Becoming Non Resident in the UK

by **versyelli** on Wed Aug 17, 2011 7:06 am

Hey,

I've been out of the UK from the beginning of this tax year to now, with 1 week business there and 1 week home. All my business is done out side the UK, year round and will be forever by the looks of things.

I own a UK company, that I take a small salary (500/mo) as well as foreign companies. I can give up my UK company without issues.

The previous 3 tax years I have been in the UK for the majority of the year, well over 183 days.

If I complete this tax year outside of the UK, would I be considered a non resident, or I would I need to wait for my 4 year rolling average to be under 91 days?

Would I need to become a resident of anywhere else, or can I simply remain a non resident of the UK, without getting residency elsewhere?

Regards,
Versyelli

by **Peter D** on Wed Aug 17, 2011 9:01 am

"1 week business there and 1 week home." Please explain this. Was this business conducted with a UK company, are you employed by a UK company. 1 week home, so you have a home here, do you have any family living in the UK home. Regards Peter

by **Peter D** on Wed Aug 17, 2011 9:13 am

Have a read :
http://www.hmrc.gov.uk/cnr/res-dom-tax-amends.htm
Regards Peter

by **versyelli** on Wed Aug 17, 2011 10:00 am

Peter D wrote:"1 week business there and 1 week home." Please explain this. Was this business conducted with a UK company, are you employed by a UK company. 1 week home, so you have a home here, do you have any family living in the UK home. Regards Peter

I spent 1 week doing business for one of my non UK businesses in London and another week just at home with my parents. I don't own a house or a car in the UK etc.

I am employed by a UK company, but it's my own company. I can give away my shares to that if need be, and stop the salary.

by **taxationuk** on Wed Aug 17, 2011 10:37 am

Peter D wrote:Have a read :
http://www.hmrc.gov.uk/cnr/res-dom-tax-amends.htm
Regards Peter

This is a great starting point. If you are intending to remain outside of the UK, then you can apply for Non Residence straight away by completing a simple form, however, if you do recieve any income you will be taxed in the Jurisdiction to which you are moving, this is not always beneficial (depending on where you are going to live).

The other thing to consider is should you decide to exit the company you may still be liable to CGT on your Company shares for another 7 years.

Kind regards

Terry Hodge
th@taxationuk.com

by **thehiker99** on Wed Aug 17, 2011 1:15 pm

Versyelli

At the MOMENT There are basically two ways to lose UK tax residency, either you :-

a/ Move, lock stock and barrel to another country, and minimise links to the UK. (Houses, cars, wives, children in school, Golf Club membership etc etc). HMRC would probably want comprehensive evidence that you've taken up residence somewhere else.
You would appear, on the surface, to satisfy the part about links to the UK.
I'm not sure about the UK company though. Not sure how HMRC would view that.

b/ You go overseas to work in "Full Time Overseas" employment. Again HMRC would probably want to see evidence that you are in full time employment, not in part time/ad hoc employment.

You do this for at least one tax year. If you leave the UK on the 7th of April, you would have to be away for nearly 2 years, before satisfying this part of the equation.
Leave on the 6th, and it would be exactly one year.

In both cases to attain, and retain, non residence status, you cannot visit the UK for more than 183 days in one year, or 91 days per year, averaged over a maximum of 4 years. If you are a overseas for many years, it's effectively 91 days a year, average.
In both case comprehensive evidence of movements would have to be kept.

Beware though that HMRC have published a consultation paper, which proposes the introduction of a "Statutory Residency Test".
It seems on the face of it, to be based on the basic rules above, with one major change in that they no longer talk about "rolling averages", but simply speak of 90 days. (No "less than" 91).
There are other more minor changes, to complicated to go into here.
You can find it on HMRC's website.

The consultation exercise end next month, and from what I've read, legislation will be put forward towards the end of the year, with a view to it becoming law 5th April 2012.

The Hiker.

by **versyelli** on Wed Aug 17, 2011 2:55 pm

I don't plan on residing anywhere. I'm usually in countries less than 2 months, and constantly on the move. It would be hard for me to reside elsewhere.

As for my company, I can give away my shares to my family. That is not an issue for me.

I left the UK on the 8th of April (for meetings) and only returned here for 1 week around June for a meeting in london then left again.

Me not leaving on the 6th, would this mean I would need to be out of the UK for 2 years to become a non resident? Or simply stay away for less then 91 days out of this current tax year?

by **Peter D** on Wed Aug 17, 2011 3:44 pm

If you do not reside in any other country then you may well be deemed UK resident. You should seek advice from the HMRC residence unit. Read :
http://www.hmrc.gov.uk/pdfs/ir20.pdf. If you are not carefull you could be laibile to IT in two countries. Regards Peter

by **thehiker99** on Thu Aug 18, 2011 7:43 am

Versyelli
Sorry to be the bearer of bad news, but.......

If you left on the 8th of April 2011, you will not complete a tax year before the 5th of April 2013.
From what I understand this is set in stone. You will not cross the first hurdle till April 2013.

Also
If you are not actually resident anywhere, and you are not in Full Time overseas employment, I doubt very much if you will be able to convince HMRC, that you are not tax resident in the UK.

If you don't pass one of the above hurdles, you don't even get to the part about counting days.

This is what came out of the Gains-Cooper case a couple of years ago. (Google it).
Simply spending less than 91 days a year in the UK, does not make you non resident.
I believe it did at one time in somewhat distant past, but not now.

Read HMRC 6, (you'll gt it on HMRC's website) which is the current guidebook (note guidebook - it's not set in law), about non residency.
Section 2.2 Page 6.

I'm not an expert, and I may be wrong, but believe that all of the above means that any income you make, worldwide, shall remain liable to UK tax.

Sorry again.

Andy

by **versyelli** on Thu Aug 18, 2011 8:15 am

thehiker99 wrote:Versyelli
Sorry to be the bearer of bad news, but.......

If you left on the 8th of April 2011, you will not complete a tax year before the 5th of April 2013.
From what I understand this is set in stone. You will not cross the first hurdle till April 2013.

Also
If you are not actually resident anywhere, and you are not in Full Time overseas employment, I doubt very much if you will be able to convince HMRC, that you are not tax resident in the UK.

If you don't pass one of the above hurdles, you don't even get to the part about counting days.

This is what came out of the Gains-Cooper case a couple of years ago. (Google it).
Simply spending less than 91 days a year in the UK, does not make you non resident.
I believe it did at one time in somewhat distant past, but not now.

Read HMRC 6, (you'll gt it on HMRC's website) which is the current guidebook (note guidebook - it's not set in law), about non residency.
Section 2.2 Page 6.

I'm not an expert, and I may be wrong, but believe that all of the above means that any income you make, worldwide, shall remain liable to UK tax.

Sorry again.

Andy

I could get a residency in a tax haven if I needed to within a few weeks.

However, does this mean this tax year I am able to stay in the UK if need be? Do I need to complete a whole year out of the UK for it to count as a tax year out of the UK or just simply be away on the day at the start of the tax year?