Domicile: What makes you think I live here? By Simon Sweetman

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Simon Sweetman tries hard to find any merits in the current proposals for taxing non-domiciles.

This week the CIOT asked the movers and shakers of the tax world for a round table discussion of the issues of domicile (they let me go as well). If there were two things that came out of the discussion, they were:

  1. There is a great absence of hard information

  2. people's position rather depends on the constituency they represent (the bankers dont entirely share a perspective with the Low Income Tax reform Group).

    oh, and

  3. though we all disagreed with each other, we are united in our contempt for what is on offer. Presumably, though, it will sail through. The Tories can hardly vote against since it was their idea in the first place.

Probably something like 10% of the population...

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17th Dec 2007 19:18

Domicile reconciled?
20 years ago (but not today!) he Law Commissions of England and Wales and Scotland recommended to government (at the time Tory) that there should be a fundamental reform of the law of domicile to bring it from the 14th century to the 20th century as it were. Domicile as a concept affects many, many things other than taxation from capacity to enter into contract to the ability to leave one' property to others, either by gift, by will or inaction (where the state decides who gets what under the intestacy provisions. Bizarrely there are still differences in the consequences between England and Wales and Scotland, hence the Anderson case some years ago where it was ruled to be inherently (!) unlikely that a Scot would take English Domicile.

Had domicile been changed then this discussion would be an historic curiosity, but the chance was taken and dropped twice by the Tories, once in 89 and then again in 1991. The Labour party included it in their shadow budget of 1992 and 1997 (if my memory serves me correctly) but have been silent ever since.

There are considerable arguments in favour of basing domicile on permanent residence after 7 years, and abandoning the lottery of the domiciles of origin and dependancy in favour of the 'childhood domicile' as the starting point, the country with which the child is most closely connected. The Law Commissions considered, and who are we to doubt them, that the commercial and legal advantages outweighed the taxation disadvantage.

However instead of looking at this reform again - joined up government looking at the larger picture etc, we have a half-baked political expedient, which will, as usual discard the baby with the bath-water, losing the minor tax inconvenience but failing to take advantage of the real commercial and legal advantages - and the super-rich will happily pay £30,000 pa to be left alone, given that some years Mo Al-Fayed was happy to pay £250,000 pa to be left alone.

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17th Dec 2007 19:58

Domicile NZ Style
Domicile planning even for the common 'man' was fun in the UK while it lasted and now it is the preserve of the rich. Domicile NZ style is determined by the 14 section Domicile Act 1976. Section 9 of that Act simply states:

9. Acquisition of New Domicile
A person acquires a new domicile in a country at a particular time if, immediately before that time:
(a) He is not domiciled in that country; and
(b) He is capable of having an independent domicile; and
(c) He is in that country; and
(d) He intends to live indefinitely in that country.

Pretty much "end of story".

It continues to amaze me that there is never enough "balls" in the UK to do something as straightforward as this, so we end up with half-way house that only really affects the 'ordinary' person and adds to the myopia that is the UK tax system.

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18th Dec 2007 11:07

We may have to go through the looking glass before anything like a sensible taxation sytem emerges. Only Tories could do it and their recent pronouncements dont make one feel confident.
People used to want to live here because we had the best social care and a fair tax regime. Now neither of these things is true.
If we could return to a simpler, low -taxation regime and reward excellence in public services, the problem would vanish,like the Ceshire Cat! Its a tall orderthough, when one considerrs the plethora of vested interests on every side.

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