UK Statutory Residence Test Query
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UK Statutory Residence Test Query
Apologies if this has been answered elsewhere but does anyone know if the 3rd Automatic Overseas Test applies if you are a foreign-based pilot laying-over in the UK? (From time to time I operate to LHR but live and work in the ME)
Document RDR3 is the source document for determining residency status
Para 1.8 states that the Test does not apply if "at least 6 of the trips you make in that year as part of that job are cross border trips that begin in the UK, end in the UK, or begin and end in the UK".
My thoughts are that since my UK flights begin outside the UK, or end outside the UK, or begin and end outside the UK then the 3rd Automatic Overseas Test does apply - but maybe I'm kidding myself! Would someone with first-hand knowledge of the interpretation of this rule please advise - I have been googling myself silly all afternoon!
Document RDR3 is the source document for determining residency status
Para 1.8 states that the Test does not apply if "at least 6 of the trips you make in that year as part of that job are cross border trips that begin in the UK, end in the UK, or begin and end in the UK".
My thoughts are that since my UK flights begin outside the UK, or end outside the UK, or begin and end outside the UK then the 3rd Automatic Overseas Test does apply - but maybe I'm kidding myself! Would someone with first-hand knowledge of the interpretation of this rule please advise - I have been googling myself silly all afternoon!
Last edited by myke; 14th May 2017 at 06:39.
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If I meet the 3rd Automatic Overseas Test then it does not matter how many ties I have - I would be automatically classed as non-resident. It all hinges on whether my flights are deemed to begin or end in the UK.
For such a simple question seeking professional advice is rather akin to using a sledgehammer to crack a nut. I feel sure there are many similar colleagues on here who have examined this question and can offer a quick answer.
For such a simple question seeking professional advice is rather akin to using a sledgehammer to crack a nut. I feel sure there are many similar colleagues on here who have examined this question and can offer a quick answer.
Amateur opinion.
Looking at the notes to the HMRC document on the third test it seems fairly clear that at least in the context of the document the operative word is "trips" not "flights". As you said in your OP you seem to be doing trips that start and end outside the UK.
But whilst I hate to say it of course for real piece of mind you need professional advice.
I would be automatically classed as non-resident. It all hinges on whether my flights are deemed to begin or end in the UK.
But whilst I hate to say it of course for real piece of mind you need professional advice.
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I went through all this nonsense with HMRC a few years ago..nightmare, but in a nutshell they "advised" Days spent in UK that "count as work" are based on time, location and circumstances. For instance, if you "transit uk", remain on A/C on the ramp if its less than 3 hrs its not counted as work in UK. If you Divert to UK and remain in A/C for less than a "DAY" but more than 3 hrs, would be treated as "exceptional circumstances" and not treated as work. If you do layover in UK, get of A/C for more than 3 hrs, you are subject to the "Day Rule" midnight/ midnight and it counts as UK work. As mentioned, its not that easy as the Statutory tests" also look back at your UK residency status in the past 3 years. Therefore, if you do a 36 hour bullet stop in LHR its a day and a half towards your allowance. They will ask for copy of rosters as the defining article. Having said all this, they seem to be on our side, and "generous" with the calculations, for instance if you land 23.00 local you could argue your duty finished 00.01so that "Day" is disregarded as its after midnight.
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Thanks for the feedback guys. Having studied RDR3 meticulously I'm fairly sure I understand all the vagaries of the work less than 3hrs, midnight rule and exceptional circumstances etc. In my case they would rarely apply since I have no business or job in the UK, and my time there is much less than 90 days a year. I also do not fall foul of the Deeming Rule as I perhaps make a maximum of 15-20 trips to the UK a year, mostly for a few days off at a time. Finally, I would only extend my stay for legitimate reasons which would constitute Exceptional Circumstances.
For me the issue is if I can apply the Third Automatic Overseas Test since that determines outright whether I am non-resident or whether I need to apply the Tie-Breaker Rule (which I would fail since I have 3 ties and was resident in at least one of the previous three tax years). As someone who wants to do things right it is vital for me to know the answer to this question.
