence

Insolvency The Curious Incident of the Insolvency Sector in the Light of Economic Turbulence

11m Accountancy Age editorial
Leonard Curtis called in as administrators for builders Boshers

Legal Leonard Curtis called in as administrators for builders Boshers

11m Stephanie Wix, Writer
New Year Honours of 2017

Accounting Standards New Year Honours of 2017

11m Stephanie Wix, Writer
"Not enough time" to implement MTD by 2018, says Tyrie

Corporate Tax "Not enough time" to implement MTD by 2018, says Tyrie

1y Stephanie Wix, Writer
Colin: A spoonful of investment...

Governance Colin: A spoonful of investment...

1y Stephanie Wix, Writer