UK: Going Abroad Under A Full Time Employment Contract: Is Performing UK Duties A Problem?

Last Updated: 26 April 2011
Article by Piers Master


Recent Press reports have inaccurately represented the effect of new draft guidance from the UK's HM Revenue and Customs ("HMRC") as to the non-UK residence status of individuals working abroad under full time employment contracts. In particular, according to the Press reports, such individuals may no longer maintain non-UK residence status if they work in the UK in more than ten days per tax year.

In reality the position is not as serious, nor as simple, as such reports suggest.

In brief if the draft guidance is adopted in its current form it confirms, in relation to an individual who has gone abroad under a full time contract of employment, that

  • such individual may work in the UK for up to 10 days without jeopardizing their non-UK residence status
  • Work in the UK may comprise substantive and not merely incidental duties, (Here substantive duties includes, for example, attending board meetings).
  • If a person works for longer than 10 days in the UK this will not automatically make them UK resident. Whether or not they become UK resident will depend on all of the circumstances.

The draft guidance is set out in full later in this briefing note.


If the current draft guidance is adopted it will definitely apply for 2011/2012. For earlier tax years it is unclear whether it will apply in precisely this form for determining an individual's residence status. From April 2012 a new statutory residence test is due to be enacted which might or might not include a "10-day rule". The position should become clearer once the Government consultation is published in June 2011.

What is the relevance of going abroad under a full time employment contract?

Under current HMRC practice one of the ways in which an individual can become non-UK resident is by leaving the UK to work full time abroad as an employee. Such an individual becomes non-UK resident from the day after departure provided the employment contract is for at least one full tax year (that is from 6 April in one year to 5 April in the following year). Certain other conditions must also be satisfied including that return visits must be limited to under 91 days per tax year on average and less than 183 days in any one tax year

Going abroad under a full time contract satisfying such conditions is enough to establish a break from the UK so as to become non-UK resident. When an individual goes abroad under other circumstances not involving such a full time contract, then to establish non-UK residence they must normally demonstrate a clean break from the UK. This might involve taking a number of steps such as selling or letting their house in the UK and staying outside the UK for a full tax year with no return visits. When going abroad under a full time employment contract, these other more stringent requirements are not normally needed.

Meaning of "work abroad"

What if a person going abroad under such a contract has to return to the UK sometimes for work? Until now there has been no guidance on the meaning of "working abroad" for these purposes . In other contexts a distinction is made between "incidental" duties, which may be carried out in the UK, and substantive duties, such as attending board meetings, which if done in the UK will undermine a person's claim to be working full time abroad. Some advisers take the view that work in the UK which is merely "incidental" can be treated as part of the "full time work abroad" and that any substantive duties carried out in the UK will undermine a person's claim to be working full time abroad. However, the position is not clear cut. Nor has it been clear, if substantive duties in the UK are permitted, how many days may be spent undertaking such duties in the UK without jeopardising one's non-UK residence status. The new draft guidance therefore seeks to address these issues.

New draft guidance

The new draft guidance states

"Non-residence and full time work abroad

You can become non-UK resident if you make a break with the UK through working full time abroad. 'Full time work abroad' means a genuine, full time, foreign employment. This could be either a contract with a foreign employer or a formal secondment to a non-UK position by a UK employer.

If you claim that you have left the UK to work full time abroad we will expect you to be able to demonstrate that you are working equivalent hours to full time foreign employees, at the same level in the same line of business, in the country concerned. It is expected that this will normally be a minimum of 35 hours a week.

If you are working abroad you may still have to physically return to the UK sometimes to do some work here. You will be expected to show that the amount and nature of any work carried out in the UK do not prevent the overseas work from satisfying the criteria required for it to be considered to be full time.

The evidence required to demonstrate that you are in full time work abroad may include the following:

  • A description of the nature of your work and responsibilities
  • The results of your work
  • Timetables of activities, including time spent and nature of work done in the UK
  • Reports that you made to your employer on your performance
  • A record of the annual leave you took

Duties in the UK

HMRC accept that it has a practice whereby non residence can be demonstrated by working abroad full time even though some of the duties carried on in the UK are substantive. Although this is not in accordance with the definition of full time work at section 830 Income Tax Act 2007, HMRC's guidance on ceasing to be UK resident covers a wider range of issues than that section.1

How much work can be carried on in the UK depends upon the facts and circumstances relevant to each individual. However HMRC will generally accept that working in the UK for fewer than 10 days in a year will not by itself prevent an individual claiming they have made a break with the UK because they are working full time abroad. If more days than this are worked in the UK, whether an individual is working full time abroad will depend upon their particular circumstances.

Given that

  • Residence is a long term issue affecting the entirety of a tax year and individuals and companies will have planned actions on the basis of HMRC guidance, and
  • The government has announced that it will consult on a statutory residence test to codify the rules on residence

HMRC can confirm that for 2011/12 this practice will continue. It will however, be reviewed for future years having regard to the outcome of the consultation on a statutory residence test."


Although allowing 10 days work in the UK is not particularly generous, it is at least helpful to have specific guidance as to the number of days which may be spent working in the UK without jeopardising residence status. Previously there was no such clarity.

Also helpful is the indication that employees may carry out substantive duties in the UK without this affecting their residence status. Previously there had been some doubt about this. It should mean for example that company directors may attend board meetings in the UK, provided they do not exceed the 10 day limit, without jeopardising their residence status.

Furthermore, if a person spends more than 10 days working in the UK they might still be treated as non-UK resident, depending on their other circumstances including of course their links with the UK.

Although according to the draft guidance the distinction between incidental and substantive duties is not relevant for the purpose of the 10 day test, it is important to remember that the distinction remains relevant for other purposes. For example, if a person carries out substantive duties in the UK, then they no longer enjoy the protection of s 830 Income Taxes Act 2007. This means in practice that any accommodation they have available for their use in the UK must be taken into account in determining their residence status. Note too that the distinction between substantive and incidental duties remains relevant in relation to "dual contract" arrangements which UK resident non-domiciliaries might enter into (which are beyond the scope of this briefing note). It may be that the distinction remains relevant to establishing the residence status, for example, of an employee who spends more than 10 days working in the UK but this seems unclear.

Of course rather than relying on HMRC guidelines, it would be much better if the law of residence were clear. It is to be hoped that from April 2012, when the introduction of a statutory residence test is anticipated, the current heavy reliance on guidance and case law to determine residence status will be a thing of the past.


1. Section 830 Income Taxes Act ("ITA") 2007 provides that in determining the residence status of a person who goes abroad to work under a full time contract of employment the availability to him of any accommodation in the UK may be ignored. This is helpful for a person going abroad to work as it means that they can keep their house in the UK without this being relevant to determining their residence status. Under section 830, however, if a person performs substantive duties of their employment in the UK, they may no longer be treated as working under a full time contract abroad. In that case they would lose the protection of s 830 ITA 2007. In the context of s 830 then, the distinction between substantive and incidental duties remains relevant.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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