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Posted Wed, 22 May 2024 07:55:57 GMT by David McNay
I'm trying to understand the following situation. A British citizen, with no other passports, who is also domiciled in the UK is working abroad. For the 2023/24 tax year & 2024/25 they no not meet the UK residency requirements so are assumed to be non-resident for tax purposes - based on the Statutory Residence Tests. However they also fail to meet the Residency requirements of the country they are working in, because the 3rd country assess statutory residence over 5-years and this person has only been working there for 2. After 5-years they impose worldwide earnings taxation, but there is a DTA in place. This seems to make them a tax-nomad or stateless for tax purposes - is this a problem from HRMC's perspective? Being domiciled British they still fill in a UK Self-Assessment which declares (and pays tax) on all UK sourced income, and they pay income tax on any earnings sourced in the 3rd country (for the days they are working there). So as far as I'm aware there is no tax avoidance! Just means HMRC taxes UK earnings and the foreign tax authority taxes offshore earnings. Would like to understand the HMRC stance [not interested in the foreign tax authority position, just how HRMC would consider this]. If it helps the 3rd country is South Africa. Thanks, David
Posted Fri, 24 May 2024 14:26:28 GMT by HMRC Admin 32

You do not declare to HMRC your non UK income or capital gains, when you are not UK tax resident.  

If you have UK sources of income and capital gains, you may have to pay UK tax, depending on what those sources of income are.

Thank you.
Posted Sat, 25 May 2024 07:26:35 GMT by David McNay
Hi, thank you but that doesn’t answer the question - that just reiterates what was in the question. The question is if there is a problem with a British person being stateless from a Tax perspective?! Some countries it’s okay (seems the UK too) but in other countries you MUST be resident somewhere, so you revert to your home country if you are tax resident nowhere.
Posted Thu, 30 May 2024 12:01:32 GMT by HMRC Admin 19

You would revert to your citizenship.

Thank you.
Posted Thu, 30 May 2024 15:13:08 GMT by David McNay
Thank you, please could you post where in the law states this? So looking for the exact phrasing which states that a British Citizen isn’t allowed to be stateless from a tax residency perspective - even if they are paying all taxes owed both in the UK and the foreign countries they work.
Posted Wed, 05 Jun 2024 06:36:07 GMT by HMRC Admin 25
Hi David McNay,
There is no legislation on this, but you have to be resident somewhere for tax purposes, so it would then depend on what the relevant DTA states. Please refer to the UK/South Africa DTA here:
Article 4 paragraph 2 which clearly defines how residence for an individual is established.
Thank you. 

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