A recent domicile First Tier Tribunal (“FTT”) case Henkes v HMRC  (“Henkes”) is very relevant for non-UK domiciled individuals who came to the UK many years ago and who believe their intention to leave the UK meets the requirements to be accepted as non-UK domiciled. Although the case is fact specific, many of the facts and arguments put forward by the taxpayer are analogous to facts and arguments we see in such cases and so the way these were then dispensed with by the FTT offer a warning and a reminder of the need to keep each client's domicile status and risk under review.
A few key points from the recent FTT decision have been summarised below.
Firstly, it is worth noting that everyone has a domicile of origin, which is usually but not always, inherited from that person’s father at birth. That domicile of origin persists, unless that person’s intentions demonstrate that he/she has changed their domicile status, and hence replaced their domicile of origin with a new domicile of choice.
In the Henkes case, HMRC agreed the taxpayer had a non-UK domicile of origin but took the view the taxpayer had acquired a new domicile of choice in the UK. The FTT found in HMRC’s favour.
In summary, the taxpayer, a 77-year-old man, had a domicile of origin in Venezuela and is a Dutch citizen. He grew up in South America and was educated in the USA. He moved to the UK in 1967 when he was 23 and remained based there, aside from two 3 year periods of absence due to work. His wife is British and their children and grandchildren live in the UK. He owned residential property in Spain as well as the UK.
He worked for the Shell group between 1973 and his initial retirement in 2003. Post 2003 he continued to work on a part time basis as a non-executive sitting on boards outside the UK.
Whilst a case at the FTT is not binding, this case is interesting as:
– the case concerns a living taxpayer. There have been few cases where the courts decide that someone who is still alive (and therefore able to state their intentions at tribunal) has acquired a domicile of choice;
– it highlights the continued importance of actions matching stated intentions. Inconsistencies in this case in relation to the plans of the taxpayer’s wife and where the taxpayer ultimately saw himself permanently living made it easier for HMRC to undermine the taxpayers assertions;
– it includes debate about the lack of links to the jurisdiction of the domicile of origin, and what extent this impacts on weighing up the taxpayer’s links to the UK; and
– it discusses the taxpayer’s plans around retirement and intentions for leaving the UK, and the degree to which being based in the UK was necessary to enable him to fulfil his global non-executive role.
Given the degree of scrutiny HMRC apply to their enquiries into domicile status and increased interest in this area by HMRC, the Henkes case is a timely reminder to ensure that your and/or your client’s have done everything possible to demonstrate why you/they remain non-UK domiciled and the events that will lead you/them to leaving the UK permanently.