Meaning of 90-day tie

[modellingman]

There is a Statutory Residence Test which determines whether in any given tax year an individual is a UK resident for tax purposes. As part of this there is a "sufficient ties" test. One of these ties is called the 90-day tie.

It is based is in Schedule 45 of the Finance Act 2013 and defined in paragraph 37, Part 2 as

P has a 90-day tie for year X if P has spent more than 90 days in the UK in—
(a)the tax year preceding year X,
(b)the tax year preceding that tax year, or
(c)each of those tax years separately.

So, the question. If I spend 60 days in the UK the tax year preceding X, and another 60 days in the tax year preceding that I will have spent 120 days in the UK in the two tax years preceding year X. Does this satisfy condition (c) of the legislation?

If it does, ie the 90 day limit applies to the combined two year period, why include conditions (a) and (b)? In this case, anything that meets either (a) or (b) (or both) would necessarily meet (c).

If it doesn't, ie the 90 day limit does not apply to the combined two year period, but instead to each year separately, then why include (c) at all? In this case anything meeting (c) would necessarily meet both (a) and (b).

Either way, it seems that the rules have been over-draughted. All that is required is (c) without (a) and (b) if my example meets the test or (a) and (b) without (c) if it does not. Or am I missing some subtlety?

[jfgw]

I suggest that it is worded that way to ensure that the text can only be interpreted as intended.

(a) or (b) can mean:
(a) or (b) but not both, or
(a) or (b) or both (a) and (b).

While common sense would suggest the latter in this instance, it is the legal interpretation which matters, and this needs to be unambiguous.

Julian F. G. W.

[DrBunsenHoneydew]

I agree, it is to distinguish between "inclusive or" and "exclusive or".

HMRC take it that a “UK presence” tie is created if the individual spent more than 90 days in the UK in either of the previous two tax years, or in both.

[johnhemming]

If you want to see some really picky analysis of secondary legislation have a look at the joint committee of both houses on statutory instruments. It is important that legislation is clear and something that makes it clear that it is an inclusive or is sensible.

[Lootman]

HMRC take it that a “UK presence” tie is created if the individual spent more than 90 days in the UK in either of the previous two tax years, or in both.

The way I read it is that it is really saying it takes two full tax years of being away from the UK in order to be treated as non-resident (*)

So if I live in the UK in 2017-18 (I do, having spent more than 90 days here already) then even if I don't spend a day in the UK for all of 2018-19 and 2019-20, I won't become non-resident (in the opinion of HMRC) until 6th April 2020.

(*) Assuming that other factors are not material anyway

[modellingman]

HMRC take it that a “UK presence” tie is created if the individual spent more than 90 days in the UK in either of the previous two tax years, or in both.

The way I read it is that it is really saying it takes two full tax years of being away from the UK in order to be treated as non-resident (*)

So if I live in the UK in 2017-18 (I do, having spent more than 90 days here already) then even if I don't spend a day in the UK for all of 2018-19 and 2019-20, I won't become non-resident (in the opinion of HMRC) until 6th April 2020.

(*) Assuming that other factors are not material anyway

In the circumstances described, Lootman would not be a UK tax resident in either 2018/19 or 2019/20 by virtue of the fact that he would satisfy the First Automatic Overseas test in each year (see the guidance document available at https://www.gov.uk/government/publicati ... e-test-srt though, be warned, at over 100 pages it is not a simple read). In fact, if he spent up to 15 days in the UK each year he would still satisfy the test and so be non-resident.

The 90-day tie is one of five possible ties to the UK, with the others based on family, accommodation, work and the country in which most time is spent. These ties only play a part in determining whether or not an individual is a UK tax resident if the individual does not satisfy any of the Automatic Overseas Tests (these tests classify an individual as non-resident) and the individual does not satisfy any of the Automatic UK Tests (these tests classify an individual as resident). The number of ties required to make someone a tax resident depends on two factors: whether or not they have been a tax-resident in any of the preceding 3 tax years and the number of days spent in the UK in the tax-year (see tables on p29 of the guidance document).

It certainly is possible to spend more than 90 days in the UK and be non-resident for tax, though other conditions would also need to apply.

My thanks to jfgw, DrBunsenHoneydew and johnhemming for your replies. You have confirmed my suspicions.