Every person has a domicile at all times throughout their lifetime, starting with a domicile of origin at birth, which is usually the domicile of the person’s father. Once an adult, an individual's domicile will change only if they move country and intend to live in that country permanently or indefinitely. An individual will acquire a domicile of choice in that other country if both elements are present. A domicile of origin is reactivated if a domicile of choice is lost.
The benefits of ‘non-domiciled status’ are a long-standing and attractive feature of the UK tax system.
HMRC may enquire into a person’s non-UK domiciled status during their lifetime or following their death, and are doing so increasingly.
Whether making a claim for non-domiciled status, undertaking tax and succession planning on the basis of a foreign domicile or responding to an enquiry, the starting point will be the details of the person’s origins and of any moves between countries during childhood. This is often difficult to establish because of the passage of time. The intentions of the person’s parents can be relevant. Capturing the information in writing, accurately and in a timely fashion, can be crucial.
The second stage is to demonstrate that the person has not acquired a domicile of choice in any part of the UK. This depends on the person's intentions. However, external evidence should be used to demonstrate those intentions; a mere statement of an intention will be viewed critically. Relevant evidence would include:
In this recent 2020 case, the First-tier Tax Tribunal passed judgment on Mr Henkes’ domicile. HMRC accepted that Mr Henkes had a domicile of origin outside the UK (either in Venezuela or the Netherlands), but argued that he had acquired a domicile of choice in the UK.
The following facts and issues were examined:
Taking all of the evidence into account, the tribunal held that Mr Henkes had acquired a domicile of choice in the UK; the UK was his “ultimate home”.
This case highlights, in particular, the need for all surrounding facts to support a person’s stated intentions.
If you need advice relating to the domicile issues discussed in this article or other areas of concern, please do get in touch as a member of the private client team will be able to discuss these matters with you.