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New online tool should be approached with caution, says tax barrister
HMRC are set to launch an online tool to help taxpayers gauge their residence status – but it should be approached with caution, according to a leading tax barrister.
The digital offering, which follows last month’s introduction of the statutory residence test, is expected in pilot form in the next few weeks. It will indicate a user’s status by asking “a few straightforward” questions about where he or she has their home, the number of days spent in the UK, and their family ties in this country.
Atlas Tax Chambers’ Keith Gordon said, “It would be churlish to dismiss out of hand any attempts to provide taxpayers with assistance with their tax affairs. However, there is a real risk that taxpayers using the tool will be given a false sense of security.” he said.
Current legislation is based on numerous discussions between the Revenue and representative bodies and is “hardly satisfactory”, said Gordon, author of Residence: the Definition in Practice. “The question of day-counting under the statutory residence test requires six-and-a-half pages of guidance – and that only skims some of the issues that have to be considered, particularly in the case of passengers in transit.”
He added that the suggestion that a taxpayer’s home is a straightforward matter is ”frankly disingenuous considering the fact the current proposal is hardly satisfactory. A taxpayer could consider – either through optimism or sheer naivety – his or her home to be overseas and obtain a favourable outcome from the indicator tool, only to find out several years down the line that HMRC take a different view.
“The indicator tool will inevitably assist some taxpayers in some situations, but it is no substitute for a complete rethink of the entire residence test, which has spiralled out of control.”
