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Relaxations to the statutory residence tax rules should be made permanent for the national interest

Specialist skilled workers should not be caught by the UK’s tax rules if it’s in the national interest, and relaxations to the UK’s statutory residence tax rules should be made permanent, says Nimesh Shah.

The Government were right to make tax changes after James Dyson wrote to the Treasury at the start of the pandemic last year. Tax should never have got in the way of a critical national cause.

Tax rules are there to ensure the right amount of tax is collected by the Treasury. Tax should not act as a barrier and stop necessary resources coming to the UK when needed and delivering wider social and economic benefits for the country.

James Dyson wrote to the Treasury expressing concern that members of his team normally based outside of the UK would get caught in the UK’s tax rules if they came to work in the UK to support the development of much-needed ventilators.

Dyson’s request was granted when the Chancellor, Rishi Sunak, announced on 9 April 2020 a temporary and limited exception to the UK’s ‘statutory residence test’ – this is the tax law which determines whether an individual is tax resident or not in the UK.

Sunak confirmed the rules would be changed to effectively ignore any time spent in the UK by someone between March and June, who were working on the UK’s efforts against the COVID-19 pandemic. At the time, the Chancellor specifically highlighted Anaesthetists and Engineers working on ventilator design and production as examples of individuals that would benefit from the exemption.

The situation leads to the question of whether such a change should be made permanent in the UK’s tax legislation, so that highly specialised skilled workers can freely come to the UK to support the Government and key businesses on projects of national interest and significance without becoming unknowingly caught in the UK tax system.

At times outside of a global pandemic, a pre-clearance procedure could be established by HM Revenue & Customs so that individuals have certainty over their UK tax status before setting foot in the UK.

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