The statutory residence test determines UK tax residence from April 2013 replacing old rules. It has three tests: automatic overseas tests, automatic UK tests, and sufficient ties test. For the employees: Anna meets the second automatic overseas test and is not UK resident. Ben likely meets this test excluding exceptional days in the UK. Carl meets this test but Davinia's train journey may take her over the 31-day work limit so more details are needed to examine her position fully.

1. Tax Journal
Thoughtful commentary - by tax experts, for tax experts.
Tax Journal, Issue 1219, 18
6 June 2014
Ask an expert
Secondees training in the UK
Priya Dutta
Senior consultant, Gabelle
Email: priya.dutta@gabelletax.com
Tel: 020 7182 4740
© Reed Elsevier (UK) Ltd 2014
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Q My company is the holding company of a worldwide group with a number of foreign subsidiaries. Its head
office is in Glasgow and employees from the UK are regularly seconded to work for the foreign subsidiaries.
Prior to the introduction of the statutory residence test, we had been advised that all our secondees were not
UK resident on the basis that they were working full time abroad. Each year, some of the secondees come
back to the UK to study for professional qualifications: the course fees are paid for by the company and the
course lasts 30 days, excluding travel time. In the past, I have been told that time spent on the course
amounts to 'incidental duties' and so does not jeopardise the employees' residence status. However, I have
heard that the rules have changed. The four employees concerned are Anna, Ben, Carl and Davinia. Anna
and Ben have not been resident in the UK since 2008. Anna spent fewer than 45 nights in the UK during
2013/14. Ben spent slightly more; following an accident, and on the advice of doctors, he spent a week in
hospital until he was fit to travel. Carl and Davinia have been non-UK resident since 2012. Anna, Ben and
Carl fly directly to and from Glasgow airport. Davinia is not able to get a direct flight to Glasgow, so she takes
a flight to London Heathrow and then a train to Glasgow. Typically, each employee, when they are not
studying in the UK, works long hours and weekends. No one spends more than 90 days in the UK or (with
the exception of the UK course) has any significant breaks from employment. Am I right in thinking that,
because all four individuals work full time abroad, they are automatically not resident in the UK?
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A From 6 April 2013, an individual's residence position is determined by the statutory residence test (SRT,
found in FA 2013 Sch 45) and the old rules no longer apply.
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2. The SRT is split into three sections, which I briefly outline below. Before I do, however, it is necessary to
categorise each employee as either an 'arriver' or a 'leaver'.
Broadly speaking, arrivers are treated more leniently and can spend more days in the UK without becoming
resident here. An arriver is any individual who has not been resident in the UK in any of the previous three
tax years.
In contrast, a leaver is any individual who has been resident in the UK in any of the previous three tax years.
On this basis, Anna and Ben are arrivers and Carl and Davinia are leavers.
The tests
The SRT can be broken down into three separate tests:
· the automatic overseas tests (AOT);
· the automatic UK tests; and
· the sufficient ties test.
Where the first test -- the AOT (see FA 2013 Sch 45 para 11 et seq) -- applies, it is not necessary to consider
the following two tests. Assuming the individual does not die in the year, the AOT itself can be broken down
into three subtests where the individual:
· is a leaver and spends fewer than 16 days in the UK;
· is an arriver and spends fewer than 46 days in the UK; or
· works sufficient hours overseas (with no significant breaks) and spends fewer than 91 days
in the UK, fewer than 31 of which are spent working.
For this purpose, a day in the UK is any day when the individual is in the UK at midnight (FA 2013 Sch 45
para 22(1)).
Anna
Anna's position is straightforward: as a leaver who spends fewer than 46 days in the UK she meets the
second AOT and so is not UK resident.
Ben
Ben's position is slightly more complicated. Although it is not clear how many days he has spent in the UK in
total, it appears that any 'excess' days spent in the UK are due to exceptional circumstances beyond his
control and so should be excluded from his day count. Presumably the revised day count will be fewer than
46 days, so he too will meet the second AOT and will not be UK resident.
Carl and Davinia
As 'leavers', Carl and Davinia's positions are more complicated still. They do not meet the first two AOTs.
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3. In order to rely on the third AOT (working overseas), they will need to show, inter alia, they have fewer than
31 UK workdays.
The definition of a workday is perhaps broader than most expect, since it includes any day in the UK when
the individual works for more than three hours (FA 2013 Sch 45 para 35(2)). Furthermore, time spent training
in the UK counts as time spent working (FA 2013 Sch 45 para 26(5)). In addition, travelling time can also be
counted as work (FA 2013 Sch 45 para 26(4)).
Time spent by Carl on the flights to and from the UK is not treated as work performed in the UK and so will
not add to his UK workday count. Assuming Carl works sufficient hours overseas (on average 35 hours per
week), he will meet the third AOT and not be resident in the UK. Presumably some records are kept of the
hours he worked in the UK and abroad so that a full calculation can be performed to confirm this position.
Unfortunately for Davinia, her journey from London to Glasgow will be treated as UK work, even if she is not
actually working during the journey. To the extent that her journey lasts more than three hours and is not on
the same day as her training course, these journeys will add to Davinia's UK workday count and take her
over the 31 day limit. Nevertheless, she may still not be resident in the UK provided that she does not fall
within the automatic UK residence test or the sufficient ties test. I would need to get some further details to
examine the position more carefully.
For a detailed review of the statutory residence test, see the special report in Tax Journal, 21 June 2013.
See also 'Statutory residence test: the end of the clean break' (Carolyn Steppler & Jane Scott), Tax Journal,
2 May 2014, for commentary on why the new rules provide more flexibility for leavers.
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