Finance Bill 2012: UK residence test delayed

The statutory residence test that was due to come in next year has been delayed, after a series of 'detailed' issues arose following the consultation.

The test, designed to better define residency will now be introduced in April 2013, and draft legislation will be published around the Budget 2012.

The delay has been welcomed by the Chartered Institute of Taxation (CIOT), labelling the move as 'sensible'. The CIOT claims that the statutory residence test (SRT), is too important a measure to rush, and must be right the first time.

Commenting, John Whiting, tax policy director at the CIOT said: "We are very committed to the principle of a statutory residence test for the UK: we have long argued that one is needed to help modernise our tax system and have put in a great deal of work on the concept over the last few years.

"However, the work has shown how difficult a measure this is and it is surely right to take the necessary time to work out proper answers to all the issues raised in the consultation. This is something that has to be ‘right first time': we cannot have something rushed into legislation with loose ends and unclear issues."

According to the CIOT, we have been waiting 136 years for a statutory test to resolve the practical problems and give taxpayers more certainty.

Whiting added: "The commitment to the SRT's introduction is vital and we will continue to engage with HMT & HMRC in its design. The delay does raise one further issue: as the legislation is likely to be effectively finalised in late 2012, should taxpayers be able to opt for the new rules to apply from April 2012? We can see merit in the idea."