The new rules will take effect on 6 April 2012, and, say advisers, will bring much-longed-for certainty to the business of advising UK expatriates for the first time.
According to Prudential technical manager Gerry Brown, the expectation in tax circles is that Chancellor George Osborne is likely to mention the residency legislation in today’s Autumn Statement, but that the draft legislation will not be issued until the draft Finance Bill on 6 Dec.
State of confusion
The legislation is aimed at ending what many advisers and tax experts say has been a decades-long state of confusion over how a British taxpayer may successfully shed his or her UK tax-resident status after moving abroad.
These difficulties were highlighted in the long-running, landmark case of Robert Gaines-Cooper, a British entrepreneur and long-time Seychelles resident, which dated back to 2006 and finally concluded – in the Supreme Court, with a judgment in favour of HM Revenue & Customs – last month.
Next week’s unveiling of the new residency regulations is expected to be accompanied by the final version of other pieces of proposed tax legislation that have also been out for consultation until recently.
These include a reform of the way non-domiciled individuals are taxed, as well as a plan to boost R&D and charitable donations through the use of tax incentives contained in the inheritance tax regime.
‘Reasonable and fair’
Brown is among those who believe that the pending residency regulations, if not substantially changed from the version contained in the government’s consultation paper, will be a reasonably workable and fair system that is also “faithful to the principles established in case law over the years”. For this reason, they have generally been well-received by tax professionals, he added.
The 91-days-a-year maximum annual permitted residence – long relied on by those seeking to claim to be non-tax resident, even though it didn’t always work, as Gaines-Cooper was among those who discovered to their cost – is gone, replaced by a rule that states that anyone present in the UK for 183 days or more a year will always be resident, while those who are around for fewer than nine days in a given year will always be considered non-resident.
The residence status of those present in Britain for between 9 and 183 days will depend on specified “factors” linking the individual to the UK, Brown noted.
