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Ordinary residence: Revised guidance includes ‘important changes'

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The revised version of HMRC’s guide to Residence, Domicile and the Remittance Basis, is now available.

Part 5 of ‘HMRC6’ was updated in February 2010 for changes to the remittance basis rules. The other parts were changed last month. HMRC ‘does not consider that the latest revisions have altered the position in most cases’. But taxpayers may continue to use the previous wording for ‘any tax liability that arises before (sic) 5 April 2011’, it said.

However, the ICAEW Tax Faculty has pointed out that there are ‘important changes’ to the guidance on ordinary residence, adding that ‘we feel that these should have been flagged more clearly’.

The changes allow HMRC significant room to argue, the Faculty suggested, that an individual is UK-resident ‘at a time when he or she has not been in the UK for three years and had no intention of staying in the UK in excess of three years’.

The Faculty added that HMRC now states that where the individual does not know how long his or her visits to the UK will last, ‘he or she will become ordinarily resident from the start of the fourth tax year where average visits in the three prior years total more than 91 days’.

Full-time work abroad
In a note to the Joint Expatriate Forum on Tax and NICs, published by the Chartered Institute of Taxation, HMRC said: ‘You will be aware that we are continuing to consider a number of points raised by a sub-forum in respect of full time work abroad [FWTA].

‘Until this is resolved, the sections in Chapter 8 dealing with FTWA are largely unchanged from the previous published version (the only substantive change is a new passage explaining how to calculate annual average visits to the UK). Once this work has been concluded and we have established what changes are needed to the guidance, we will share them with the Forum.’

The guidance is, HMRC emphasises, general guidance designed to help taxpayers to reach a decision. ‘Depending on your circumstances this might not be straightforward and our guidance may not cover all of the issues which affect you. If this is the case you might need to contact us to obtain further information or, alternatively, seek the services of a professional tax adviser,’ it says.

Detailed guidance for HMRC staff is provided in the Residence, Domicile and Remittance Basis Manual which is available on the HMRC website.