# How Does One Establish A UK Non-domicile Status?



## Waterdog

Having left the UK & set up home in a new land how do I establish what is my domicile status? This issue could have significant tax implications. Moreover, although it has been raised with Portugal in mind, this issue will effect expats, from the UK, world-wide.

I have tried to devil out the correct answer from a number of sources, including Google, but the more I dig the more confused I get. 

I have established that in English (Scottish?) Law domicile status has a specific meaning, divorced from nationality, citizenship & residency (I was surprised to discover that an individual can be resident in more from than one country at the same time – but another debate).

This thread is confined to proof of a change of domicile status to UK Nom Dom.

The main reason for my concerns? Inheritance tax. 

Simplified, currently, following the death of a Brit with UK domicile status their executor could be required to pay 40% of their estate above £325,000 world-wide in inheritance tax to the UK Inland Revenue before probate is awarded.

If the same Brit enjoys UK Nom Dom status this stricture will only be applied to that part of their estate within UK jurisdiction.

I would be very grateful if somebody could advise what are the criteria for a Brit having previously had UK domicile status to prove UK Nom Dom status & how do they go about it.

Over to you Guys.


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## rifleman

My wife is an accountant and tells me that there is nothing you can do to prove that you are not domiciled in the UK.
HMRC will always look at your situation holistically, so no two cases will be the same. If they don't agree with you then your only option is to go to court.
You may find this helpful.
http://www.kpmg.com/uk/en/issuesand...pages/agreeingyourdomicilestatuswithhmrc.aspx


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## MrB

Waterdog said:


> Having left the UK & set up home in a new land how do I establish what is my domicile status? This issue could have significant tax implications. Moreover, although it has been raised with Portugal in mind, this issue will effect expats, from the UK, world-wide.
> 
> I have tried to devil out the correct answer from a number of sources, including Google, but the more I dig the more confused I get.
> 
> I have established that in English (Scottish?) Law domicile status has a specific meaning, divorced from nationality, citizenship & residency (I was surprised to discover that an individual can be resident in more from than one country at the same time – but another debate).
> 
> This thread is confined to proof of a change of domicile status to UK Nom Dom.
> 
> The main reason for my concerns? Inheritance tax.
> 
> Simplified, currently, following the death of a Brit with UK domicile status their executor could be required to pay 40% of their estate above £325,000 world-wide in inheritance tax to the UK Inland Revenue before probate is awarded.
> 
> If the same Brit enjoys UK Nom Dom status this stricture will only be applied to that part of their estate within UK jurisdiction.
> 
> I would be very grateful if somebody could advise what are the criteria for a Brit having previously had UK domicile status to prove UK Nom Dom status & how do they go about it.
> 
> Over to you Guys.


For IHT purposes, in simple terms, you need to live in Pt for 5 years plus, to escape it. Most UK accountants can help you with advice, as can probably the HMRC website, eg

http://www.hmrc.gov.uk/cnr/hmrc6.pdf

Basically, for IHT you need to have not lived in the UK for more than 17 of the last 20 years, so it's 3 full tax years, plus a bit extra on each side!

It is important to keep records of when you moved etc, and also not to visit the UK for eg more than 90 days a year: but these guidelines are being revised for 2012.

And of course, you will have to give this information to those who inherit, as they are the ones that will get the questions from HMRC about whether IHT has been paid. You may not be able to answer


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## siobhanwf

Did you mean 7 of the last 20 years MrB?
Otherwise it doesn't make any sense at all


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## robc

siobhanwf said:


> Did you mean 7 of the last 20 years MrB?
> Otherwise it doesn't make any sense at all



I have a different plan to avoid IHT in the UK or Portugal.....................I call it the "spend the lot" plan,.............................. so far it is going well 

Rob


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## siobhanwf

I have told my kids I am leaving them my overdraft :evil::evil:


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## PedroCruz

Hello Waterdog,

Residency problems tend to get worse, as all fiscal administrations want to collect as much taxes as they can.
Recently a Portuguese that was working and living on Germany for the last 20 years had to went to court, because the Portuguese tax services wanted to make him pay as a resident in Portugal.
I don't konw the reality of England, but, if you can arrange things in a way you might solve averything without court ..... excelent.
As Reeflman said, there are no 2 cases alike.
But, if you leave anything behind, like a house or properties ..... they'll try their best to consider you a resident.
There was this case, some years ago, an English person left England to try not to be taxed when he passes away, so, he changed to another country ....... the tax office defended that the person never left England on the sentimental aspect, as he sent letters to the family saying he missed the country.
The court decid on behalf of the tax office.
Not an everyday situation, nevertheless .... stange.
Sorry, no magical answer.
Cheers


Pedro Cruz


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## lagosguy

As we were discussing on another thread yesterday, domicile and residency are fundamentally different concepts. As many expats have found to their cost, living abroad for many years does not get you off the hook for IHT if the HMRC refuses to accept a change of domicile. The extract from an article on Taxationweb.co.uk makes the point clearly. 

