UK HMRC rarely provide rulings until they become relevant for tax purposes. However, a guidance note was issued by HMRC (HMRC Brief 34/2010) which details the circumstances in which an individual’s domicile will be considered for IHT.
There has been a change in stance from HMRC, which, in the past stated that if a settlor considered himself non-UK domiciled it was not necessary to submit an IHT account to HMRC. If an account was submitted, HMRC would only open an enquiry if there was tax of at least £10,000 in question.
The position now is that only where there is a “significant risk of loss of UK tax” will HMRC consider pursuing an enquiry and providing a ruling on an individual’s domicile. The £10,000 minimum has been removed and there is no further guidance on the specific amount that is regarded as “significant”; it will be decided on a case by case basis.
However, completing an IHT 100 form may result in HMRC providing an assessment of a taxpayer’s domicile position if they need to assess whether any tax will be payable in respect of a chargeable lifetime transfer.
Therefore, if a taxpayer believes they are non-UK domiciled and would like HMRC to confirm this, then it may be prudent to enclose a letter with the IHT 100 form which details the reasons why they believe they are non-UK domiciled and request HMRC to confirm this.
The letter may include details such as the length of time:
- they have had a permanent home in the country
- they have worked there
- their spouse/civil partner* has been living with them
- their children have been educated there
- they have been a citizen or national of the country; as well as whether they have made a Will, funeral arrangements or have voting rights there; and
- whether they intend to remain there and outside the UK permanently.
* As defined by the Civil Partnership Act 2004.