The UK Special Commissioner ruled that visiting the UK for less than 90 days a year is not the only determinant of whether a person is UK resident for tax purposes.  In Shepard v HMRC, Mr Shepard appealed as he had only spent 80 days in the UK. Dismissing his appeal, the Commissioner held that Shepard’s absences from the UK were temporary. He returned to the UK house which he shared with his wife, had no evidence of paying tax elsewhere in the world, and intended to return to the UK.

It is not sufficient to appear to have left the UK by signing a P85 or getting an accountants letter. You also need to break your connection with the UK and establish a substantial connection somewhere else with a contract that covers an entire year. The Inland Revenue can always make a case for tax if a person’s visit to the UK are habitual and substantial and they cannot point to a contractual or tax residency elsewhere.

When combined with the above changes to UK linked offshore banks this creates serious difficulties for many security contractors who may have believed themselves impervious to tax. Tax penalties and back payments for the contractors who are caught out are likely to run into hundreds of thousands of dollars per person. With the right planning and advice contractors can ensure they minimize any unnecessary tax liabilities – again it is vital to speak to a professional adviser about these issues