Revised day counting, is it a step too far or not quite so bad after all…
Having spoken to senior HMRC officers ahead of the 2008 Budget it became evident that amendments were being considered in connection with the new day counting rules for UK tax residence from 6/4/08 which have now been announced.
We have previously commented upon the earlier Pre budget Report proposals to count all days of arrival and departure for the physical presence test and many joined in with representations to HMRC during the consultation phase ahead of the Budget.
Whilst the Budget statement now refers to “midnights” being counted from 6/4/08 we understand after further verbal clarification from HMRC on the 13/3/08 that the actual draft legislation is likely to refer to something like “being in the UK at the end of the day” rather than “midnight” which could otherwise perhaps be construed as spanning two days rather than one. In essence however the HMRC appear to have pulled back from the brink and will not be counting all days of arrival and departure but effectively instead UK midnights from 6/4/08. However we all still need to await the exact wording of the legislation that will be passed in due course.
It is further understood that the basis of duty calculation for Non Resident Aircrew remains the same.
The concession regarding days in the UK due to exceptional circumstances has not changed but frankly that is best not relied upon.
You may have seen the reference to exemption for passengers in transit which may span a midnight providing no business activity is undertaken whilst in the UK. This will not apply to working Aircrew transiting the UK engaged upon working flights.
Perhaps some examples will help.
1) Arrive Monday afternoon and Depart Wednesday morning– old rules 1 day
Pre budget proposal including day of arrival and departure- 3 days
Budget 2008 – two midnights counted 2 days
2) Arrive Monday afternoon and Depart Tuesday morning – old rules 0 day
Pre budget proposal including day of arrival and departure- 2 days
Budget 2008 – one midnight counted 1 day
3) Arrive Monday afternoon and Depart Monday afternoon – old rules 0 day
Pre budget proposal including day of arrival and departure- 1 day
Budget 2008 – no midnight counted 0 days
4) So working Aircrew transiting UK on the same day in and out before midnight will not have to count that day as a day visiting the UK after all for the physical presence test, otherwise referred to as UK visit limitations. Do note however that all working flights have to be recorded and taken into consideration for the UK duty calculation as before.
Clearly these changes are likely to impact differently on individuals according to exact circumstances and ongoing tax planning remains essential, so do contact us if we can be of further help. Additional details regarding the 2008 Budget are available upon request.
A copy of the Budget Notes concerning Day Counting BN102 can be accessed from HMRC website via the link below. HM Revenue & Customs
Links are also provided below to the full text of the prior consultation via the HMRC and Treasury websites.
HM Treasury HMRC Residence & Domicile
Federation of Tax Advisers
Professional Pilots Rumour Network
British Airline Pilot Assoc
Bassa
HM Revenue & Customs
Aircrew Taxation Matters
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Disclaimer.....
All comments posted are to be regarded as 'general' information and should not be relied or indeed acted upon without our first undertaking a specific review of your exact individual circumstances.
