OpinionAug 26 2016

Mind your Tweets in case HMRC is watching you

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The sun is out – and so are lots of guidance notes on how HM Revenue & Customs will enact George Osborne’s legacy of tax crackdowns.

Yes, George Osborne may be yesterday’s chancellor but our nation’s tax office is still having to try and figure out how it can deliver his aims of hitting tax dodgers where it hurts and boosting the country’s coffers.

We have seen rules produced on how salary sacrifice will work. The changes to salary sacrifice are simple to enact. Basically, your clients won’t be able to claim tax breaks for certain schemes anymore.

However, the rule changes for non-domiciled individuals prompted lots of chuckles among the FTAdviser team.

It was the examples included in this week’s guidance note on the statutory residence test, introduced in the Finance Act 2013, that raised smiles.

The note attempts to clear up rules around transit days for non-doms flying through the UK.

It gives a scenario where a lawyer, who lives in France but works internationally, lands in London Gatwick at 6.30pm on Tuesday and his onward flight departs from Heathrow at 2pm on Wednesday.

In the first version, he meets a colleague by chance, catches up on non-work related conversation and later uses personal email and social media.

Will we see court cases where an individual is asked to defend their Tweet on a stopover in the UK?

His day of arrival in the UK may be treated as a transit day and will not count as a day of presence in the UK for statutory residence test purposes, while his departure day may also count as a qualifying day under the test’s deeming rule.

This is because the meeting was not planned and he and his colleague did not talk about work issues. His use of social media at the hotel is deemed by HMRC to be acceptable as it was not used in any way whatsoever for business or work purposes.

However, in the second similar scenario, the lawyer and his colleague discuss a case they are both involved in.

That evening, he contacts his boss on social media to make him aware of the earlier discussion and they exchange some emails on the case.

HMRC states his day of arrival in the UK may not be regarded as a transit day and will be treated as a day spent in the UK for statutory residence test purposes.

If he works in the UK for more than three hours, the day will also count as a UK work day. His departure day may also count as a qualifying day under the test’s deeming rule.

How the heck is HM Revenue & Customs going to monitor how you are using the internet?

Will we see court cases where an individual is asked to defend their Tweet on a stopover in the UK about “Markets being busy” meant they couldn’t easily get around the shopping centre rather than being about the state of the FTSE 100?

Unless HM Revenue & Customs is now going to become Big Brother and have a separate division that sits there and monitors the world’s internet activity I struggle to see how they are going to enact this.

HMRC needs to stop obsessing over individuals and send inspectors in to speak to big firms about why they are generating massive profits in this country yet paying very little tax.