A technical guidance was published by the HMRC to provide assistance in the determination of who in the UK will have to pay the new Scottish income tax that comes into effect in April 2016.
The tax has been introduced in the Scotland Act 2012, and should define the status of Scottish tax payers. However, a number of the terms in the act are not clearly defined, so more detailed guidance should follow in order provide clarification in the event of a dispute. Specifically, if a taxpayer has a second home anywhere in the UK or moved during a financial year between England and Scotland.
As the criterion in this case, is the ‘main place of residence’. This will help determine if a UK resident is a Scottish taxpayer. A Scottish taxpayer will be someone that has their ‘main place of residence’ in Scotland for at least as long as it has been in another part of the UK during the tax year, or if the individual spends as many days in Scotland as elsewhere in the UK.
Since no definition is included in the legislation regarding place of residence, the HMRC says that it must be given ordinary meaning. In the end, this will depend on the facts of individual cases and existing case law. Meanwhile, residency must be somewhere the taxpayer has actually lived, even though a degree of permanence or continuity is required to turn occupation into residency.
‘A main place of residency is the place of residence with which the individual can be said to have the greatest degree of connection. It is not necessarily the residence where the individual spends the majority of their time, although it commonly will be. What constitutes a ‘main place of residence’ is a matter of fact and all of the facts and circumstances of the particular case must be considered to arrive at a conclusion.’
– The HMRC’s ‘main place of residence’ definition.