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14 February 2001
Revenue news
Mobile workers
Mobile workers
Revenue news
Mobile workers
In advance of its planned appearance in the April 2001 Tax Bulletin, the Revenue has published an article on how the personal residence rules apply to mobile workers on its Internet website. The main points from the article are reproduced below. The background to it is that certain international lorry drivers have claimed that they are not resident in the United Kingdom owing to the substantial amount of time which they spend each year outside the United Kingdom. The editor is aware that some cases are expected to proceed to appeal before the Special Commissioners, and can put interested parties in touch with those acting for the appellants, if so wished (no inferences on the merits of the appeals are, however, to be drawn from this.
The Revenue's views
The article explains how the Revenue considers the rules of residence and ordinary residence apply to mobile workers, individuals who usually live in the United Kingdom but make frequent and regular trips abroad in the course of their employment or business.
For this purpose:
* the expression 'mobile workers' includes for example lorry or coach drivers who drive their vehiclesw to and from the Continent; those working on cross-Channel transport; and sales persons who make frequent short business trips abroad;
* individuals usually live in the United Kingdom if their home continues to be in the United Kingdom and their settled domestic life remains here;
* trips abroad are frequent and regular where work patterns are such that individuals make trips abroad every two or three weeks or more often. It would, for example, include someone travelling to France most Sundays or Mondays in connection with their employment but returning to the United Kingdom by or at the following weekend.
Such individuals sometimes claim to be not resident and not ordinarily resident in the United Kingdom, simply on the basis of the limited number of days they spend in the United Kingdom in a tax year. While the precise facts of a particular case are always paramount in deciding residence status, the Revenue considers that where there are no special circumstances, such individuals are likely to remain resident and ordinarily resident here for tax purposes.
General guidance on how the residence rules normally apply to those leaving the United Kingdom is set out in chapter 2 of booklet IR20, Residents and non-residents. Paragraph 2.1 sets out the general principle that individuals who usually live in the United Kingdom and only go abroad for short periods, for example on business trips, remain resident and ordinarily resident here. Paragraph 2.2 explains a longstanding Revenue practice in the case of individuals who go abroad for full time employment. They are treated as not resident and not ordinarily resident from the day after their departure if:
* they have left the United Kingdom to work full time abroad under a contract of employment; and
* their absence from the United Kingdom and the employment abroad both last for at least a whole tax year; and
* during their absence any visits they make to the United Kingdom total less than 183 days in any tax year; and average less than 91 days a tax year over the period of absence up to a maximum of four years.
All these conditions must be met for this practice to apply. It is not sufficient merely for the day counting tests to be met.
The treatment under paragraph 2.2 is aimed at individuals who leave the United Kingdom for a complete tax year to live and work on assignments abroad. It might for example apply (assuming all the conditions mentioned above are met) to lorry drivers who go to live in Sweden to transport goods within Scandinavia for their firm. In the case of individuals living in the United Kingdom but making regular short trips abroad, it is questionable whether they have genuinely left the United Kingdom in a residence sense, or can be said to be working full time abroad; and they could not satisfy the condition that their absence and the employment abroad both last for a whole tax year. They have not in the Revenue's view made the clear break with the United Kingdom that the practice in paragraph 2.2 requires.
Section 334, Taxes Act 1988 broadly provides that Commonwealth citizens who have been ordinarily resident in the United Kingdom remain United Kingdom resident if they leave the United Kingdom 'for the purpose only of occasional residence abroad'. On the basis of case law, the Revenue considers that individuals who have no settled residence abroad, have no intention to stay abroad indefinitely, and return to a United Kingdom base and a United Kingdom abode at the end of each assignment, are unlikely to be able to show that they are absent for other than 'occasional residence' abroad.
Section 336 of the Act broadly provides for individuals to be treated as not resident in the United Kingdom if they are here 'for some temporary purpose only and not with any view or intent of establishing ... residence there', and have not actually spent six months here in the relevant tax year. The Revenue considers that individuals who have a United Kingdom-based employment or business, have strong ties with the United Kingdom and spend a sufficient amount of time in the United Kingdom in a tax year are unlikely to be able to show that they are in the United Kingdom for only the 'temporary purpose' specified in the statute.
