The Upper Tribunal has now heard the appeal in the case of Tuczka v HMRC on ordinary residence. It may be remembered that Dr Tuczka came to work in the UK expecting to be here for less than three years. He had no intention of staying in the UK; his purpose in coming here was to obtain some international experience and return to Austria. HMRC claimed that he should be ordinarily resident shortly after his arrival. Dr Tuczka said that he should not have become ordinarily resident until he had been here for approximately three years, or until he was here for a settled purpose. He was neither. His accommodation in London was very basic; he maintained a home in Austria where his family lived; his duties took him all over the world and he made frequent trips home. He was gaining the relevant experience here but was interviewing back in Austria with the clear intention of returning there within three years.

The Tribunal took the view that Dr Tuczka had come here voluntarily for employment which was a settled purpose; there was no minimum period which needed to be satisfied. Accordingly he could be ordinarily resident soon after his arrival. How soon – well, not quite sure. How about the beginning of the next tax year? HMRC argued vigorously in favour of this proposition – completely contrary to their long established practice in IR20, but this seems to be the way these days. The Upper Tribunal said very little. There was a great deal of introductory material, and they concluded that the First Tier Tribunal had applied the correct tests. To be ordinarily resident, it is necessary for him to be in the UK voluntarily and for a settled purpose; therefore the appeal was dismissed.

It is a pity that the Court did not take the opportunity to clarify some confusing elements of the decision of the First Tier Tribunal or to address the inevitable consequence that there is now no significant distinction between residence and ordinary residence – at least not one which can be safely articulated. Anybody coming to the UK for work is very likely to find himself ordinarily resident almost immediately and therefore liable to the high rates of UK income tax on the whole of their worldwide income. They might (only might) escape this treatment for the remainder of the tax year in which they arrive, but almost certainly not thereafter.

There are many people who have come to work temporarily in the UK on the basis of the previous understanding of the law and practice – i.e., that they would be resident but not ordinarily resident for the first three years. They will now find themselves in serious difficulty. Furthermore, senior executives of major corporations will almost certainly ensure that they and their businesses stay away. They used to rely on the established HMRC practice, but now that they know that HMRC will argue the opposite in court, there can be no confidence about how they will be treated for tax purposes.