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Statutory definition of tax residence published

21st Jun 2012
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HM Treasury has published the summary of responses and launched its outline of a statutory tax residence test for the UK.

The draft legislation for the statutory definition of tax residence is meant to answer all the questions raised by recent cases such as Robert Gaines-Cooper.

The high profile court case raised a number of important issues such as proving when you're resident in the UK for tax purposes.

Francesca Lagerberg, head of tax at Grant Thornton, commented on the news: "The test has been consulted on but is now available for more discussion leading to change in the Finance Bill 2013.

“It is not without its challenges running to over 50 pages of draft legislation, but with consultation it could provide the clarity that many internationally mobile individuals have been seeking."

John Barnett, chairman of the CIOT’s Capital Gains Tax and Investment Income Sub-Committee, also welcomed the news, but added “The rules on tax residence are messy and uncertain and a long way from what we need for a modern tax system. Moving to a statutory test will give businesses and individuals greater certainty in an increasingly mobile world.

“The Treasury are right to have taken their time over this legislation to make sure they get it right. The SRT is too important to rush. Although discussions have taken nearly five years, we see this as a good example of how to make good tax law.”

The government considered the views expressed in response to the consultation of June last year and is now inviting all interested parties to respond fully and work with the government to ensure the legislation meets its objectives.

It intends to introduce the statutory definition of tax residence and reforms to ordinary residence in Finance Bill 2013.

This consultation will only cover the issue of tax residence in the UK for individuals and will not cover the residence of companies.

Click here for the summary of responses and draft legislation.

Replies (2)

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By hiu612
25th Jun 2012 14:39

I can't wait

I sat through a lengthy webinar about a year ago on the set of tests expected to be incorporated in the FA2012, but deferred for a year. The rules set out seemed logical, well thoguht through and just what was needed to eliminate the current uncertainty. I was itching for them to be legislated so i could finally give a firm opinion on a client's residence status rather than hedging and caveating.


Hopefully the latest set don't get deferred for another year, and we will be in the last tax year in which "internationally mobile" taxpayers have to guess at the fundamental basis for their liability.

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By The Black Knight
26th Jun 2012 12:32

Simplification at last?

Should cut down on I really don't knowing time!

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