Obtaining a domicile ruling before death

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.

The information provided in this article is not intended to offer advice.

It is based on Old Mutual International's interpretation of the relevant law and is correct at the date shown at the top of this article. While we believe this interpretation to be correct, we cannot guarantee it. Old Mutual International cannot accept any responsibility for any action taken or refrained from being taken as a result of the information contained in this article.

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