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HMRC internal manual

Residence, Domicile and Remittance Basis Manual

Residence: Introduction: Introduction

This guidance expands upon the information in HMRC6 and is written for HMRC officers who have to consider the residence status of individuals up to the introduction of the Statutory Residence Test (SRT), which applies from 6 April 2013. It is divided into chapters dealing with the subjects listed at RDRM10000.

It is vital to remember that each case will depend on its own facts and for that reason this guidance can do no more than set out general principles. The terms ‘residence’ and ‘ordinarily resident’ are not defined in the Taxes Acts and so our guidance on these terms is largely based on rulings of the Courts. As there is no statutory definition of ‘residence’, it takes its normal, everyday meaning.

What is residence?

An individual’s residence position is one of the factors that determines what UK tax is due and on what type of income or gains. If an individual is resident and ordinarily resident in the UK they will be liable to UK tax on all of their income wherever it arises (unless there is a claim for the remittance basis). This includes earned income from employments and self-employment, as well as UK investment income such as dividends or interest from a bank or building society. Capital Gains tax will also be due on any gains the individual has from the disposal of certain assets which belong to them.

There are many factors which are covered in this guidance that determine whether an individual is resident in the UK. With one exception (explained later in the guidance), it is not simply a question of the number of days an individual is physically present in the UK during a tax year, although this is an important consideration.

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Enquiries into an individual’s residence status

When reviewing an individual’s residence status we need to consider how often and how long they are in the UK, the purpose and pattern of their presence here and their connections to the UK. Their connections to the UK might include the location of family, property, business and social and charitable connections.

You need to bear in mind that an enquiry into an individual’s residence status will be time consuming and will take a lot of resource. We need to review and establish the facts surrounding their presence in the UK, and the purpose of that presence, and also their connections to the UK, whatever they are. Reviewing an individual’s residence position will usually mean we have to look at all the circumstances surrounding their lifestyle, both before and after the alleged departure, and unfortunately some people find such questions intrusive, that is regrettable but HMRC need to establish and consider the facts so that they can come to an informed view.

Individuals and their advisers can expect that HMRC’s understanding of the law, as it is summarised in this guidance, will normally be applied in relevant cases. However, each case will turn on its own facts, or context, and so there will be circumstances in which HMRC and individuals will disagree about the interpretation to be placed upon the facts or the way that the legal principles should be applied to the facts.