Draft Finance Bill 2012: Government dithers over statutory residence test
“The Government today postponed the introduction of a statutory residence test, which would have given individuals some much needed certainty about their residence status. At the moment, the decision as to whether an individual is tax resident in the UK rests with the courts and, following a ream of recent case law, the position for many is now increasingly unclear.
“In October this year, Robert Gaines Cooper, and Mr Davies and Mr James famously took a judicial review to the Supreme Court against the UK tax authorities, claiming that they had failed to stick to their published guidance and had significantly changed their practice on tax residence. Although the Supreme Court rejected the allegations, the law lords were nevertheless critical of the guidance as unclear and ambiguous.
“A statutory residence test is now urgently needed to help individuals wade through the mire, and today’s announcement will come as a disappointment to many. In an increasingly global market place, where it is just as easy to work in Switzerland and other low tax jurisdictions as it is the UK, ongoing ambiguity will do little to attract talent and investment to our shores.
“Employers seconding employees overseas will need to urgently revise contracts which will have been drawn up on the basis that the new test will apply from 6 April 2012.”