Residency status

Bill Blevins looks at how tax authorities keep track of an individual’s residency status…

Question: With regards to tax residency, apart from the individual telling them, do the UK and French tax authorities actually know how much time one spends in each country and if so, how? Thank you very much for your help. G MacIntyre, by emailAnswer: Neither the UK nor the French tax authorities are informed when you leave or arrive in a country, and as such don’t automatically know how much time you spend in each place. Nevertheless, you need to be careful about abiding by the tax residency rules of each country, because if either decide to investigate your residency claims, they can use documents such as tickets, boarding passes, credit/debit card statements, utility bills, phone records, parking fines and speeding tickets to establish where you were at any given point in time. And don’t forget, people have been known to annoy neighbours, gardeners and cleaners, who may report you to the authorities.An individual does not have a choice as to where to claim tax residency; it is a matter of fact as to whether you are French or UK resident under the rules. While you can claim to be resident somewhere, an investigation could prove otherwise if you have not actually fulfilled the residency criteria for that country.Residency rules don’t actually always stipulate a number of days required for residency or non-residency. For example, the main domestic French residence rule is where your main home is located. If it is in France, no matter if you spend less than 6 months in France during each French tax year, you will be French resident under French domestic law. Conversely, even if you spend less than 91 days in the UK on average, you could still be found to be UK resident if you have not left the UK for a settled purpose’.HM Revenue & Customs (HMRC) documentation on non-residency states:You should always look at the pattern of your lifestyle when deciding whether you are resident in the UK. Things you should consider would include what connections you have to the UK such as family, property, business and social connections. Just because you leave the UK to live or work abroad does not necessarily prove that you are no longer resident here if, for example, you keep connections in the UK such as property, economic interests, available accommodation and social activities or if you have children in education here. For example, if you are someone who comes to the UK on a regular basis and have a settled lifestyle pattern connecting you to this country, you are likely to be resident here.’Medical recordsHM Revenue & Customs has sent letters to some people claiming non-UK residency requesting various documents as proof. This included a list of precise dates of all arrivals and departures in the UK with supporting documentary evidence in form of bank/credit card statements. Utility bills, itemised phone bills, insurance policies and local property/council tax statements were requested for any accommodation that was occupied. The letter also asked for information on where the individual’s medical records were kept and for a brief narrative detailing social activities and interests in the UK and France and documentation relating to membership of any clubs etc.While you can fulfil both countries’ domestic residence criteria simultaneously, the UK/France double tax treaty will then deem you to be resident in only one country for tax purposes. A number of tests are applied, and if none of them can determine your residency it will fall back to your nationality.If your situation is not clear cut, or you have any doubts about your status, you should seek advice from an adviser with up-to-date knowledge of both the UK and French tax rules to establish where you are tax resident, and what steps you should take to ensure you are actually tax resident in the country you wish to pay taxes in.