Does anyone know when the 91 day rule came into being for considering a taxpayers residence status please? Also can anyone tell me what the rules were relating to employees leaving the UK to take up work abroad prior to the 91 days rule. I vaguely remember that they may have been bit more lenient that the current rules, but I cannot find any references to the old legislation. A pointer in the direction of where I might find the information would be most appreciated. This is not a spurious question, I am trying to establish what (very old) advice a new client to me might have relied upon when he took up employment abroad. It will not help his current residence situation (within 183 days but exceeds 91 days on average rule), but may be useful in mitigation of any potential penalties. Also, I read an article in the accountancy press some time ago that seemed to suggest that the 91 days rule does not actually have the force of law and that other circumstances such as industry shift patterns etc could be taken into account when determining whether a UK national should be taxed on foreign earnings. I may be clutching at straws, but can anyone throw any light on this please. Has anyone successfully used such arguments to counteract the 91 days rule when determining non residence? I cannot find anything else to suggest that this might be the case but with the potential amounts of tax at stake I want to explore all angles. Many thanks.
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IR20 (predecessor to HMRC6) was certainly in use back in 1976
The basis for Robert Gaines-Copper's original departure from the UK in 1976 was IR20 and that had a version of the 91-day rule in it's contents as this was the substance of the original court case several years ago, so it depends on how far back you are going.
The 91-day rule certainly pre-dates anything that I am aware of, the only substantial changes in residency being the implications of the legal decisions in Gaines-Cooper, Grace, Tuczka, etc.
The biggest downside to any issue of residency is the uncertainty thrown into the equation with regard to the implied terms of IR20 used against Gaines-Cooper in that non-residency would only apply where there was a 'distinct break' in the persons life to justify this.
The 'leniency' in the 91-day rule usually applied where someone who was not normally resident in the UK exceeded this due to factors beyond his/her control such as family death, illness, etc.
There are a few people here with a reasonable understanding of t
If you post more details about the circumstances we might be able to offer you a more detailed opinion or point you in the right direction. From my own perspective, most of my knowledge of the non-residence stuff comes from having been involved with it directly during my relocation out of the UK back in 2009.
Unfortunately, there are no black-and-white answers with the non-residence stuff as HMRC and its predecessor like to keep the waters murky for their own reasons. Mr. Gaines-Cooper being a pretty good example of what happens when you do.
The key thing is to look at the ties that your client retains to the UK, if he has no real ties to the UK, then he will be fine. However, if he has a wife and child or a residence that is available then this is more problematic (although not critical).
Unfortunately, I think I agree with your opinion.
There doesn't seem to be much question about your client being UK resident given the rolling average, although he might have been able to claim it initialy. However, I suspect that if HMRC have commenced an investigation of your client on the basis of the 155-days, they are likely to try and say he was never really non-resident.
Fortunately, when I did the move out of the UK, it was after the initial Gaines-Cooper and Grace decisions, so during my move I sold the house, moved the family, closed all bank accounts / credit cards and liquidated all assets.
Since the relocation, I've only spent a rolling average of about 12-days in the UK and that is likely to decrease substantially after next year due to the death of my mother last January. You can never be 100% sure that you've got rid of the issue of residence, but your client does seem (on the face of it) to have dug himself into a bit of a hole.
However, finding good advice on this is difficult. Even though I had read up on all of the relevant HMRC and published materials on relocating abroad (Lee Hadnam's books), I still engaged a specialist company in Leeds called Xpatria to provide a detailed assessment and review of my plans as well as providing oversight of the actual implementation.
I hope this mistake doesn't cost your client his house - this sort of thing can be very expensive, especially if it has gone uncorrected for several years.
The following book is the one which I found to be most useful
I still have a copy of it upstairs, but it is more useful as a background to read BEFORE going to see a specialist.