Overview

A proposed statutory residence test for individuals is intended to bring clarity to an often vague and complex area. Current guidance is largely governed by HMRC's guidance and case law dating back decades.

The proposal comprises a self-assessed three-stage test: Part A (conclusive non-resident), Part B (conclusive resident) and Part C (different sets of "connection tests" combined with day counting to determine residence when A and B are inconclusive).

The test will supersede all existing legislation, case law and guidance for tax years following its introduction, expected to be from April 2012. For periods prior to this, individuals will still need to use existing case law/HMRC guidance and it is not intended that there will be any transitional rules.

In this briefing, Ashurst analyses the proposed structure of the test, how it may improve matters as well as potential areas of ambiguity.