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If you live abroad and claim exemption from UK income and capital gains tax according to the Statutory Residency Test, it is crucial that you keep detailed records of visits to the UK in order to be able to verify your claim to reside abroad. This has become a hot issue with HM Revenue and Customs (HMRC) who, according to tax experts, are challenging claims to non-residency with increasing regularity.
According to the test, which became law on 6th April 2013, if you spend 183 or more days in the UK you are automatically UK resident for tax purposes. However the situation is often less clear cut, with other factors coming into play such as if you have worked in the UK or if you have a home or close family ties there. In theory, you could spend as few as 46 days in the UK and yet still qualify as resident for tax purposes.
A case in point was reported in the Daily Telegraph in November 2013. A multi-millionaire couple who spent less than 91 days per year in the UK were nonetheless deemed to be tax resident because they kept their family home in Cheshire and their teenage daughter continued to live in the UK.
Given that there are so many different factors taken into consideration concerning the residency issue, whatever your situation, it is highly advisable to keep any relevant information which can provide evidence of exactly when you visited the UK in case HMRC decide to investigate you. This information should include travel tickets, accommodation costs, credit card bills, passport stamps, proof of ATM withdrawals and your reasons for travel. In the event that your claim to non-residency is challenged, this will be vital in arguing your case to the tax man.
Disclaimer: Infinity is not licensed or qualified to give tax advice.
This article is intended for information only and does not constitute tax advice. If you are in any doubt about your tax status please contact a qualified professional.