Can Expats Trust HMRC’s Tax Residence Indicator?

HMRCThe Statutory Residence Test was designed to make decisions about tax residence in the UK simpler for everyone.

Despite an online step-by-step Tax Residence Indicator, the website offers just that – an indication of residence status and hints at taking professional advice before committing to any financial planning.

The website is so guarded about giving an opinion; it seems next to useless in all but the simplest cases.

HM Revenue and Customs has helpfully published guidance notes to help expats through the indicator.

That is if they have the stamina to read and digest 100 A4 pages of tax information.

More guidance soon

“Help and guidance is provided if you click on the ‘?’ icon shown beside the questions. As you progress through the Tax Residence Indicator we provide links to the relevant parts of the Guidance Note: Statutory Residence Test,” says the website.

“However we recommend that you read that full guidance before you start, by following the first link below. This will help you answer the questions accurately.”

Even more helpfully, the website wistfully announces that more guidance is available ‘soon’.

Seeing as the web page is not dated, just how expats will know when soon might be is another mystery.

The validity of the guidance has to come into question as well, especially relating to serious criticisms raised in the courts over how HMRC deals with taxpayers.

HMRC has lost a High Court challenge from 120 Qualifying Recognised Overseas Pension Scheme (QROPS) investors angry at receiving tax demands after switching their UK pension cash to a Singapore ROSIIP later closed by the tax man.

Unfair HMRC

They claimed HMRC should have offered better advice rather than penalise them for transferring the cash to a QROPS pension that HMRC appeared to agree was legal.

Expats might well argue just how taking this online test will help them.

Advice on the HMRC website is the tax man’s interpretation of the law and has no legal standing in court.

So what happens to an expat who takes the test and then assumes if the HMRC website agreed he or she was UK resident and they make financial decisions based on that assessment only to find they were wrong?

HMRC’s track record would suggest a tax penalty would follow.

The policy seems unfair to taxpayers and expats relying on official information from a government agency and too many mistakes should prompt an overhaul HMRC’s customer service strategy.


If you are concerned about these issue and want to discuss transfering your UK pension to a QROPS, then complete the Contact Form here and we will reply as a priority

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