Ordinary Residence - A Challenge To IR20

Residence, ordinary residence and domicile are three key aspects

which need to be considered whenever anyone arrives in or leaves

the UK (along with their position under any relevant double tax

treaty). These concepts are still not defined by statute, but have

been principally developed by HMRC (until recently as set out in

their booklet IR20) applying the very limited case law in this

area.

A practice has grown up of treating someone as ordinarily

resident if they were or intend to be in the UK for three years or

more. However, a recent case (Genovese v. HMRC) has held that

ordinary residence can only be obtained after an individual has

been resident in the UK for a sufficient period (3 years in this

case). An intention to reside here for a sufficiently long period

is not on its own enough to make someone resident from the time of

arrival.

Those who have followed HMRC's advice that they were

ordinarily resident from the date of arrival in the UK if they

intend to stay for at least three years may therefore be able to

reclaim tax paid in the first few years that they were in the UK,

i.e. before they established a pattern of residence which would

enable HMRC to treat them as ordinarily resident.

Full Article

Introduction

Residence, ordinary residence and domicile are three key aspects

which need to be considered whenever anyone arrives in or leaves

the UK (along with their position under any relevant double tax

treaty). These concepts are still not defined by statute, but have

been principally developed by HMRC (until recently as set out in

their booklet IR20) applying the very limited case law in this

area.

A practice has grown up of treating someone as ordinarily

resident if they are or intend to be in the UK for three years or

more. However, a recent case (Genovese v. HMRC) has held that

ordinary residence can only be obtained after an individual has

been resident in the UK for a sufficient period (3 years in this

case). An intention to reside here for a sufficiently long period

is not on its own enough to make someone resident from the time of

arrival.

Those who have followed HMRC's advice that they were

ordinarily resident from the date of arrival in the UK if they

intend to stay for at least three years may therefore be able to

reclaim tax paid in the first few years that they were in the UK,

i.e. before they established a pattern of residence which would

enable HMRC to treat them as ordinarily resident.

Facts

The taxpayer was an...