Member Article

Delays to statutory residency test

The Government will delay the provision of a statutory residence test by a year, it was announced on Tuesday.

Reform to the test was originally slated for April 2012, but this will now be pushed back until April 2013, to allow for different industry viewpoints to be considered.

The move is intended to introduce a simplified test to determine where an individual’s residence is, for taxation.

In June, the Treasury proposed tighter regulations on residency, making it more difficult to become non-dorm status when leaving the UK by assessing the connections of the person, and their time spent in the UK.

Commenting on today’s announcement, Susan Blair, Senior Manager at PwC in the North East, said: “The announcement this morning that the new statutory rules on residence status will be delayed for a year to 2013 will disappoint employers and individuals who were hoping for early certainty on the position.

“Although this latest consultation has been running since June, discussions have been taking place for the last 8 years.

“We hope the rules deal with the particular needs of highly mobile industries like Oil and Gas and provide the necessary flexibility to ensure the UK is an attractive location. Employers and individuals do need certainty on the position as quickly as possible.”

In a written statement, David Gauke, the Exchequer Secretary to the Treasury, said: “The Government is committed to the form of the statutory residence test outlined in
consultation.

“It will make a further announcement around Budget 2012 when it will publish its response to the recent consultation together with a further consultation on policy detail and draft legislation.

“This will ensure that the full package of measures announced at Budget 2011 will be implemented in a two-step programme that will be completed in Finance Bill 2013.

“The Government remains committed to making no further substantive changes to these rules for the remainder of this Parliament.”

The tax law has traditionally relied on precedent following court rulings, and also input from Customs and Revenues.

An announcement on the results of the on-going consultation and draft legislation will now be made at the time of the 2012 budget.

This was posted in Bdaily's Members' News section by Tom Keighley .