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TonyTax
TonyTax, Tax Consultant
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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, my question is about residency. I expect to return to

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Hello, my question is about residency. I expect to return to UK in Dec'15 after nearly 23 years living permanently overseas and non-UK resident for tax (departed January 1992, UK resident before then). I intend to remain in the UK after I return. I will also be employed in the UK for 6-9 months after my return but it will be 'gardening leave', so I have the option to restrict my presence in the UK to 46 days, to satisfy the automatic overseas test. However I don't really want to do this, so am trying to find out if split-year treatment will apply. Case 6 seems the obvious one, and I satisfy all of them except one criteria that confuses me. This is the one that states 'you must have been resident for one or more of the 4 tax years before the year in which you are not UK resident under the previous bullet' (i.e. 3rd automatic overseas test - which I will satisfy for 2013/14, but not for 2015/16 - the calc works out at 27, not the 35 required). My question is whether the criteria mentioned above refers to the 4 years before I became non-resident (1992/93) or just the previous tax year (2013/14)? Everything I've read seems to indicate it's 2013/14, but that then means I'm not eligible for SYT which seems unreasonable given the long period I've been away. Can you please give your interpretation of my situation and/or add to my understanding of the criteria that seems to be excluding me? Very grateful for any help you can give.
Regards,
John
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.
Hi.

Case 6 of the split year treatment rules is aimed at those returning to the UK like yourself after a period of working full time abroad. However, the legislation was changed to that Case 6 only applies to those who have been non-UK resident for a short period.

Take a look under Case 6 about halfway down the notes here. As it says, in order for Case 6 to apply, you must have been UK resident in one or more of the four tax years immediately preceding your last year of full non-UK residence.

Frankly, I don't know what the HMRC thinking is behind the change I explained above as it doesn't seem logocal but it leaves you no option but to change your plans or to look to meet one of the Cases for returnees to the UK or to stay within the 46 day limit. Reading between the lines, I get the impression that there was an error in the drafting of the original proposed legislation.

I hope this clarifies things for you but let me know if you have any further questions.
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