.png)
.png)
Whose convenience?
All readers of Taxation will be aware that the 31 January deadline for 2005-06 self-assessment tax returns is fast approaching. In this respect, HMRC say that coming up to 31 January 2006 during the busiest period they were receiving up to 8,700 self-assessment tax returns an hour (almost 150 a minute) online and that during the five days coming up to that deadline they received a record 258,000 returns online, including 161,000 in the last two days.
They are therefore asking taxpayers and their agents who are filing online 'to ensure they file early and if that is not possible, to file outside peak times, which are weekdays mid morning and mid afternoon in the last two weeks in January'.
Taxation points out, again, that HMRC's system should, indeed must, be able to cope with the inevitable last-minute rush that ensues with tax return filing, given that, like leaves on the line (now euphemistically referred to by the railways as 'slippery rails'), this rush happens every year, and that taxpayers and their agents should be able to file their returns as soon as they are ready to file them, rather than have to wait for quiet periods not necessarily convenient to them.
On a different note, the absolute deadline for self-assessment tax returns is midnight on 31 January, and this includes returns received in tax office letter boxes which are opened first thing on Thursday morning, 1 February. Returns received up to midnight on 1 February are late, but will not incur the late-filing penalty, and this includes returns received in tax office letter boxes which are opened first thing on Friday morning, 2 February. Returns received from the Friday morning post and onwards are late and will be penalised.
More on residence
HMRC have recently published an 'HMRC Brief' concerning residence in the light of the Special Commissioners' decision in Robert Gaines-Cooper (SpC 568) (see Mike Truman's comment 'An IR20 sunset', Taxation, 30 November 2006, page 214 and Feedback, 14 December, page 276). They note that some commentators have suggested that the decision in Gaines-Cooper means that HMRC have changed the basis on which they calculate the '91-day test' and say that 'this is incorrect'.
The brief goes on to say that the '91-day test' is set out in Chapters 2 and 3 of the booklet IR20: Residents and non-residents. HMRC say that this guidance is clear that the 91-day test applies only to individuals who have either left the UK and live elsewhere or who visit the UK on a regular basis. Where an individual has lived in the UK, the question of whether he has left the UK has to be decided first. Individuals who have left the UK will continue to be regarded as UK-resident if their visits to the UK average 91 days or more a tax year, taken over a maximum of up to 4 tax years. HMRC's normal practice, as set out in booklet IR20, is to disregard days of arrival and departure in calculating days under the 91-day test.
In considering the issues of residence, ordinary residence and domicile in the Gaines-Cooper case, the Commissioners needed to build up a full picture of Mr Gaines-Cooper's life. A very important element of the picture was the pattern of his presence in the UK compared to the pattern of his presence overseas. The Commissioners decided that, in looking at these patterns, it would be misleading to wholly disregard days of arrival and departure. They used Mr Gaines-Cooper's patterns of presence in the UK as part of the evidence of his lifestyle and habits during the years in question. Based on this, and a wide range of other evidence, the Commissioners found that he had been continuously resident in the UK. From HMRC's perspective, therefore, the 91-day test was not relevant to the Gaines-Cooper case since Mr Gaines-Cooper did not leave the UK.
HMRC confirm that there has been no change to its practice in relation to residence and the '91-day test'. HMRC will continue to:
- follow its published guidance on residence issues, and apply this guidance fairly and consistently;
- treat an individual who has not left the UK as remaining resident here;
- consider all the relevant evidence, including the pattern of presence in the UK and elsewhere, in deciding whether or not an individual has left the UK;
- apply the 91-day test (where they are satisfied that an individual has actually left the UK) as outlined in booklet IR20, normally disregarding days of arrival and departure in calculating days under this test.
The guidance provided by booklet IR20 is general in nature. If, on the facts of the matter, a dispute arises over the application of this general guidance and the parties cannot resolve their dispute by agreement, the Commissioners will determine any appeals. The Commissioners are bound to decide the legal issues by reference to statute and case law principles rather than HMRC guidance. Where a dispute relates to particular facts, the Commissioners will consider the evidence and make findings of fact to which they will apply the law.
This brief says exactly what BDO Stoy Hayward's Andy Wells expected. He considers that the Gaines-Cooper decision has changed 'nothing' and that it generated 'a lot excitement over not a lot'. HMRC confirm that the 91-day test still stands. Andy acknowledges that the residence rules are 'always difficult to understand, particularly the relationship between case law and established practice'. He adds that it is important if a client is going to become non-resident that 'he has a settled purpose and that he has no ties in the UK that will not potentially undermine this settled purpose'.
HMRC Briefs 01/07, 4 January 2007
