“Should I stay or should I go?”

The words of a Clash song from 1981, but questions over what constitutes UK residency (at least for tax purposes) have been around much longer than 30 years. As long ago as 1936, commentators were berating the government for the lack of clarity in relation to residence.

Background

Prior to 2013, reliance had to be placed on the now (in)famous Inland Revenue booklet IR20 for guidance. The booklet was not statutory but simply the taxman’s view on what constituted residency or ordinary residency and that non-statutory view was challenged on numerous occasions over the years.

Thankfully the uncertainty ended in the 2013 Finance Act with the introduction of a statutory test for UK resident.

Statutory Residence Test

The process now is extremely straightforward – there are even some websites where you can test your current or future residency position.

The legislation consists of three parts: –

Part A is a conclusive test for non-residency; any positive answer in this section will deem the individual to be non-UK resident

Part B in contrast is a test for conclusive residency in the UK; again a single positive response will indicate that the individual is UK resident

Part C – in the event that the individual is unable to answer positively to anyy of the three questions in either part A or part B, then part C will become the determining section ; this section covers a number of factors involving

• the individual’s family connections with the UK
• UK employment
• available accommodation and
• the number of days of physical residence in the UK,

The overall flavour of the responses to Section C will be a determining factor in the UK residency of the individual.

Particular attention needs to be paid to years of arrival and departure; ideally planning should be undertaken well in advance of an individual either leaving the country permanently or arriving.