No escape for MAJOR Tim
Major Tim Peake has just commenced his six month stint on the International Space Station. Any suggestion that orbiting some 400 kilometres above the earth allows the escape of such worldly considerations such as taxation would be potentially wide of the mark.
Whilst it is apparent that Major Peake has been based at European Space Agency in Cologne for a period of time, preparing for his current mission, if one were to look instead at Major Tom, a UK individual, leaving the UK for six months off plant, he would unfortunately remain firmly within the scope of UK tax.
The UK tax residency rules generally does give privileged treatment to individuals who leave the UK for full time work. However, the legislation would struggle to cope with Major Tom’s status as an astronaut in orbit: the legislation differentiates between individuals who are present in the UK on the one hand and those who are present overseas on the other. Certainly orbiting 400 kilometres above the earth does not seem to fall within the normal definition of overseas (although statistically one would expect Tom to be literally over seas for 71% of the time on board the space station)! Further, whilst it would be assumed that there would be no difficulty in satisfying the full time work test, again the legislation places an astronaut orbiting on a space station in a difficult predicament: the legislation provides special rules for individuals who hold an employment on board a vehicle, aircraft or ship whilst it is travelling. It would seem clear that a Soyuz rocket and space capsule must be a vehicle. However, whilst the ISS is clearly travelling, it is by no means clear that it is a vehicle: a space station surely goes beyond something that is a mode of transportation. Further, the legislation requires that all of your trips involve crossing an international boundary at sea, in the air or on land. Space would seem to fall outside of this!
Even if Tom was able to deal with the inherent difficulties above, the long and short of it is that spending six months in space is no where near enough commitment to leave our friends at the Revenue behind. The loss of UK residence requires at a simplistic level absence from the UK for full time work throughout an entire UK tax year. Six months absence, even in space, is unfortunately simply way too short!
If for whatever reason you have not paid tax that is due, it is likely to be the case that whilst in orbit you may be somewhat removed from the risk of a knock at the door by collectors seeking the tax money due. However, it must be remembered that HMRC are prepared to be patient and are armed with a wide range of sanctions to deal with late paid tax: interest, surcharges and penalties could all be facing a non compliant astronaut upon planetary return, as if coping with gravity and a return to the world having been floating in a bean can for six months was not enough. Surely this would be the all time low that David Bowie was referring to in Space Oddity!
For further information, please contact Nigel May or your local MHA MacIntyre Hudson tax advisor.