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US/UK Tax Treaty Query

UK tax resident or not?

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Good Morning Everyone

I am getting myself tied up in knots with the US/UK tax treaty. Have a client who under the STR would not be tax resident in the UK for the year ended 5 April 2020 (yes they are late!) - taking into account the exceptional circumstances of 60 days due to COVID, which they meet the criteria for

However, if we take the 12 month period October 2019 to September 2020 they would be over 183 days

They are employed by an American company


Now my confusion is here - under the Double Tax Treaty, Article 14, section 2

2. Notwithstanding the provisions of paragraph 1 of this Article, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if:

(a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve-month period commencing or ending in the taxable year or year of assessment concerned;

(b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State;

and (c) the remuneration is not borne by a permanent establishment which the employer has in the other State

So in this case, the US is the Contracting State, the UK is the Other State, on this basis

a. Yes more than 183 days in any 12 month period

b. Yes as paid by the US

c. Yes, employer has no presence in UK


Now if I look at the Double Tax Relief Manual

For example, a US resident seconded to work in the United Kingdom for a two year assignment arrives here on 15 October 1990 and leaves the United Kingdom on 1 October 1992. Depending on all the circumstances, he could be taxable in the United Kingdom only for the year 1991-92. For the years 1990-91 and 1992-93 he could meet the condition in Article 15(2)(a) because in both periods he was not present in the United Kingdom for 183 days `in the tax year concerned’.

Now it does say 'Depending on the circumstances' - I'm thinking that this is a complete red herring and I have gone down a rabbit hole I don't need to go down


I just want a sanity check that they would be UK resident due to the 183 days over a 12 month period criteria

Thank you

Replies (2)

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By Tax Dragon
11th Jun 2021 10:49

Someone who is not tax-resident in the UK under the SRT cannot be made tax-resident in the UK by an international treaty.

The treaty maybe removes the UK's taxing rights - but from what you say does not appear to do so in this case.

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Replying to Tax Dragon:
By sarahg
11th Jun 2021 11:00

Thank you

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