Paul Gray Esq CB

            Chairman

            HM Revenue & Customs

            100 Parliament Street

            London SW1A 2BQ                      5 February 2007 

 

 

 

 

I would be most grateful to know, from some relevant person in your organisation, whether it is possible for an individual to be a non-domicile in the UK for tax purposes if he or she is registered as a UK voter.

 

As you know, registration as a voter entails a statement of residency, so it is hard to see one could then keep non-domicile status.

 

 

 

            8 February 2007

 

Further to the above letter I would also be grateful to know have many individuals currently hold the status of non-domiciled taxpayers, whether the qualifying conditions are defined by statute and whether it has been the subject of any landmark legal cases.

 

 

 

 

Richard Heller

From Miss Su McLean-Tooke

Policy Adviser

Charity, Assets and Residency

Residency Business

Offshore Personal Tax Team

3/63 100 Parliament Street

London SW1A 2BQ                            7 March 2007  (received 30 April)

 

 

Thank you for your letters of 5 and 8 February in which you raised some questions about domicile. Your letters have been passed to me for reply.

 

Residence and domicile are completely separate concepts: residence will not affect domicile, and vice versa. Domicile is a general law concept and it is not defined in any of the tax statutes. It was one of the issues considered in the Special Commissioners’ decision in the recent case of Gaines-Cooper (SpC 568). Individuals normally acquire a domicile of origin from their father at birth. It is possible to be a UK citizen and to have a domicile of origin from elsewhere.

 

UK citizens, Commonwealth citizens and citizens of the Republic of Ireland who are resident in the UK are entitled to vote in UK parliamentary elections (as are some UK citizens resident overseas). So there are many instances where someone who does not hold UK domicile status may register to vote.

 

Individuals who are not domiciled in the UK may use the remittance basis of taxation in respect of overseas income and gains. This means that the liability for UK tax falls when relevant income or gain is brought into (remitted to) the UK rather than, as normal, when it arises. Individuals only need tell HM Revenue & Customs about their domicile status when it affects their UK tax position. In the vast majority of cases, either there is no offshore income and gains or the remittance basis is not used, and therefore we are not in a position to know how many UK taxpayers have non-domicile status.

 

I hope that you find this reply helpful.

 

 

Mrs Su McLean-Tooke

 

 

Mrs Su McLean-Tooke

Policy Adviser etc                                          1 May 2007 

 

 

 

 

Thank you for your letter of 7 March (reference 03205/2007) which reached me only a few days ago.

 

In spite of your explanation, I remain baffled by the idea that residence has nothing to do with domicile status. My Oxford English Dictionary defines domicile first  as “a place of residence or ordinary habitation; a house or home 1477. It then lists as a separate definition “Law. The place where one has his permanent residence, to which, if absent, he has the intention of returning 1765; residence 1835.” That certainly suggests a strong connexion between domicile and residence.

 

You state that domicile is a general law concept and not defined in statute. However, according to media reports the domicile provision was first established in 1799, for the benefit of wealthy Britons with colonial fortunes. Since many of these were derived from slavery, it has been described as the last relic of the slave trade.

 

If I understand your letter correctly, it is up to the revenue authorities to look at an individual’s circumstances and decide whether or not he qualifies for non-domicile status. In the Gaines Cooper case the Special Commissioners considered it relevant that Mr Gaines-Cooper liked to go to Ascot and was a member of the Rolls-Royce Enthusiasts’ Club. If such ephemeral factors can be counted it must be open to the revenue authorities to consider such factors as the establishment of residence in the UK and registration for voting.

 

On the latter point, you may like to note the Parliamentary answer by the then junior Constitutional Affairs minister on 24 January 2005Col 145W. “Residence for the purpose of eligibility to be included in electoral registers entitling electors to vote at UK general elections is not defined in law but has been ruled by the courts to entail a considerable degree of permanence” (my italics). A Commonwealth or IrishRepublic citizen must be resident in the UK to register as an elector. So must a UK citizen unless he specifically registers as an expatriate voter, in which case he is so identified on the electoral register (because he cannot vote in local elections). Given the Parliamentary answer above, it would certainly seem both lawful and expedient for HMRC to ask current non-domiciled taxpayers and future claimants if they are registered non-expatriate electors.

 

As I need hardly tell you, there has been a revival of media and Parliamentary interest in the non-domicile rules and considerable debate over their economic impact and still more, over their equity. Ordinary taxpayers are entitled to feel resentful when they are taxed on their entire income while people vastly richer than themselves pay tax only on the income they choose to bring to the UK. The non-domicile rule has been defended as a contributor to wealth creation in the UK – but it actually discriminates against British wealth creators and in favour of those who create wealth overseas and keep it there.

 

According to recent media reports, the Chancellor recently terminated a five-year review of the non-domicile rule. Is there any intention to publish this review? It was funded by taxpayers and I think that they have a right to consider its findings.

 

 

 

 

Richard Heller

 

 

Letter published in Evening Standard   2 May 2007 (no sense in wasting good words)

 

Derek Scott advises us not to be aggrieved “when some individuals get extremely rich” (ES 30 April). But British taxpayers have every right to complain when the super-rich profit from non-domicile tax status which has turned Britain into the world’s biggest tax haven.

 

Far from encouraging wealth creation in this country, the non-domicile regime gives its beneficiaries a cast-iron motive to create wealth overseas – and keep it there. It discriminates against British entrepreneurs who have no foreign connexions, and forces British taxpayers to make up the lost revenue.

 

You also report that Gordon Brown has cancelled a five-year review of the domicile rules. Taxpayers funded this review: the least he can do is to publish it.

Richard Heller

 

Note: Derek Scott was my predecessor as political adviser to Denis Healey