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The launch of the highly anticipated statutory residence test for taxpayers has been put on hold for 12 months, after the government decided further time was required to finalise the details.
It will now be introduced with effect from 6 April 2013 and legislated in Finance Bill 2013, rather than in Finance Bill 2012 as originally hoped for. Draft legislation will be published around Budget 2012.
The announcement of the rain check for the test divided opinion within the tax profession over whether it was a sensible or disappointing move.
The Chartered Institute of Taxation's tax policy director, John Whiting, said the work carried out so far on the concept of a statutory residence test for the UK ‘has shown how difficult a measure this is, and it is surely right to take the necessary time to work out proper answers to all the issues raised in the consultation.
‘This is something that has to be right first time; we cannot have something rushed into legislation with loose ends and unclear issues.’
Mr Whiting said the UK has been waiting for such a procedure ‘for at least 136 years’, meaning one more would be a ‘modest extra commitment to get a practical, workable set of rules in place’.
He also raised the question of whether the delay to the text should allow taxpayers ‘be able to opt for the new rules to apply from April 2012’.
Sean Drury, international mobility partner at PricewaterhouseCoopers, claimed the announcement of the 2013 start would ‘disappoint employers and individuals who were hoping for early certainty on the position...[because] discussions have been taking place for the past eight years’.
He added, ‘We were hopeful the current confusion following the Gaines-Cooper Supreme Court judgment would be clarified from 6 April 2012. We will now have a further period of uncertainty and individual's residency being subject to HMRC interpretation.’
Mr Drury echoed John Whiting’s point that the test's delay may prove helpful, bearing in mind rules would need be shaped to 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’.
