As Major Tim Peake is announced as Britain's first official astronaut, Spear's legal blogger tackles the next big question what will his tax status be?
It's November 2015, Major Tim Peake, Britain's first ever astronaut is floating miles above earth, and tweeting, of course.
'Worried about home…and I don’t mean the wife and kids or how embarrassed they might be by my guitar solos (or lack of them), but about my residence status for the purposes of the UK statutory residence test…'
Will this be Major Tim Peake’s first tweet from space? Perhaps not, but despite new guidance on the Statutory Residence Test (the SRT) published by HMRC earlier this month, questions remain as to the extent and interpretation of the test.
In Major Tim’s circumstances, the first question is whether spending six months on the International Space Station (the time it takes to get there and how he occupies himself in transit will have to be considered separately) means he meets any of the 'automatic overseas' tests which will mean he is not UK resident for tax purposes.
He will, technically, be 'overseas' (well, 'over seas' and 'over continents' too) – but probably not in a capacity envisaged by HMRC. Working in space probably isn’t within the standard definition of a full-time contract of employment abroad, either. Similarly, the calculation of whether he works 'sufficient hours' is by reference to hours worked rather than days, which because of the nature of the job, might mean he really is 'working' 24/7, which will skew the calculation considerably.
Will Major Tim Peake be UK resident for tax purposes?
In terms of transit to the ISS, 'work done by way of or in the course of travelling to or from the UK by air or sea or via a tunnel under the sea is assumed to be done overseas' – no mention of space travel – so this might help him. Of course there are special provisions for those who have a 'relevant job on board a vehicle, aircraft or ship' and who make 'cross-border' trips – Major Tim will be crossing into UK airspace (and leaving it again) about 15 times a day (according to ISS statistics), but I doubt whether HMRC had astronauts in mind, when drafting the legislation.
And if there is any doubt about meeting any of the automatic overseas tests (and the length of his posting means he won’t satisfy the first automatic UK residence test), he then has to consider whether the ISS is or is not a 'home' overseas.
As we know, the term is undefined – is the space station a 'structure' or a 'vessel'? Does it have a sufficient degree of permanence? Would Major Tim consider it more than a holiday home or temporary retreat, I wonder? I would love to be a fly on the wall when HMRC seeks the views of the reasonable onlooker with knowledge of all the material facts in this regard.
If it’s not a home, then he may find he is still conclusively UK resident, but if it is a home, and unless he works 'sufficient hours' in the UK in the relevant tax year, we have to consider his day count and 'UK ties'. Although the term 'day' has different meanings for different parts of the test (including the concept of a 'deemed day' which seems suitably surreal for space travellers), a quick review of the latter would suggest that he remains UK resident.
Please note, however, Major Tim, if you are reading this, that this is an outline of complicated legislation and does not constitute or contain legal advice. For further details please contact the author…
Sophie Mazzier is counsel at private wealth firm Maurice Turnor Gardner LLP