resident non/domicile

[geraldferry]

My wife and I are non resident Canadians. Since February 2002 we have spent approximately five months a years in the UK. We have had conflicting advice from Inland Revenue enquiry consultants as to whether we should obtain a National Insurance number. On three occasions, twice on the phone and once in person at Inland Revenue offices, it was suggested that we not bother registering. This suggestion came after it was revealed that neither my wife or I have or plan to bring into the UK more income than the tax exemption allowed for seniors over the age of 65.

The question I have is this: By not registering and not establishing our non domicile status, could we be deemed to be domiciled when we come to Inland Revenue's attention either because of the gross interest paid on our bank account and or the income statements they will be receiving from offshore unit trusts in Jersey, Luxembourg and Ireland. The fact that we have no attention to settle here permanently and could stop spending part of the year in the UK at any time may not be accepted because we failed to register.
thank you,

Gerald Ferry

[Taxbar]

Dear Gerry,

you do not explain in detail your position and appear to make contradictory statements.

National Insurance numbers why? Are you looking to receive medical treatment here? Do you rent or own property here?

What do you do in the UK for 5 months? and where do you spend the rest of your time?

You need professional advice about your specific residence position.

Domicile is another issue entirely and you appear to be confusing the two.

Daniel Feingold
STP
info@stratax.co.uk

[AA UK]

Dear Gerald - I have frequently come across cases exactly like your own.

1. You are resident here if you spend more than 90 daya a year on average in the UK. The first question to decide therefore is from which tax year you are resident here (please be clear this is tax residence not immigration residence).
2. Once we know this answer you are then taxable in the UK on income and gains arising in the UK and republic of Ireland or remitted to the UK.
3. Consequently you want the Inland Revenue to agree that even though you are resident in the UK you are not domiciled here.
4. You will then probably have to file annual UK tax returns.
5. You would do best if you took professional advice on completing UK arrival forms (P86 and DOM1) to make certain that the answer is the best one for you.
6. Don't forget that staying non-UK domiciled will be vital to avoid UK inheritance taxes.
7. The National Insurance number is of course a red herring. the Inland Revenue would like you to have one just so that can record and find you on their computer system. You do not need a National Insurance number and the Inland Revenue can create a special National Insurance number if you don't have a real one.

taxguy@blueyonder.co.uk

[geraldferry]

Further to my original question, I am quite clear on the "residence" aspect. I only went into that aspect to put it into some sort of context. My concern is with the non-domicile status. If we do not register now and establish our non-domicile status do we run the risk of arbitarily being classed as domicile if in the future we bring into the UK more money than our personal allowance and have to file a tax return or would the test as to our domicile status be the same as it is presently?

thanks, Gerry Ferry

[AA UK]

The test is the same as currently. I am just ever so much more comfortable with having a piece of paper now saying that the Revenue agree that one is not UK domiciled.

In addition you may well be impelled to get such confirmation as a consequence of the EU Savings Directive.

The UK Revenue almost certainly already have much of the details of your non-UK incomes by virtue of exchange of information agreements. Filing tax returns is probably the most sensible conclusion every year because it gives the Revenue only 12 months afterwards to enquire at which point the year is concluded.

[Taxbar]

Without filing a tax return and having UK Income or CGT at stake, you will not be able to obtain a Domicile Ruling anyway.

For those in your category who seek piece of mind: I would recommend getting a Legal Opinion on your Domicile from a tax lawyer. This providing your intentions do not change will be useful in any argument with the Capital Taxes Office.


Daniel Feingold
STP
info@stratax.co.uk

[AA UK]

With respect Daniel has this back to front. One cannot file a tax return and THEN get a domicile ruling. One has to request a domicile ruling BEFORE (even a day before is fine) the tax return is filed.

I am not convinced that Counsels opinion on domicile is useful. Presumably there are facts that support domicile in one of the provinces of Canada, such as wills, bank accounts, friends, family, real property, drivers licenses, club memberships etc. Putting this information together during lifetime along with a statement on form DOM1 would be sufficient.

Given Gerry's facts he would be best advised to file form DOM1 now with professional assistance. Annual tax returns would then be filed showing remitted income even if there is zero tax due each year.

[Taxbar]

With respect to Mr AA.

I am a Lawyer and a Domicile tax expert. Y
You have to have foreign source tax at stake to get a ruling. Yes, you need to explain that you want to file a return and you need to know how to treat foreign source income and that's why you need the ruling.

In cases where Domicile is relevant and its not possible to get a ruling,(or in addition thereto) then the standard practice of the tax partners of large Professional firms in London (who like me specialise in this area!) is to obtain a Legal Opinion from a Tax Lawyer; based on the facts that AA is referring to.

I Have successfully defended claims from CTO for many millions based on Legal Opinion's as to a Client's Domicile; taken whilst alive.


Daniel Feingold
STP
info@stratax.co.uk

[King_Maker]

AA UK,

"With respect Daniel has this back to front. One cannot file a tax return and THEN get a domicile ruling. One has to request a domicile ruling BEFORE (even a day before is fine) the tax return is filed."

I agree with Daniel.

The IR will not give a Domicile Ruling, if there is no UK tax involved.

[AA UK]

Daniel and Kingmaker:

I also specialise in this field and understand and empathise with you both.

My understanding from reading the Inspectors Manual at IM1635 is that the Inspector will submit the form DOM1 directly to the HMRC's Centre for Non-Residents for a ruling.

This interpretation was supported by the answers to Questions 1 and 2 on the Frequently Asked Questions section of the Centre for Non-Residents pages at the HMRC website http://www.hmrc.gov.uk/cnr/resdom.htm
This view is also supported by Tax Bulletin Issue 29.

HMRC will indeed not give a ruling unless there is tax involved. However one does not ever recommend filing a return claiming non-domicile status without the Revenue first giving a domicile ruling if this is possible given that they do not charge for this generous (and non-statutory) service.

Of course - and I agree with you both - filing the claim should best be done with professional advice. Once you have the comfort factor of a Revenue ruling plus, if appropriate, an opinion then this may indeed assist in handling the death estate.

So one of things that Gerry needs in place are Wills drawn up under the laws of one of the provinces in Canada. He also needs to consider probate minimisation such as Canadian trusts, as well as excluded property trusts to minimise UK IHT when Gordon Brown changes the rules (as he may do in the parliament). All of these items do indeed need a lawyers advice...

Blessed are the peacemakers (or indeed cheesemakers if you follow the Life of Brian)