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TaxationWeb's Mark McLaughlin points out a significant shortcoming in HMRC's new residence indicator.

HMRC gave taxpayers an early Christmas present on 20th December, with the release of an updated version of the Tax Residence Indicator tool. The tool is intended to help individuals determine whether they are considered to be resident in the UK from tax year 2013-14 onwards for income tax and capital gans tax purposes.

HMRC's introduction to the Tax Residence Indicator tool (Check Your Residence Status) states: "The results given rely on you providing accurate information. You may wish to print a copy of the result and keep this for future reference in case of enquiry by HM Revenue & Customs (HMRC)."

Sounds promising. But wait - HMRC then states: 

"Your residence status can only be established with reference to established facts and circumstances. You can use this tool to predict what your residence status will be in future years, however HMRC will not be bound by the results."

Hang on. If HMRC will not be bound by the results, what use is the tool?

Actually, the statutory residence test (SRT) is, as the name suggests, part of UK tax law. Admittedly, the SRT legislation is long and potentially complex, and the Tax Residence Indicator tool is not suitable in all cases. However, for those suitable cases where the complete and correct information has been used, on what basis does HMRC not consider itself to be bound?

Perhaps HMRC is confusing the SRT with the previous non-statutory regime of IR20 and subsequently HMRC6, where they seemingly made the rules up as they went along. Difficult though the SRT may be, at least it will provide an answer - and it's too bad if the answer is not to HMRC's liking.  

Happy New Year!

Best wishes,

Mark McLaughlin

Managing Editor