It may be remembered that a revised version of HMRC6 was published on 31 December 2010. I mentioned some of the changes in the January Tax Bulletin. One of those changes related to the long-standing practice whereby a person becomes resident in the UK if they come here for an average of more than 90 days each year over four years. In that case they become resident at the beginning of the fifth year.
(There is exception to this rule if it is clear when you arrive, or during this four-year period, that you are going to be in the UK for more than 90 days on average for the four-year period. In that case you become resident immediately.)
The new HMRC6 seemed to reduce this four-year period to three years. Para 7.5 includes the passage:
“You may not know how long you will continue to visit when you first arrive in the UK. If, after 3 complete tax years, a pattern has emerged that these visits total more than 91 days on average and your visits continue, then you will become resident and ordinarily resident in the UK from the start of the next tax year”.
That looked pretty clear and people have therefore been advised to be aware that the old rule has gone and to ensure they do not breach the new three-year rule.
However, the Tax Faculty have obtained confirmation from HMRC that their practice has not changed and that the four-year rule still applies. A person will only be regarded as resident at the start of the fifth tax year where the visits average more than 90 days over the previous four years.
This is very welcome clarification and I dare say HMRC6 will be amended in due course to avoid any misunderstanding from the above passage.