Avenger, It is heartening to know that the taxmen are 'on our side'. I think I will give them a call when I am next back in Blighty.
For me the issue is if I can apply the Third Automatic Overseas Test since that determines outright whether I am non-resident or whether I need to apply the Tie-Breaker Rule (which I would fail since I have 3 ties and was resident in at least one of the previous three tax years). As someone who wants to do things right it is vital for me to know the answer to this question.
Avenger, It is heartening to know that the taxmen are 'on our side'. I think I will give them a call when I am next back in Blighty.
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Unless you are referring to your own post my statement is not an opinion but an accurate reflection of the rules (notwithstanding my use of the word flight instead of trip - a harmless error). I accept that I, like most here, are amateurs when it comes to tax law but I have studied RDR3 in depth - something which I suspect few on here have done.
I was making a statement of my position, not a reflection on your prior post...badly worded, my bad.
You might be suprised, there are more than a few here, self included, who are e.g. UK based but not UK resident and as a result who have ploughed their way through RD3 to ensure that their particular arrangements are "compliant".
Hopefully you'll get a definitive answer at some point.
but I have studied RDR3 in depth - something which I suspect few on here have done.
Hopefully you'll get a definitive answer at some point.
Last edited by wiggy; 14th May 2017 at 12:30.
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No worries wiggy, and I appreciate the reminder about getting the terminology correct. If I don't get an answer by the time I go home at end of the month I'll call the taxman and post on here his interpretation of the rule.
Incidentally, one thing I learned is that one needs to keep very accurate records of work carried out overseas (which must average 35 hours per week based on the Reference Period). Even flying the best part of 1000 hours a year - including pre-flight and post-flight duties is well below the level required. Clearly, we also carry out admin duties and (most of us, anyway
) study for many hours to remain current although this is very tedious to document. I'm not sure if time spent on layovers away from base counts as work but the cumulative time away should certainly satisfy the rule. One would assume that a pilot flying almost to the annual hourly limit would also be sufficient evidence, but again maybe I'm being overly optimistic! Perhaps someone has a definitive answer on this issue?
Incidentally, one thing I learned is that one needs to keep very accurate records of work carried out overseas (which must average 35 hours per week based on the Reference Period). Even flying the best part of 1000 hours a year - including pre-flight and post-flight duties is well below the level required. Clearly, we also carry out admin duties and (most of us, anyway
) study for many hours to remain current although this is very tedious to document. I'm not sure if time spent on layovers away from base counts as work but the cumulative time away should certainly satisfy the rule. One would assume that a pilot flying almost to the annual hourly limit would also be sufficient evidence, but again maybe I'm being overly optimistic! Perhaps someone has a definitive answer on this issue?
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It's worth considering that these residency tests are just the current rules. Money is short in the governments pot and they don't seem to be trying to claw it back from the corporations.
Who do you think will be targeted for their contributions in future to appease the disillusioned UK middle?
It's even more significant now as the ME seems to be introducing new taxes each year, so you be hit with a double whammy if they deem you as UK resident (family move back, property owned etc).
Just a thought. The world's a changing for sure 😢
Who do you think will be targeted for their contributions in future to appease the disillusioned UK middle?
It's even more significant now as the ME seems to be introducing new taxes each year, so you be hit with a double whammy if they deem you as UK resident (family move back, property owned etc).
Just a thought. The world's a changing for sure 😢
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No longer relevant to me as I have moved back to the UK, but my accountant always advised me that a trip was a duty period. So a turnaround began and ended outside the UK therefore didn't count, but if I went to the hotel then that was two trips - one in, one out.
As above, though, the definitive answe is to ask HMRC and get it in writing. As I have previously discovered the hard way, if your acocuntant gets it wrong it is still you that is liable!
As above, though, the definitive answe is to ask HMRC and get it in writing. As I have previously discovered the hard way, if your acocuntant gets it wrong it is still you that is liable!
