A UK judgement could have a profound effect on islanders who have previously lived in the UK or who spend significant time there, according to a local tax expert.

Fortis tax director Fran Snoding (pictured)said islanders had always needed to be mindful of UK tax laws in order to avoid being considered a UK resident, but this need has been increased by a recent High Court ruling which could see Guernsey residents running the risk of becoming eligible to pay UK taxes.

The judgement of HM Revenue and Customs v Grace found Lyle Dicker Grace, a South African pilot, to be UK resident for tax purposes. Grace was originally assessed to be liable to pay tax for the years 1997/98 to 2002/03 on the grounds that he was resident there. However, he appealed these assessments and won his case at the special commissioners, who found that he was not.

This resulted in HM Revenue & Customs appealing to the High Court and ended with high court judge Mr Justice Lewison overturning the initial ruling and declaring Mr Grace to be resident for the years in question.

‘The common practice to avoid UK residence was to count days and ensure that an individual spent less than 90 there each year,’ said Mr Snoding.

‘What is significant about Grace is that the judge made no more than a passing reference to day counting in his judgement and that when applying HMRC guidance, Grace actually spent less than 90 days in each year in the UK.’