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Posted Sun, 14 Aug 2022 13:40:13 GMT by 9043583
My friend is a UK non-domicile that moved from Singapore to the UK in October 2021 (during the 2021/22 tax year) and is permanently leaving the UK (to move back to Singapore) in October 2022 (during the 2022/23 tax year). She met the second automatic UK test in both her arrival and departure tax years so I understand that she would be classed as a tax resident in the UK for both the 2021/22 and 2022/23 tax years. I am trying to understand if my friend can benefit from split-year treatment under Case 8 (i.e. “Starting to have a home in the UK”) in her arrival year and/or Case 3 (i.e. “Ceasing to have a home in the UK”) in her departure year. For my friend to qualify for Case 8 (and therefore split her arrival year) I understand that she needs to: (1) be UK resident in the tax year - she meets the second automatic UK test for the tax year and is therefore a resident in the UK (2) be non-UK resident for the previous tax year - she meets this requirement (3) be UK resident for the following tax year (this must not be a split year) - she would not meet this requirement if Case 3 applies (see below) (4) have no home in the UK at the beginning of the tax year but start to have a UK home at some point during the tax year and continue to have a UK home for the rest of the tax year and all the following tax year - she would not meet this requirement if Case 3 applies (see below) (5) not have sufficient UK ties to make them UK resident in the period from the 6 April to the point they start to have a UK home - she meets this requirement For my friend to qualify for Case 3 (and therefore split her departure year) I understand that she needs to: (1) be UK resident in the tax year - she meets the second automatic UK test for the tax year and is therefore a resident in the UK (2) be UK resident for the previous tax year (whether or not it was a split year) - she met the second automatic UK test for the previous tax year (i.e. 2021/22) (see above) (3) be non-UK resident for the tax year following the split year - she will ensure that she remains a non resident in the UK for the entirety of the subsequent tax year (i.e. 2023/24) (4) have one or more homes in the UK at the start of the tax year and at some point in the year cease to have any home in the UK for the rest of the tax year - she will no longer have a home in the UK once she departs from the UK in October 2022 It seems that splitting her departure year under Case 3 would mean that she no longer meets requirement’s (3) or (4) to split her arrival year under Case 8. In this case would Case 3 effectively “take priority” over Case 8 or would Case 8 “take priority” over Case 3?
Posted Mon, 15 Aug 2022 16:31:51 GMT by HMRC Admin 10
Hi
If a person meets all of the conditions of more than one case of split year, the priority ordering rules are applied.
An individual must be uk resident for tax year under Satutory Residency Test, to meet the criteria for split year treatment.
Thankyou.
Regards.
Posted Mon, 15 Aug 2022 17:39:54 GMT by 9043583
Thank you for your response - I am still unsure as to whether Case 3 or Case 8 would take priority in this scenario. This following link explains what case takes priority within the group of Case's 1-3 and within the group of Case's 4-8 group but it does not provide clarity on whether any priority order exists between the cases across the two groups (which is relevant in my friend's situation, as either Case 3 or Case 8 could be applied, but one of them needs to take priority as both of them cannot be applied together). https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm12030 Would you be happy to provide a view on whether Case 3 or Case 8 would be prioritised in this scenario please?
Posted Tue, 16 Aug 2022 13:25:06 GMT by HMRC Admin 17

Hi
 
9043583,
 
Case 3 and case 8 cannot be applied for the same year.

For case 3, you need to be resident in year prior to departure and for case 8 you cannot be resident in the year prior to departure.

You will therefore need to consider the tests again to see what applies to you  .

Thank you.


 
Posted Sun, 21 Aug 2022 17:32:19 GMT by 9043583
Thank you for your response. I understand that both Case 3 and Case 8 cannot be applied for the same year (but that was not my question). As outlined in my original post: Case 8 can be applied in my friend's year of arrival (i.e. 2021/22) but only if Case 3 is not applied in her year of departure (i.e. 2022/23). Case 3 can be applied in my friend's year of departure (i.e. 2022/23) but only if Case 8 was not applied in her year of arrival (i.e. 2021/22). In this scenario meeting the requirements of one case automatically disqualifies the other case. Case 8 or Case 3 therefore needs to take "priority" as both cannot be applied across the two relevant tax years (2021/22 and 2022/23). Can you please advise which case would take priority in this scenario.
Posted Wed, 24 Aug 2022 14:07:53 GMT by HMRC Admin 10
Hi
Case 3 has priority.
Thankyou.
Regards.
Posted Fri, 26 Aug 2022 11:26:01 GMT by 9043583
Thank you for your confirmation.
Posted Sat, 27 Aug 2022 20:21:48 GMT by 9043583
I have a follow up question. I understand that Case 3 (in my friend's tax year of departure) has priority over Case 8 (in my friend's tax year of arrival). My friend arrived in the UK in October 2021, part way through the 2021/22 tax year. She met the second automatic UK test for this tax year. Given Case 8 cannot be applied in her tax year of arrival does this mean that she will therefore be classed as a resident in the UK for the whole of the 2021/22 tax year (i.e. from 6th April 2021 to 5th April 2022)?
Posted Sun, 04 Sep 2022 16:11:28 GMT by 9043583
Are you able to provide a view on this follow-up question please?
Posted Wed, 07 Sep 2022 08:00:07 GMT by HMRC Admin 19
Hi,

Unfortunatley we cannot confirm residence status for individuals. To assist you please refer to the tool here:

Tax on foreign income

Thank you.
Posted Wed, 07 Sep 2022 08:10:45 GMT by 9043583
Understood. If an individual theoretically speaking: a) arrived part way through a tax year, b) met the second automatic UK test for that tax year, and c) did not qualify for split year treatment in that tax year, Would that individual be considered a tax resident for the entirety of that tax year?
Posted Fri, 09 Sep 2022 15:55:48 GMT by HMRC Admin 25
Hi 

We are unable to answer hypothetical questions on  the matter of residancy, it's for you to decide.

You can find useful guidance using the residence tool: 

Tax on foreign income

Thank you. 
Posted Fri, 09 Sep 2022 22:11:21 GMT by 9043583
Thank you for sharing a link to the guidance which allowed me to navigate to the following manual: https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm12010 The guidance available in the manual above confirms that unless split year treatment applies, an individual is either UK resident or non-UK resident for a full tax year, and at all times in that tax year, under the SRT.

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