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Key issues:
Our Alert of 16th November 2006 explained the decision made by the Special Commissioners against Mr Robert Gaines-Cooper in determining his residency for UK tax purposes. As that Alert explained, the decision could have resulted in fundamental changes to the manner in which UK residency is determined for tax purposes if adopted by Her Majesty’s Revenue & Customs (HMRC). HMRC have now indicated that they will not in fact seek to apply the ruling of the case in a wider context, meaning that the majority of UK taxpayers will be unaffected by the decision.
HMRC are planning to issue a Tax Bulletin during December explaining in more detail their interpretation of the case and the application of the “90 day rule”. Assuming this interpretation follows the position outlined above; the UK residency of most individuals assigned to and from the UK will not be affected. This is because these individuals will normally be able to prove that they are leaving the UK for residency purposes and so can continue to discount days of arrival and departure in determining their ongoing UK residency status.
However individuals who have been resident in the UK for some time, particularly British nationals, will need to mindful of the ruling and ensure that they seek further specialist advice on whether the ruling could apply to their circumstances.
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