ResidenceSeptember 12, 2012
I really wish I could care about the consultation on a statutory definition of tax residence, honestly I do. I mean, I’m sure it’s a good thing to give simplicity and certainty to people whose residence status might be in doubt, and I’m sure all the work that has gone into the initial consultation, the responses document and the current consultation has been carried out diligently and intelligently and will produce the right result in the end.
Only why couldn’t we just copy out the same rules the Americans use? The ones that fit onto one sheet of A4?
Oh, that’s right, because Americans have sensible rules “If you are a resident alien, you must follow the same tax laws as U.S. citizens. You are taxed on income from all sources, both within and outside the United States.”
In the States, the first determinant is citizenship – if you’re a US citizen, you pay US taxes, and you don’t have to faff about with residence and ordinary residence unless you’re in a non-citizen-but-still-living-there category.
Here, we still retain the imperial concept of “domicile” – if you were going out to rule the Empire, you were still an Englishman even if you never set foot in blighty till your corpse was shipped home for burial. Which might have made some sense when we HAD an Empire, but, you know, That Sun Has Set. Now we are only a tax haven, inviting anyone filthy rich enough to settle here and pay us £50k in blood money and we won’t bother them about taxes because that’s only for the little people. Oh, and if you’re starting to make serious money, check out your family tree – if your grandfather was born somewhere interestingly foreign or if you suddenly develop a passion for Belize then you too could become a non-dom
So you’ll forgive me if I can’t get too fussed about the detail of how to legislate the residence conditions. The tax impact assessment shows that it’s “expected to have a negligible Exchequer impact”. Well, what about tackling the other side of the coin and doing something which would have some impact? Let’s stop being a tax haven, make citizenship and taxation go together, and stop faffing about.