Monday, 26 April 2010

Ordinarily Resident

It is possible to be resident in the UK, but not ordinarily resident here or to be resident but not domiciled here. You can be resident in the UK but not ordinarily resident here. When we talk about someone being 'not ordinarily resident in the UK' we mean that although they are resident in the UK for a particular tax year, they normally live somewhere else. For example, if you are resident in a tax year because you have been in the country for more than 183 days but you normally live outside the UK, it is likely that you are not ordinarily resident. (U.K. Tax Guidance Sheet)

There's a lot of interest about whether former Senator Stuart will be able to stand for election again in the seat that he lost. The law regarding election says that:

Who may stand for election to the States
3. Any person who:
is twenty-one years of age before the date of the election and
is a British subject who has been ordinarily resident in the Island two years prior to the date of the election or has been resident for a period of 6 months prior to the date of the election and has been ordinarily resident in Jersey for an additional period of, or periods that total, at least 5 years.

The key term here is "ordinarily resident". This being a legal term, it does not simply mean where someone is residing. It is more complicated than that.

J. G. Collier is a Fellow and Director of Studies in Law and University Lecturer in Law at Trinity College, Cambridge. In his book "Conflict of Laws", he notes that:

A person's residence is where he lives. It is a question of fact. For the purpose of statutory provisions in which it is found 'ordinary residence' appears to differ from 'residence simpliciter'.

For the purpose of taxing statutes it has been held to mean 'residence' in a place with some degree of continuity and apart from accidental or temporary absence. 

In IRC v. Lysaght  it was held, in a case concerning a person who lived in Ireland but spent about a week in each month in England living in hotels when on business there, that a person can have his ordinary residence in each of two places and so, surprisingly perhaps, that he was ordinarily resident in England as well as in Ireland.

A person can continue to be ordinarily resident in one country though he is actually resident on business elsewhere, especially if he continues to maintain a home in that country. It has been held that a minor who usually lived in England with one parent continued to be ordinarily resident there, though he had been removed abroad by the other parent and had resided with that parent in the other country for some time.

The U.K. Tax authorities apply a pragmatic rule to saying whether someone is "ordinarily resident" in the U.K., for example:

When considering whether a person coming to the United Kingdom is ordinarily resident here, we are trying to decide whether they have come to live here as part of the regular order of their life for the time being. Often it will be obvious. On other occasions, there will be a need to consider all the relevant factors in order to build up an overall picture of the person's position.

Several of the key questions they ask is:

What is the reason the person has come to the United Kingdom? If the person is here for recreational or temporary purposes (such as a holiday), this is likely to be a sign that they are not ordinarily resident;

Does the person intend to leave the United Kingdom (other than for temporary absences of limited duration) in the near future? If so, this may indicate that the person is not here for a settled purpose and is not ordinarily resident;

Equally important - in Stuart Syvret's case - is whether he would be deemed to have ceased to be ordinarily resident in Jersey. Here again, the U.K. can provide useful guidance for the principles involved:

When considering whether a person leaving the United Kingdom has ceased to be ordinarily resident here, the decision is whether they have, for the time being, ceased to live here as part of the regular order of their life. All the relevant factors should be considered in order to build up an overall picture of the person's position.

Will the person be returning to the United Kingdom at the end of the period abroad? If so, this may indicate that ordinary residence continues. If not, this may indicate that the person ceases to be ordinarily resident, particularly if they do not retain a home in the United Kingdom during their absence.

Given there is an element of intent, and Stuart Syvret intends to return, it will be interesting to see how the Jersey Law Officers consider whether he is eligible or not. Of course, just because he is allowed to stand, it doesn't follow that he would be re-elected. Some politicians in the past who have resigned and stood again have discovered that their popular mandate has deserted them - Peter Manton being a notable example. Counts on a blog roll may turn out to be a poor indicator of electoral success.

Conflict of Laws, J. G. Collier, CUP, 2001, p55ff


Rob Kent said...

"Given there is an element of intent, and Stuart Syvret intends to return,..."

If you go back over Stuart's blog entries since he left, he repeats many times that he has no intention of returning. He once mentions emigrating to New Zealand.

It is only recently that he has said he is going back.

But I'm sure if he was a rich man and they wanted to tax him, they would find a way to say he was 'ordinarily resident' during that period.

Anonymous said...

Hasn't he always said that he will return ONCE the law over here has been sorted out? That's intent to return, because he believes he will ultimately get justice.

If he's paid from Jersey and pays tax here, that must count for a lot too.

Rob Kent said...

Yes. Just because your employment contract says something, that doesn't affect your residence.

My contract might say I must not be absent from the island for three months, for example, but the test for residency is different.

Many people leave the island and travel round the world for a year or more, which doesn't make them non-resident.

I was simply pointing out that if your criteria is intent, you will find lots of statements on his blog.

TonyTheProf said...

Yes Stuart certainly appears inconsistent over his future intentions.

He has, however, noted that he has been paying Jersey tax and social security during his absense, which is one factor in his favour.

Rob Kent said...

Residency laws are ambiguous at the best of times, particularly with regard to taxation.

There was a recent significant case in the UK where HMRC won a claim that a non-resident was not really non-resident despite declaring himself to be so and living outside the UK for the obligatory 183 days per year.

The judge concluded that because his 'major interests' (not the exact term) were still in the UK, his non-residence was purely cosmetic. Apparently the ruling will also affect people like Guy Hands and Louis Hamilton.

On that basis, Stuart is still a resident in Jersey because all his interests are there.

As the judge said at one of the early hearings into the IR35 legislation, determining everyone's status amounts to "State support for lawyers and accountants."

Trebles all round!