​Understanding Residence and Domicile
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Residence: A person is considered resident in the country (or tax jurisdiction) where they are based. For tax purposes, residence is often evaluated based on a tax year, allowing a person’s residence status to change annually.
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Ordinary Residence: Although the concept of ordinary residence is being phased out by the government, it remains relevant for prior years. A person is ordinarily resident in the country where they habitually reside, indicating some degree of continuity over several tax years.
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Domicile: Unlike residence, domicile is a legal concept that a person acquires at birth and is difficult to change without a conscious decision. A person can live in a country for decades without becoming domiciled there. Typically, a person acquires the domicile status of their father at birth, meaning one can be domiciled in a country they have never visited.
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Relevance in Tax Investigations
Residence or domicile status becomes particularly relevant during HMRC tax investigations, especially if there are foreign assets involved. If it can be demonstrated that a person is not UK domiciled, they may face no tax liability or a reduced one.
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HMRC may challenge a person’s claimed non-residence or non-domicile status to verify tax exemptions.
Residence Of Companies
Unlike individuals, companies do not have a domicile status but do have a residence status which affects their tax obligations.
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How We Can Help
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Our specialist Tax team can assist in determining your residence or domicile status, which could influence your tax liability. We offer:
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Review of Circumstances: We assess your residence or domicile status to determine its effect on your tax obligations. For companies, we establish the residence status.
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Negotiation with HMRC: If necessary, our specialist team can negotiate with HMRC to reach an agreement on the correct tax treatment of any income or gains.
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Voluntary Disclosure and Defence: Whether you need to declare income or gains to HMRC through a voluntary disclosure or HMRC has challenged your status, we can provide expert assistance.
If you would like us to review your residence or domicile status, contact us for a free, confidential, and no-obligation discussion. We offer an initial free-of-charge meeting for prospective clients.