Illustrating the way in which your status changes.

This little story has no real point apart from illustrating the way that a person's status can change in the eyes of the UK tax authorities.


Fred was born and bred in the English Midlands. He attended university in London and, on graduating, took a job with a bank in the city. He married Sally, his childhood sweetheart and they set up home in Islington.

Fred was Resident, Ordinarily Resident and Domiciled in the UK. Even when he went contract and took a seven month assignment in Frankfurt returning home each weekend, he lost none of these and, as a result had to account to the tax authorities in both countries.

The hassles of dealing with that led him to refuse to accept any more short contracts outside the UK but, after a couple of years, the memories of all those nights in the Bier Kellar got to him and his wife agreed that he could go and do a 12 month contract. The contract ran from May to May and Fred only came home twice each month. As usual, the
couple took their summer break in Italy and they spent Christmas with Jim and Sandra, Sally's parents who had retired to a nice villa in Spain on the fruits of Jim's successful career robbing Post Offices in rural Wales. Fred only notched up fifty days in the UK and was no longer Resident. However, because he chose to be self employed he was still Ordinarily Resident and, in any case, Domiciled in the UK.

Time went on and Fred stayed in Germany and eventually, when he made the decision that he would continue to work outside the UK he signed up as an employee of a management company who handled all of his affairs. As such, he now found that he was no longer even Ordinarily Resident but still he counted as Domiciled in the UK.

One day, Fred's wife told him that she wanted a divorce. Sally had a good job and didn't want support so they sold the house and split the proceeds. Fred still visited the UK every now and then and his status had not changed.

Fred carried on contracting around assorted European countries for another couple of years and then, out of the blue, he was offered a six month contract with his old employer in London. It was for a specific project to migrate an old application that had Fred's name all over it. The rate was good and he felt like helping out. After all six months in the UK would be enough time to sort out a few bits and pieces of his personal life so Fred agreed. He moved to London for six months but continued to work as an employee of the UK division of the same management company. Now, Fred was still of course Domiciled in the UK and found that he was considered to be Resident but not Ordinarily Resident.

At the end of the six months, Fred knew where he felt at home and took another contract in Germany. Still with the same Management company. He thus shed his Resident status again.

One reason for the return was Petra, the tall blond ski instructor who Fred had met on the slopes the previous winter. When Fred returned, things suddenly went really well and Fred pooled the money from the sale of the house in Islington with Petra's savings and they bought an apartment in Petra's home town. It was very picturesque with stunning Alpine views and Fred could get to work in Munich on the train. He was so happy with life that he even accepted a permanent job with the bancassurance company for whom he had been contracting. Fred received a permanent residence permit and had now lost his UK Domicile even before he and Petra married!

You all know what happens next in the story don't you? Fred's company aquires a small reassurance specialist in London and they want somebody to oversee the task of integrating the back office systems. The job will mean being in London for six months in the summer and it is guaranteed to be for six months only. That's OK by Petra who quite likes the idea of seeing the sights and so off they go and so now Fred manages to be Resident in the UK but not Ordinarily Resident and not Domiciled there.

After that our happy couple settle down to continue their life in Oberammergau and soon enough there are a couple of children to take care of. Fred does the occasional week in London for the firm but never enough to regain Resident status.

The years go by and the kids head off to uni and then, out of the blue, the UK decides to join the Euro. Would Fred mind going back to the UK for a few years to see through the project of transitioning the systems to the new currency? Sure enough, he and his wife take the plunge and he aquires the status of UK Resident and UK Ordinarily Resident. But, he has no intention of settling permanently in the UK and at the end of the project he will most certainly return to the Bavaria that he has grown to love. Thus, he avoids restoring his UK Domicile.

One afternoon at work, Fred is thinking back over his life and it suddenly occurs to him that he has been through all of the possible combinations of Residence, Ordinary Residence and Domicile except for one. He has a good knowledge of UK tax law and realises that it is pretty unlikely that he will now manage the elusive status of not Domiciled and not Resident but Ordinarily Resident in the UK. Then the company Chairman pops into the office with a proposal. The company is entering the latest round the world yacht race. Crew must all be ex company employees accompanied by their spouses and, while there will be no pay for the eleven months, Fred is entitled to a large termination bonus and he would be welcome to return on contract after the race.

The company Chairman is a little surprised to hear Fred shout "Bingo!"

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