“Domicile involves complex issues of law. An individual can be resident in more than one country at the same time, but can only have one domicile. A person is generally domiciled where his or her permanent home is situated. A ‘domicile of origin' is acquired at birth, normally from one's father. The domicile of a minor normally follows that of the person on whom he or she is legally dependent (a ‘domicile of dependency'). However, a ‘domicile of choice' can be acquired from age 16. This broadly involves leaving the current country of domicile to settle in another country, and requires strong proof of having moved to the other country permanently or indefinitely. Living in another country is not conclusive evidence of an intention to change domicile.”

A complication for expats seeking to persuade the HMRC that their living abroad by itself constitutes a change of domicile is the fact that so many expats, who say they have left the UK for good, return to the UK because of bad health, old age, financial troubles, boredom, homesickness, family commitments etc, etc. If the expats' fall-back position seems to be to return "home" when the going gets tough, you can hardly blame the HMRC for demanding more than a change of country to prove a change of domicile.

Ideally somebody with legal or tax management experience can post what they think are the key criteria that have to be met in order to achieve a change of domicile; but the fact that legal disputes are still taking place in the UK as the HMRC seeks to charge tax on expats' estates suggests that, however good the legal advice, at the end of the day it is the HMRC or a court that will determine the fact of somebody's domicile. 

The foolprooof way to get yourself out of the HMRC's clutches is, of course, not to have any assets in the UK that it can lay claim to. If all your assets are abroad and you have a foreign will, then you won't need to probate a will in the UK. It is the very fact that so many expats continue to hold assets in the UK that encourages the HMRC to believe that they have not severed all their ties with the UK, which is the test for a change of domicile.

I wonder if any expat member has tried to approach the HMRC and get them to agree that a change of domicile has taken place. I can't believe they would; but it seems an obvious thing to try.


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## PedroCruz

Good post lagosguy,
Those are actualy the problems.
And the worse of all, is that when coountrys have diferent ways of treating the same.
Sometimes the problem are all about translation (from the original international tax agreements).


Pedro Cruz


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## rifleman

My wife tells me that she has had HMRC agree that clients are non doms, so they will do it.


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## canoeman

As I posted in the other thread after discussions with HMRC and various others,as we knew this could be an issue, I followed some simple steps that HMRC have agreed that I am no longer considered Domiciled in UK, recent changes to EU laws on EHIC have also helped to reinforce that fact, even though we do still own, rent and pay UK tax on property in UK.

I'm not worried about any IHT issues, as in our case it would only be UK assets that might be subject to IHT, but it is something we do look at on a regular basis, and might or might not alter in the future.

MrB link to the revised to revised HMRC6 gives a lot of information, one of the areas we are specifically careful about are visits to UK so we don't overstay allowed days or even attend the same annual events each year.

Best advice is check your individual circumstances, then don't have any UK assets and follow Robc & Siobhán advice

Completed form supplied HMRC in English & Portuguese for relief from UK income Tax, completed by Portuguese Finances and returned to HMRC.
Completed form R105's for banks etc
Notified NHS no longer a Resident.
Notified new addresses to Banks, froze TESSA, ISA's
Opted for Non Resident Landlord scheme 
Registered Residence in Portugal,
Registered with Portuguese Social Security
Registered with Portuguese Health Service
Registered Driving Licence with IMTT
Consular Certificate for date of leaving UK
might have been a few other things but they where the major ones.


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## Waterdog

Many thanks to all who have made the effort to respond to my initial question.

MrB, I have waded through HMRC6 Residence, domicile the remittance basis (84 pages).

Whilst pages 12 to 21 are specific to the domicile question, HMRCC6 addressees both residence & domicile & this could be where confusion starts.

Because of the wide divergence of opinion voiced in this thread, I am still confused but heartened that some appeared to have resolved this issue to their satisfaction.

Whilst some assert that establishment of UK domicile status is finally the preserve of the UK law courts (not HMRC) & near impossible to establish before death. Both Rifleman’s wife & Canoeman advise that it is possible to get the HMRC to confirm UK Non Dom status for Brits who previously held UK domicile status, whilst still alive.

