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Statutory Tax Residence
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Statutory Tax Residence

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Definition of statutory residence for tax purposes

Definition of statutory residence for tax purposes


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  • 1. Statutory definition of tax residenceThe UK tax system uses the concepts of residence, domicile and ordinary residence to determine tax liabilities.However, there is no statutory residence test. The concept of residency has been established through a series ofHM Revenue & Customs guidance and tax cases.Following a string of high-profile tax cases most notably that of Mr Gaines-Cooper and increasing pressure uponthe government to ensure maximum tax recovery from those living or working in the UK they are undertaking aconsultation with a view to introducing a definition for statutory residence in the Finance Act 2012. The proposals The proposal is to split definitions into three A: C: B: areas: those clearly Conclusive Other Conclusive non- determining residence resident; those clearly not; residence factors and how to determine those in between. Conclusive non-residence Other determining factors Conclusive residence • Full time working abroad • Family ties in UK • Only home is in UK (+35hrs) • Available accomodation in • Full time work in UK • Less than 20 days working in UK (+35hrs) UK • Substantive employment in • Not more than 25% duties • In UK for less than 90 days UK (+40 days p.a) overseas Our viewWe welcome the tidying of matters around the edges of residence, however the other determining factors stillcreate areas of uncertainty for individuals who still retain some links to the UK after leaving other than for full timework.There will be a number of individuals who under the previous HMRC6 guidance were treated as not UK residentwho will under this new statutory basis fall within the “other determining factors” section who might want to revisittheir arrangements to ensure that they might not be caught by such actions.We shall monitor the position regarding the draft legislation with great interest and hope there is more clarificationon the other determining factors section that might provide comfort to a greater proportion of those affected