This Is Guernsey

By Simon Tostevin

CHANGING the way that days of arrival in and departure from the UK are counted will catch out a lot of people, according to tax expert Tony Mancini. The tax executive director for KPMG was speaking after a seminar for local financiers about HM Revenue and Customs’ proposed changes to UK residence and domicile legislation, which are due to take effect from 6 April.

But he sees the fact that spending just two hours in the UK waiting for a connecting flight will count as a day of residence as an opportunity for domestic airlines such as Aurigny and Blue Islands to establish further direct links with finance capitals such as Geneva and Zurich.

He said business people would look to utilise these connections to avoid touching down in the UK and incurring a day of residence.

‘Many people spend a lot of time going to the UK to not only do business but to travel through on the way to somewhere else.

‘At the moment it’s fairly easy not to break the residency rules, but the changes coming in will alter that. It’s going to catch a lot of people.’

The legislation is still in draft form but if it is not changed, it will mean that anyone who spends 183 days in the UK in a tax year will be classed as tax-resident. That would also apply if they were to spend an average of 91 days or more a year there during a four-year period.

The current practice is that days of arrival and departure are ignored. The 183 and 91-day tests are already in place, but HMRC wants to change the way days are counted.

There is an exception for transit passengers as long as they remain airside, but that will have only limited benefit for local business travellers.

‘The changes mean people will start to adjust their travel plans. It should create opportunities for Blue Islands and Aurigny.

‘Increasingly, Guernsey people are going further afield so if you can get a connection to Geneva, that will be much better than having to go to the UK.’

Mr Mancini said the proposals would be particularly challenging for those involved in the private clients sector who rely on face-to-face meetings rather than telephone and email contact.

He added that a number of taxation and finance bodies were lobbying HMRC to have the legislation altered, but major changes were now unlikely.

‘It’s not great news for us here, but it’s also damaging for the UK because there are already people looking to leave because of changes and we will have to try to attract them here.

‘In a way, it could be an opportunity for Guernsey.’