Expatriate taxation - CIOT - The Chartered Institute of Taxation

CIOT RESEARCH PROJECT ON EXPATRIATE TAXATION
4.4 There are a few tax cases on the meaning of domicile, but the main case law
in determining domicile arises from the issues of divorce and wills. The most
recent case of Agulian & Anr v Cyganik ([2006] EWCA Civ 129), heard in the
Court of Appeal, has an excellent analysis of what domicile means, albeit in
the context of the application of domicile to a will. In the absence of any other
law, it is logical to assume that tax law would hinge upon the domicile law as
applied in non-tax cases.
4.5 Tax cases where domicile has been an issue include:
• Earl Of Iveagh v Revenue Commissioners ((SC(I)1930, ITC31)
• CIR v Cohen (21 TC 301)
• Re Clore (decd) (No2), Official Solicitor v Clore and Others (1984
STC 609)
• Fielden v CIR (42 TC 501)
• CIR v Duchess of Portland (54 TC 648)
• CIR v Bullock (51 TC 522).
4.6 There are many other cases, but the interesting thing to note is that, because
there appears to be no defined statutory rule of domicile, each case is
decided on its own merits and, as the facts vary and the tax at stake can be
significant, many cases could end up in Court to determine domicile for tax
purposes.
4.7 It would be logical to assume that the taxpayer could apply to HMRC for a
domicile ruling in every case. However, for the majority of foreign national
expatriates who come to the UK to work on a temporary basis, it would be
stretching the imagination to think anyone would find such a person domiciled
in the UK as has recently been exemplified in the Cyganik case (Agulian &
Anr v Cyganik( [2006] EWCA Civ 129).
4.8 The exception to this is the case of any expatriate who has a UK domicile of
origin, but who has established a domicile of choice in another country and
returns to work in the UK for an assignment.
4.9 If domicile requires physical residence in another jurisdiction, and the
employee returns to the UK for a two- to five-year assignment, the ruling on
domicile could be that the individual had abandoned his domicile of choice.
4.10 It is noted that there was an intention of the Chancellor to conduct a review of
residence and domicile but, at the time of writing, the consultation period has
been ongoing for three years and is still open. The Chancellor stated in his
2003 Budget, and repeated on the Treasury website, that the report issued in
March 2003 would:
“… provide a framework for further analysis and discussion and ensure that
any specific options for reform of the current rules are based on the widest
possible understanding of their effect.”
4.11 It is clear the three-year delay in any further meaningful statement shows
there is no sense of urgency in making change.
Peter Ashby 22 6.2.07