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A statutory and comprehensive residence test should be introduced a part of proper reform of residence and domicile rules, the CIOT has said.
The organisation believes that the current law determining whether an individual is resident in the UK is a mess and mainly based on very old case law rather than any clear statutory statement of the rules.
The CIOT's proposed test — possibly similar to ones used in the USA and Ireland — would be based solely on the number of days in the tax year that an individual was present in the UK.
A rolling average over a number of years, suggested the institute, would be used with the practical effect that an individual could spend up to 120 days in the country each tax year, including days of arrival and departure.
CIOT spokesperson Emma Chamberlain remarked: 'In the present era of great personal mobility in work and personal life, it is essential that an individual can know, with certainty, what circumstances will render him resident in the UK.
'If an individual cannot do this, he or she will err on the side of caution and limit or avoid visits to the UK; this will reduce spending in the UK and diminish business activity here.
'As a result the economy will suffer and there will be loss of tax revenue. Moreover, it is unacceptable that many individuals who leave this country to work abroad cannot know with certainty whether or not they are still UK resident.'
Ms Chamberlain then claimed that the UK is alone in setting a test that can judge someone resident on as few as 90 days.
She added: 'A business traveller who comes to London for a meeting, stays overnight and leaves the next day may well spend less than 24 hours in the UK on each occasion.
'Whereas previously this did not count at all, now it counts as two days. This allows business travellers who are not from a country which has an appropriate double tax treaty only 45 visits to the UK a year, fewer than four a month, or even fewer if they also have the odd holiday here as well.
'This will have a genuine and really serious impact on London and other major UK cities as places to do business.'
