ACCA Advanced Taxation (ATX) Practice Exam

When does sufficient ties contribute to residency status for tax purposes in the UK?

1. If an individual has spent a significant number of days in the UK

2. If an individual has family ties in multiple countries

3. If an individual has multiple residences

4. If an individual has substantial business operations abroad

The correct answer is: If an individual has spent a significant number of days in the UK

In the context of UK tax residency, the concept of sufficient ties plays a crucial role. An individual’s residency status is determined primarily by the Statutory Residency Test, which considers the number of days spent in the UK along with various ties or connections to the country. Having spent a significant number of days in the UK directly affects residency status because the number of days spent is a fundamental criterion in the residency test. If an individual exceeds a specified threshold of days in the UK, they are more likely to be considered a UK resident for tax purposes. This is typically set at 183 days, but even those who spend fewer days can still be classified as residents if they have sufficient ties to the UK. Sufficient ties include factors such as having family in the UK, having accommodation available, or working in the UK. These ties, combined with the number of days spent in the UK, assist in determining whether an individual should be seen as a resident or a non-resident for tax considerations. Other options provided do not adequately reflect how residency is established under UK law. While family ties in multiple countries may lead to complex residency situations, they do not directly contribute to being a UK resident under the specific jurisdiction of UK tax law. Similarly, having multiple