Mobile workers
In advance of its planned appearance in the April 2001 Tax Bulletin, the Revenue has published an article on how the personal residence rules apply to mobile workers on its Internet website. The main points from the article are reproduced below. The background to it is that certain international lorry drivers have claimed that they are not resident in the United Kingdom owing to the substantial amount of time which they spend each year outside the United Kingdom. The editor is aware that some cases are expected to proceed to appeal before the Special Commissioners, and can put interested parties in touch with those acting for the appellants, if so wished (no inferences on the merits of the appeals are, however, to be drawn from this.
The Revenue's views
The article explains how the Revenue considers the rules of residence and ordinary residence apply to mobile workers, individuals who usually live in the United Kingdom but make frequent and regular trips abroad in the course of their employment or business.
For this purpose:
* the expression 'mobile workers' includes for example lorry or coach drivers who drive their vehiclesw to and from the Continent; those working on cross-Channel transport; and sales persons who make frequent short business trips abroad;
* individuals usually live in the United Kingdom if their home continues to be in the United Kingdom and their settled domestic life remains here;
* trips abroad are frequent and regular where work patterns are such that individuals make trips abroad every two or three weeks or more often. It would, for example, include someone travelling to France most Sundays or Mondays in connection with their employment but returning to the United Kingdom by or at the following weekend.
Such individuals sometimes claim to be not resident and not ordinarily resident in the United Kingdom, simply on the basis of the limited number of days they spend in the United Kingdom in a tax year. While the precise facts of a particular case are always paramount in deciding residence status, the Revenue considers that where there are no special circumstances, such individuals are likely to remain resident and ordinarily resident here for tax purposes.
General guidance on how the residence rules normally apply to those leaving the United Kingdom is set out in chapter 2 of booklet IR20, Residents and non-residents. Paragraph 2.1 sets out the general principle that individuals who usually live in the United Kingdom and only go abroad for short periods, for example on business trips, remain resident and ordinarily resident here. Paragraph 2.2 explains a longstanding Revenue practice in the case of individuals who go abroad for full time employment. They are treated as not resident and not ordinarily resident from the day after their departure if:
* they have left the United Kingdom to work full time abroad under a contract of employment; and
* their absence from the United Kingdom and the employment abroad both last for at least a whole tax year; and
* during their absence any visits they make to the United Kingdom total less than 183 days in any tax year; and average less than 91 days a tax year over the period of absence up to a maximum of four years.
All these conditions must be met for this practice to apply. It is not sufficient merely for the day counting tests to be met.
The treatment under paragraph 2.2 is aimed at individuals who leave the United Kingdom for a complete tax year to live and work on assignments abroad. It might for example apply (assuming all the conditions mentioned above are met) to lorry drivers who go to live in Sweden to transport goods within Scandinavia for their firm. In the case of individuals living in the United Kingdom but making regular short trips abroad, it is questionable whether they have genuinely left the United Kingdom in a residence sense, or can be said to be working full time abroad; and they could not satisfy the condition that their absence and the employment abroad both last for a whole tax year. They have not in the Revenue's view made the clear break with the United Kingdom that the practice in paragraph 2.2 requires.
Section 334, Taxes Act 1988 broadly provides that Commonwealth citizens who have been ordinarily resident in the United Kingdom remain United Kingdom resident if they leave the United Kingdom 'for the purpose only of occasional residence abroad'. On the basis of case law, the Revenue considers that individuals who have no settled residence abroad, have no intention to stay abroad indefinitely, and return to a United Kingdom base and a United Kingdom abode at the end of each assignment, are unlikely to be able to show that they are absent for other than 'occasional residence' abroad.
Section 336 of the Act broadly provides for individuals to be treated as not resident in the United Kingdom if they are here 'for some temporary purpose only and not with any view or intent of establishing ... residence there', and have not actually spent six months here in the relevant tax year. The Revenue considers that individuals who have a United Kingdom-based employment or business, have strong ties with the United Kingdom and spend a sufficient amount of time in the United Kingdom in a tax year are unlikely to be able to show that they are in the United Kingdom for only the 'temporary purpose' specified in the statute.
