Tax expert welcomes residency test

A STATUTORY Residency Test for tax purposes will be introduced in 2012, and experts say the Budget announcement will be welcomed by business and individuals.

The Chartered Institute of Taxation claimed the test would modernise the system, saying: “We cannot have rules dating from the age of sail and Morse code governing what happens in the electronic era.”

John Whiting, tax policy director, said it will make it easier to distinguish between those who genuinely live abroad and people spending much of their time in Britain.

Current rules are based upon residence, ordinary residence and domicile, but with no definitions of the terms it can be hard to judge how much the taxman should collect.

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