Everybody knows that the counting of days of arrival and departure for the purposes of determining UK residence has become a tad controversial. This is no longer the current position (although the arguments for earlier years will continue for ages) because we now have the statutory day-counting rules introduced on 6 April 2008. A day counts only if you are present in the United Kingdom at midnight – at least as far as the 183-day test in Section 831 ITA 2007 is concerned.
An issue arises about what is meant by “presence in the UK”. What about airspace and territorial waters? (A gold star to anybody who notices that this is also relevant to whether a remittance to the United Kingdom of foreign income or gains has been made.)
I find that HMRC have published their view that “the point of arrival in the UK will be when an aircraft lands, a train arrives at the first station in the UK, a boat docks at the quay side or drops anchor in territorial waters” – and the corresponding position applies for the point of departure.
This sounds sensible enough, but it is in direct conflict with the Revenue Manuals, which say quite specifically that for the purposes of the taxation of earnings, the United Kingdom includes territorial waters up to a 12-mile limit and airspace.
If that is not clear enough, Section 830(1) TA 1988 provides that:
The territorial sea of the UK shall for all purposes of corporation tax be deemed to be part of the United Kingdom.
And Section 1013 Income Tax Act 2007 states:
The territorial sea of the UK is treated for the purposes of the Income Tax Act as part of the United Kingdom.
How then, can HMRC simply announce that they will have a different rule – however convenient that might be? At a time when HMRC are so firmly contending that they cannot possibly operate a practice that is contrary to the law, it is bizarre that they should so obviously seek to do so here.
One thing is absolutely certain. If you rely on the latest statement or if you rely on the Manuals to claim that you were not in the United Kingdom because your boat left, or Eurostar departed, shortly before midnight, you will be doomed, because HMRC are very clear in their stance that nobody can possibly rely on any of their statements or practices that are contrary to the law.