HMRC Technical guidance on Scottish taxpayer status

02 November 2015

In June 2015 HMRC published draft technical guidance on Scottish taxpayer status for comment and final guidance has now been published.

HMRC has thanked all those involved in this consultation process, both through comments on the draft guidance and through attendance of stakeholder sessions. As a result of the comments and suggestions made, the guidance has been reviewed and the final copy now published.

There were 20 responses to the consultation on draft technical guidance and the vast majority of respondents were broadly happy with the high level principles illustrated and approach taken. Much of the content within the final published technical guidance therefore remains little changed from the consultation draft.

For the benefit of key stakeholders, HMRC kindly has shared an informal brief summary of the substantive points raised in consultation and their response to those points:

- Emphasise key points more clearly and provide more guidance around the key principles of 'place of residence' and examples of how they work in practice. A new section has been added to the technical guidance more clearly setting out illustrating those key principles.

- Begin guidance with case law to better illustrate the basis from which principles for SRIT tests and in particular 'place of residence' are drawn – guidance amended to reflect

- Emphasise/make clearer that an individual cannot be a Scottish taxpayer unless he/she is UK tax resident (but articulate interaction with SRT 'split year' treatment in the year that an individual becomes or ceases to be UK resident – guidance amended to reflect

- Provide greater clarity regarding the difference in operation of tests for 'day counting' and 'close connection' where an individual has had more than one residence or main residence in the course of the year (i.e. the former considers days spent in Scotland against aggregate days spent elsewhere in the UK, the latter considers days in Scotland against days spent in each other constituent part of the UK on an individual basis) – guidance amended to reflect.

- List of factors illustrative of a “main place of residence” should be enhanced with the inclusion of factors indicative of the location of an individual’s social and/or private life/activities - guidance amended to reflect.

- Confirmation that 'place of residence' does not signify residence for other tax areas e.g. CG PPR – guidance amended to reflect.

- Greater clarity of meaning of 'Part of the UK' - guidance amended to reflect.

- Clarification of whether flexibility exists for exceptional circumstances around place of residence (e.g. looking after sick parents, move out while storm damage on your house is repaired) - guidance amended to reflect.

- Rank/weight factors illustrative of “main place of residence” – the factors relevant and illustrative of main place of residence will vary from individual to individual with factors decisive in some scenarios irrelevant in others. The test is therefore of a qualitative rather than a quantitative nature and not capable of weighting/ranking.

- Amend the guidance to reflect changes made to the definition of a Scottish taxpayer (esp. Scottish Parliamentarian) made by The Wales Act 2014 (s.11) – these changes do not have effect until the Welsh rate of Income Tax commences.