Introduction

The TaxationWeb Forum frequently features questions about the domicile of individuals. Domicile is not specifically a tax issue, although an individual's domicile status can have UK tax implications in terms of income tax, capital gains tax and inheritance tax. Domicile is primarily a question of law, and can be a very difficult question to determine. Domicile status depends on the specific facts in each case, and is based on a number of principles derived from case law. Specialist legal advice is generally highly advisable. Even if an individual is not domiciled in the UK under general law, he or she can be 'deemed' domiciled for inheritance tax purposes if certain conditions are satisfied. Non-UK domicile status has potential UK tax advantages, a fact that is not lost on many non-domiciliaries. 

Query from TaxationWeb visitor ('Medman')

I am claiming non-domicile as my mother is from outside UK, can anyone point me to some links of webpages that have info, on as I need to establish the viability before seeing a tax advisor. Can anyone suggest an adviser, and what should be the going rate per hour in London?

Editor’s Comments

'Medman' does not state specifically why he wishes to secure non-domicile status (e.g. whether he has offshore investment income or gains and wishes to claim the remittance basis, or whether he wishes to shelter overseas assets from IHT on trust before becoming 'deemed domiciled' in the UK for IHT purposes. HM Revenue & Customs (HMRC) are aware of the potential advantages of non-UK domicile status, and it would not be surprising if claims by individuals purporting to be non-UK domiciled for the first time were the subject of more frequent challenges by HMRC. Interestingly, the 'Non-Residence' supplementary pages of the 2006-07 self assessment return for individuals includes a separate section with five questions regarding domicile. Whether this is merely an information gathering exercise or a platform for more HMRC enquiries remains to be seen.

Forum responses included those reproduced below.

'Peter D' commented:

And you have lived here how long, and you were born where ?? Regards Peter

'medman' replied:

UK mum is Cypriot National. Have lived here but have accomodation and citizenship. Dad was UK national but died and left us when I was 6 I have no idea where he was domiciled as he left UK in 1980 and was never seen since. Was born here and have lived here all my life, revenue have asked for DOM1 and say I can get a ruling as I do not intend to live here as long as I can prove my intention to leave in 2 - 3 years.

'Peter D' replied:

What are you trying to achieve and what triggered HMRC to offer you a DOM1 ruling. Regards Peter

'tax me less!' commented:

You may have a strong case. I handle these cases all the time. What age were you in 1980 and do you have relatives in Cyprus?

The obvious question is why are you interested now?

London rates are typically £200 to £400 an hour plus VAT.

'Taxbar' commented:

Your case sounds like one that will need to be fought out with HMRC and you will need expert advice on this.

I can advise you on this area and whether you have a good chance, but it does beg the question as to what is at stake, to make the potential costs of up to £7-8,000 worth it?

'Daniya' commented:

Firstly you will need to establish if you are UK citizen/resident. HMRC have asked you for the DOM1 form, Why & on what basis. Do you have a british passport.
There is a ORGANISATION called the Immigration Advisory Services, head office is based in London. The SERVICE is completely FREE. The manchester Number is 0161-834-9942. Once you have fact about your self, then get the bull by the horn, i.e HMRC.
 
I do not recommend you pay any one yet, until you know exactly what is at stake and WHY!!

'medman' replied:

I have the Cyprus nationality and this allows me same rights as UK citizenship. The DOM1 form as I have an a/c in Cyprus and wish to be excluded on a remittance basis. I am UK resident, I know that. Ihave no need for a UK passport but the fees these guys charge are hefty? What does a ruling mean look like? I was 5 years old in 1980 and have relatives in Cyprus, also family proprty for me to live in.

'tax me less!' commented:

In which case self-assess that you are taxable on the remittance basis and run the audit lottery if you don't want to pay for advice.

'Taxbar' commented:

I agree to some extent with tax me less, except that the new tax return questions are more likely to bring about an Enquiry.

Domicile is as I keep saying a specialised area and is only relevant to HNWI individuals, otherwise its legal fact of little benefit!

'medman' replied:

I do not mind paying, but it seems that trying to put your affairs in order only gets you into trouble, why only HNWI, I know people on less than £30k who are non-dom!!!

'al_eebee' commented:

It is not the income level that matters. What Taxbar is saying (I suspect) is that unless there is a reasonable level of tax at stake then the costs of arguing the case through a professional are likely to outweigh any income tax saving.

Domicile of origin if normally taken from that of the father at the childs birth.

You say "Dad was UK national but died and left us when I was 6 I have no idea where he was domiciled as he left UK in 1980" which would suggest that you might have UK domicile of origin and if you have not since broken ties with the UK would still have that domicile.

But others who are perhaps better versed in these particular matters have posted here that there is scope for a non dom claim and I am happy to stand corrected.

In the end it will come down to the tax potentially at stake and whether you wish to merely self assess and await an enquiry, or pay for advice & assistance in pressing a claim

--------------------------------------------------------------------------------

To view this discussion online (including any possible updates), go to:
http://www.taxationweb.co.uk/forum/discuss.php?id=16852

To view other discussions in TaxationWeb's Tax Tips Forum, go to:
http://www.taxationweb.co.uk/forum

--------------------------------------------------------------------------------

IMPORTANT:
Any advice given on the Tax Tips Forum is given as guidance only. Neither TaxationWeb Ltd. nor any of the contributors to the site can be held responsible for any loss or damage resulting from the action taken as a result of advice given on the site. Always contact the contributor directly by phone or email (if contact details are provided) for detailed advice.

Article Added Saturday, 09 June 2007 | 1678 Hits

Your attention is drawn to the disclaimer on this site, which applies to the content in this section.