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Where Taxpayers and Advisers Meet

Non.Domiciled

NonDom41
Posts: 38
Joined: Tue Nov 28, 2017 3:03 pm

Non.Domiciled

Postby NonDom41 » Wed Jan 09, 2019 4:44 pm

I came to the UK on Jan 01, 2005 with my then 9 year old son. He is 23 now. I have a written confirmation from HMRC that I am considered a Non-Dom.

My son never worked in the UK or earned any money. He went to school and finished University last autumn.


My question is: Is he automatically also a Non-Dom because of my Non-Dom-status ?

Tom7000
Posts: 68
Joined: Wed Aug 06, 2008 3:30 pm

Re: Non.Domiciled

Postby Tom7000 » Wed Jan 09, 2019 6:01 pm

Possibly, but is it his intention to return to the land of his birth one day. That may be the deciding question. If yes probably non dom. If no probably not.

But this area is complicated.

AnthonyR
Posts: 246
Joined: Wed Feb 08, 2017 2:33 pm

Re: Non.Domiciled

Postby AnthonyR » Wed Jan 09, 2019 7:39 pm

He would have inherited your domicile as a domicile of dependence until the age of 16.

Since then the question is then whether he has acquired a domicile of choice by settling in the UK and making it his permanent home. Do you and he still have significant ties to your home country? Does he travel back there often/at all?

The other side of it is that he has been here for 14 years. After he has been resident in the UK for 15 years (assuming he's not been resident elsewhere in the meantime) he will be become deemed domicile for tax purposes anyway.
Anthony Rogers CTA TEP
Fusion Partners LLP
anthony@fusionpartners.co.uk

NonDom41
Posts: 38
Joined: Tue Nov 28, 2017 3:03 pm

Re: Non.Domiciled

Postby NonDom41 » Wed Jan 09, 2019 8:53 pm

Thank you both for your information.

I have been the owner of a small electronics company since 1976, founded in my son's country of birth. This company owns a flat and will gift it to my son before April 05 (before the 15th tax year is over). We visit this country at least once a year and the long existing company and the flat have nothing to do with the UK. I think ownership of the flat will additionally prove his ties to his country of birth. His intention is to move to this place as soon as he has found a suitable job there (he has just finished his university education last autumn).

Taking into account these circumstances and the time frame no UK-gift tax should arise.

AGoodman
Posts: 709
Joined: Fri May 16, 2014 3:47 pm

Re: Non.Domiciled

Postby AGoodman » Thu Jan 10, 2019 12:00 pm

Inheritance tax (the potential tax on gifts) is entirely dependent on your domicile, not his. The transfer will be a deemed gift by the shareholders of the foreign company.

The other tax to consider is income tax as this could be treated as a distribution to you on behalf of your son. To avoid that, you may need to elect to be taxed on the remittance basis which will cost you the £60k fee for the year (on the basis you have been resident in the UK for 12-14 years). Definitely worth getting proper advice on this income tax point.

NonDom41
Posts: 38
Joined: Tue Nov 28, 2017 3:03 pm

Re: Non.Domiciled

Postby NonDom41 » Fri Jan 11, 2019 1:33 pm

@Goodman

I have sent you a PM

NonDom41
Posts: 38
Joined: Tue Nov 28, 2017 3:03 pm

Re: Non-Domiciled

Postby NonDom41 » Fri Jan 11, 2019 5:01 pm

@Goodman

A) To avoid the described problems it would be advisable that my son buys the flat from the company. Then the foreign company has income or claim but this is not taxable in the UK.

B) If I give a part of my foreign bank savings to his foreign bank account it should also be UK-tax free. Right ?

Please remember all this happens before our 15-year non-domiciled residency and all above properties have no relations to the UK. The company was founded in 1976.

NonDom41
Posts: 38
Joined: Tue Nov 28, 2017 3:03 pm

Re: Non.Domiciled

Postby NonDom41 » Mon Jan 14, 2019 8:16 pm

Can anyone answer my last questions A and B? (@Goodman?)

AGoodman
Posts: 709
Joined: Fri May 16, 2014 3:47 pm

Re: Non.Domiciled

Postby AGoodman » Tue Jan 15, 2019 5:10 pm

A) Yes, likely fine but any gain made by the company could be attributed to you under s.13 TCGA unless you are filing on the remittance basis (presume not) or one of the following applies:


a chargeable gain accruing on the disposal of an asset used, and used only—
(i) for the purposes of a trade carried on by the company wholly outside the United Kingdom, or
(ii) for the purposes of the part carried on outside the United Kingdom of a trade carried on by the company partly within and partly outside the United Kingdom,]

(c) . . . or
[(ca) a chargeable gain accruing on the disposal of an asset used, and used only, for the purposes of economically significant activities carried on by the company wholly or mainly outside the United Kingdom, or
(cb) a chargeable gain accruing to the company on a disposal of an asset where it is shown that neither—
(i) the disposal of the asset by the company, nor
(ii) the acquisition or holding of the asset by the company,
formed part of a scheme or arrangements of which the main purpose, or one of the main purposes, was avoidance of liability to capital gains tax or corporation tax

You might well be under (cb) if the company acquired the property before you came to the UK, otherwise it depends on the reason for the company buying it.

B) Yes.

NonDom41
Posts: 38
Joined: Tue Nov 28, 2017 3:03 pm

Re: Non.Domiciled

Postby NonDom41 » Tue Jan 15, 2019 5:42 pm

@goodman

Thank you very much for your detailed information.

I have sent you a Private Message a few days ago; did you receive it? If not, please send me a PM and I will reply.


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