My client is a UK domicile, the majority shareholder and director of a UK close company. He moved to Latvia in March 2018, bought a house there with his Latvian wife in March 2019, and has a certificate of Latvian residence dated 5 March 2019. He spent 101 days in the UK in the 2018-9 tax year, and 51 days in the UK in 2019-20, mainly for work purposes. He has not returned to the UK since leaving on 6 March 2020 and his wife and children have remained in Latvia throughout, but he rented a London flat from 2018 until October 2020 as somewhere to stay when in the UK.
I am working on my client’s UK tax return for 2019-20 and trying to determine if split year treatment should apply, and if so from what UK departure date. Case 1 would apply: the 90-day rule for physical presence is ok, but the stumbling block is the 30 work days. He had 16 visits to the UK in the 2019-20 tax year – i.e. “commuting” for visits totalling 51 days. I have ascertained that there is a point in November 2019 when the number of UK workdays after that date is (just) lower than the time-apportioned 30 days allowed.
So, I am thinking that we can declare split year treatment from mid-November 2019, and claim back the UK tax at source on his salary from that point as well as taxing dividends under the favourable Latvian rules. However, if he has a Latvian residence permit dated 5 March 2019, does that nix the whole thing? i.e. he is resident from Latvia from that point – full stop. Article 4 of the DTT refers to his permanent home and vital interests… which are in Latvia.
I have no concerns about the UK temporary residence rules because he has no intention of returning to the UK beyond sporadic business visits, but I worry that he did spend a lot of work time in the UK in 2019-20, and continues to be taxed at source even to this day on his UK salary.
I would appreciate some assistance on this. It seems that I need to show my client as either leaving the UK permanently on 5 March 2019 or mid-November 2019, with little flexibility in between!