It is all in fact a little more draconian than one might think.
The new proposals will affect both non resident and non domiciled individuals.
Until April 6th, 2008, days of arrival and departure in the UK will not have been counted as days in the UK in terms of calculating days of residence as laid down in HMRC. IR20. guidelines. After April 6th, 2008, such days will count towards the rolling average of 90 days in any one tax year as laid down in IR20..
This means that a pilot or flight crew member who has gone to live in, shall we say, Malaga, where he might suppose life to be easier, would be considered to have spent a day in the UK for each part of a day that he were physically present in England. Therefore, a turnaround at Stansted would be considered a day in the UK and a night stop would give rise to a visit of two days in the UK.
The result of this will be that non UK resident flight crew who fly in and out of England in the course of their duty, on a regular basis, may find themselves UK residents in terms of the 90 day guidelines whereas up until now they fell free of such a tribulation.
The ramifications of this are potentially enormous and although double tax treaties may protect some, many fight crew may well have to employ, at considerable expense, an accountant to file a tax return in the UK as well as in their place of actual residence. Inevitably whichever tax charge is the higher will apply and so, even the Malaga example, taking advantage of the attractive Spanish tax regime for new arrivals there may end up paying the UK HMRC the difference between his Spanish tax and the UK tax. Where your salary is paid will not matter to HMRC. In addition to this, if our Malaga example is held to be resident in the UK for income tax purposes, unless he is non domiciled, he will fall into the catchment area of UK inheritance tax. Even if he is non domiciled, under the new rules, he will be liable for CGT on his world wide capital gains.
Pilots and cabin crew will have to ensure that companies do not roster them for more than ninety UK trips a year, on different days, to or from the UK. It will not matter to HMRC if you do not pass through immigration control. There is no such requirement in the UK HMRC guidelines to do so before being considered a visitor to England.
The government has published a consultation paper in which it invites further comments on matters of non domicile and taxation. The changing of the counting of the days is not actually part of the consultation paper. The government has already stated that such a change will be initiated on April 6th, 2008. The effects of such a change will be enormously detrimental to the entire financial operation of the City of London.
The British government seeks to find justification for the change of the counting of the days by stating that most other countries apply a similar rationale to days of arrival and departure. This is disingenuous and rather dangerous for the economy. The UK 90 day residence rule is probably the most prohibitive restriction of its kind enforced by any country in the world.
A better balance would perhaps be achieved by extending the 90 day rule to the more generally adopted 180 day rule per annum, as is the case in most other countries.
But that of course would require an application of the concepts of fairness and balance, both of which would appear as but figments of the fundiment to those who haunt the darling passages of the brown building which passes in England for the treasury.
