Opinion Former Article

CIOT: Statutory Residence Test: making progress

The Chartered Institute of Taxation (CIOT) is encouraged by progress with the draft legislation on the introduction of a statutory residence test for tax purposes, but has highlighted a number of areas that still need work before it appears in Finance Bill 2013.

The CIOT’s comments come in its response to the consultation on the draft legislation, which was submitted this week to HM Revenue & Customs (HMRC).

John Barnett, Chairman of the CIOT’s Capital Gains Tax and Investment Income Sub-Committee, commented:

“We very much support moving to a statutory test for tax residence. This will give businesses and individuals greater certainty in an increasingly mobile world.

“It is important that this legislation is included in next year’s Finance Bill. A lot of people in the professions, in business and in HMRC and the Treasury have invested an awful lot of time and energy getting so close to the finish line. It would be unthinkable to drop the baton at this stage. However, the legislation is not quite there yet.

“There are some key concepts and expressions that are not explained in the draft legislation. Concepts such as 'home', 'accommodation' and 'work' clearly need to be sharpened up before they can become enacted and many other areas will need guidance outside the legislation. The target has to be that the vast majority of people temporarily in or out of the UK can self-assess their residence and therefore their tax and be certain they have reached the correct answer.

“One area that still needs work is the issue of part time workers. Not everyone works a five-day week or a seven-hour day and somebody who does work part time and who is seconded either to the UK or overseas should be treated the same way as somebody who is full time.

“For us the aim is a test that delivers certainty, produces clear results and is as simple as possible. This legislation is definitely heading in the right direction but it is not yet ‘job done’.”

Notes to editors

The draft legislation is available on the Treasury website at:
http://www.hm-treasury.gov.uk/d/condoc_responses_srt_or_summary.pdf

The CIOT’s response can be read in full at:
http://www.tax.org.uk/media_centre/LatestNews-migrated/SRT_SoR_CIOT

The Chartered Institute of Taxation (CIOT) is a charity and the leading professional body in the United Kingdom concerned solely with taxation. The CIOT’s primary purpose is to promote education and study of the administration and practice of taxation. One of the key aims is to achieve a better, more efficient, tax system for all affected by it – taxpayers, advisers and the authorities.

The CIOT’s comments and recommendations on tax issues are made solely in order to achieve its primary purpose: it is politically neutral in its work. The CIOT will seek to draw on its members’ experience in private practice, government, commerce and industry and academia to argue and explain how public policy objectives (to the extent that these are clearly stated or can be discerned) can most effectively be achieved.

The CIOT’s 16,500 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’.


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Sophia Bell
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