However, having previously received verbal ‘assurances’ from the HMRC, only later to be flatly denied, may I ask Rifleman & Canoeman if the confirmation received was formalised in writing?

A big thank you to Canoeman for the comprehensive checklist for obtaining Portuguese residency & relinquishing UK domicile status - a Moderator could make this a Sticky.

Considering that although an UK Non Dom, you still own, rent & pay tax on property in the UK & make regular visits to the UK, your achievement is awesome & must give heart to the rest of us.

A thought, if ones estate worldwide is well below the £325,000 threshold possibly HMRC are more disposed to give an early ruling?

So - having achieved UK Non Dom Status – go on & win the lottery - that would learn them!

Canoeman, I assume you have an EHIC issued by Portugal? Please amplify how the recent changes to EU laws on EHIC have helped to reinforce your UK Non Dom status?


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## rifleman

My wife tells me that she cannot recall what exactly was put in writing to her firm by HMRC in relation to non dom clients, but agreement was definitely signalled by a reduced tax demand.


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## rifleman

She also caution that domicile can change again, as can the law.


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## canoeman

I did receive written confirmation to my new status, I wouldn't say we make regular visits to UK but I do make certain neither of us overstay or if you like have a pattern of visits that HMRC might consider against non domicile rules.
we do also try to make certain we keep abreast of any changes, the new HMRC6 is different but certainly easier to follow than previous one.

EHIC our original ones where issued by UK and returned when we Registered Residence here, Portuguese Social Security then issued ones for us to use in EU, then last year EU law was changed and the country responsible for paying your State Pension now has to issue your EHIC for use in EU, so our EHIC's are now issued by UK for use in the EU not Portugal.


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## Waterdog

Hi Rifleman,

I was afraid you might say that!

Did your wife's clients get the HMRC response in writing - sorry to press but I got well & truly caught by an earlier about-turn following a verbal answer?

Whatever, Canoeman has really cracked it so there is still hope for all of us.


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## Waterdog

Although outside the thrust of this thread - are the inheritance tax laws in Portugal similar to the UK?

Additionally, do you require 2 Wills - one covering your UK based assets the other for your Portuguese estate?

I am beginning to get a headache so will retire for a lie down with a G & T or few.


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## canoeman

If your a UK Resident with Portuguese assets then you should have 2 wills

This is a ex- UK Resident legally Resident in Portugal

1. Portugal recognizes your *country of births succession laws* so you do not have to follow Portuguese succession law.
2. You should make a Portuguese will to cover your Portuguese assets (if you solely rely on a UK will then that would have to be probated in UK (regardless of assets or not) before Portuguese Probate could start.
3.IHT was abolished in Portugal in 2004 and replaced by a flat rate 10% Stamp Duty on taxable value of assets. Stamp Duty only applies to Portuguese assets.
4. There is no IHT/Stamp duty on assets left to spouse, issue and parents.
5. We do currently have 2 wills 1 UK 1 Portuguese

This is really the bare bones, and there is a lot more to it than this.

In Portugal a person's estate comprises everything owned in sole name and the share owned in joint names, unlike UK there is no such thing as joint tenancy so anything held jointly
will be held under tenancy in common, and does not pass automatically to joint owner but comes under terms of deceased will.
Trusts & Trustees do not exist in Portuguese law so if used in a UK or UK style Portuguese will cause a conflict and create problems and delay with probate.


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## rifleman

Waterdog said:


> Hi Rifleman,
> 
> I was afraid you might say that!
> 
> Did your wife's clients get the HMRC response in writing - sorry to press but I got well & truly caught by an earlier about-turn following a verbal answer?
> 
> Whatever, Canoeman has really cracked it so there is still hope for all of us.


She says there was correspondence, nothing so simple as a letter saying ok your client is a non dom, and she could only tell you word for word what it did say if she pulled the files out.

I know myself that advice you get from a civil servant, whether written or Aural, does not bind the government department or local authority that they are employed by. So it wouldnt make any difference legally. They could write and say non dom today and something else tomorrow.


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## Waterdog

Rifleman please thank your wife for all of her advice.

Canoeman apart, who seems to have negotiated a very special relationship with ‘The Revenue’, it would appear one has to die before this matter is finally resolved.

Looks as if I may have to follow Robc’s & Soibhanwf’s lead & spend it before the taxman can so excuse me ‘cause I got some serious drinking to do!


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