SRT – HMRC Guidance
In force since 6 April 2013, the new Statutory Residence Test (SRT) will be receiving Royal Assent in July.
In preparation for this welcomed change, HMRC have started the ball rolling by releasing new material so that taxpayers can get up to speed. This week a new webpage was published (http://www.hmrc.gov.uk/migrantworkers/tax-non-uk.htm) to answer simple questions regarding residency.
However, there has been a blemished start and we must credit ICAEW with being the first to spot HMRC’s mistake. For simplicity, the Finance Bill 2013 will be removing the concept of “ordinary residence”, yet HMRC has neglected to remove references to this from the prose and explanatory tables on their new webpage. More confusion for the unsuspecting taxpayer.
Tax Residence Indicator
HMRC will shortly be publishing a pilot online test so that individuals can grasp an idea of their residence status. It is expected to ask questions such as: where your main home is, how many days you spent in the UK and whether you have family there.
This test will certainly raise awareness, however there is a significant risk that the test will be over simplified. For example, the definition of home is very specific and while an individual could consider their home elsewhere, the rules set out in the SRT would conclude otherwise. Without all conditions being made explicit for the purposes of this test a user might complete it incorrectly, conclude that they are non-resident and continue their presence in the UK as before.
No doubt HMRC will include a disclaimer to this effect. The implications of making such a mistake could be severe and we would recommend that further advice be sought to determine an individual’s status and plan accordingly.
For the ‘tax-techie’ out there, HMRC have recently released an extensive 92 page, SRT Guidance Note which is littered with examples. This bears a strong contrast to the simplicity of the Indicator, but perhaps the two will be linked online? Wishful thinking. For now the contents pages are possibly of the most value in trying to navigate around this “note”.
Furthermore, a revised HMRC 6 Booklet is to be realised later this year to include the SRT.
Finally, for those out there who might have been tightly arranging their schedule in accordance with the previous guidance to UK residency, we cannot stress the importance of these changes, especially as they have been in place since 6 April 2013.
If you would like more information on SRT and how the changes might be relevant to you please contact us and we would be happy to assist.
Please contact Piers for more information or comments: PPye-Watson@mdaviesassociates.com