HMRC have published the promised guidance on residence, domicile and the remittance basis, which replaces IR20 and all other Revenue guidance on the subject. Just a few thousand pages. We have been asking for it – if you will pardon the expression. I guess you would call it Quantitative Pleasing. I will say more about all this in due course….
For the moment I would just mention a few other relevant points from their update last week.
Forms DOM1 are being withdrawn. Now that the remittance basis is no longer mandatory and is a matter of self-assessment, the whole question of domicile will be a matter of self-assessment too. Any DOM1s now submitted to HMRC will be returned unexamined. Form P86 is also being withdrawn, and there is going to be a new form, which will exclude any reference to domicile.
Domicile is also relevant to inheritance tax, and HMRC seem confident that their new guidance on domicile will enable taxpayers to decide for themselves whether or not they are UK domiciled. It will still be possible for taxpayers to seek confirmation from HMRC regarding their domicile if the amount of inheritance tax at stake exceeds £10,000.
Taxpayers will be required to state on their tax return the grounds for their entitlement to the remittance basis; i.e., that they are not domiciled or they are not ordinarily resident. HMRC will then have the opportunity to enquire into their domicile status by way of a section 9A enquiry. HMRC say that when a claim to the remittance basis is not challenged for a particular year, this does not mean that they necessarily accept that the individual’s domicile is outside the United Kingdom, and it will not prevent them from opening an enquiry later. This sounds as if it would be covered by the normal enquiry window – but that is almost certainly not the case. Unless full details are provided in the tax return sufficient to enable HMRC to determine whether somebody was domiciled or not, the enquiry window will be entirely irrelevant. HMRC would simply claim that they were not able from the information supplied to determine the domicile, and they can therefore make a discovery on Langham v Veltema principles. This looks a bit difficult, because you could send in the return with a DOM1 form, giving them all the details they need to come to a conclusion about your domicile – but they will return the form unexamined. This could raise some interesting questions. Better, perhaps, to provide extensive details supporting the foreign domicile with the return (but not in the form of a DOM1) so that at least you would have the protection of the enquiry window.