There's no point asking the taxman where to lay your hat: their answer is as clear as mud, says Sophie Mazzier of Maurice Turnor Gardner LLP
Just before Christmas HMRC published its draft guidance on the soon-to-be implemented Statutory Residence Test (SRT). The SRT comes into force on 6 April 2013 but both the legislation and the draft guidance are subject to further consultation until 6 February 2013.
In fact, the SRT has been the subject of much consultation already and to the credit of HMRC and the Treasury, much heed has been taken of the views of many professionals (mine included) and the original implementation date was delayed so that further thought could be given to the minutiae and wider ramifications.
So why the excitement? It is HMRC's concept of 'home' which is still causing a stir. We all think we know where 'home' is (although perhaps over the Christmas period, the logistics of getting back there might have become a little hazy); even those who have more than one home, perhaps in more than one country, would feel confident enough to point in the direction of home. The guidance acknowledges all of this and confirms that it will always be dependent on the facts and circumstances.
However, HMRC doesn't like to make it quite so clear: it says that 'home can be a building (or part of a building), a vehicle, vessel or structure of any kind which is used as a dwelling by an individual. It will be somewhere which an individual uses with a sufficient degree of permanence or stability to count as a home' – a concept which is mind-bogglingly broad in scope.
Happily the guidance provides scores of examples, but while watching a reality TV series involving a well-known hotel chain, I recently began to wonder whether the ubiquitous taxman might have been watching it too, no doubt clutching his well-thumbed copy of the draft guidance rather than the bumper Christmas television guide. Might a hotel be home for some UHNWs?
And at the other end of the spectrum, what about the status of the humble garden shed, for those who have been seasonally banished (or who perhaps have voluntarily vanished)?
So contrary to Paul Young’s observation that wherever you lay your hat, that’s your home, were you to consult HMRC guidance regarding the physical correlation between your head covering and your home's actual location, you would find, at paragraph A4 of Annex A (on page 38) that HMRC considers 'a person’s home is a place that a reasonable onlooker with a knowledge of the material facts would regard as that person 's home.'
Not quite as clear, or indeed as catchy… Perhaps Paul Young might consider a secondment to the Office of Tax Simplification.
Sophie Mazzier, counsel, Maurice Turnor Gardner LLP
Read more from the Legal Aide blog
Below: Paul Young singing 'Wherever I Lay My Hat (That's My Home)'