UK-domicile chosen on fleeing the Nazis

In Jeremy Coller v HMRC [2023] TC08738, the First Tier Tribunal (FTT) found the appellant, a leading venture capitalist, had a Domicile of Origin in the UK. He was unable to claim the remittance basis of taxation.

• The taxpayer completed his 2013 to 2016 tax returns on the basis that he was Not domiciled in the UK.
• HMRC enquired and issued closure notices as they considered that he was UK-domiciled and subject to tax on the arising, rather than the Remittance Basis.
• The taxpayer Appealed to the FTT.

The FTT found that:

• To consider a person's domicile status, the domicile of their father and mother needed to be considered too.
• As HMRC were asserting that the stated domicile was incorrect, they had to meet the burden of proof.
• There were four issues to consider in order:
  1. At the date of his son's birth 19 May 1958, had the father acquired a domicile of choice in the UK. If so, this would give the son a Domicile of Origin in the UK.
  2. At the time of his death in 31 August 1968, had the father acquired a UK domicile of choice. This would give his son an English domicile of dependency which would have become an English domicile of choice when he ceased to be a minor on 17 May 1974.
  3. After the father's death had his wife acquired an English domicile of choice which in turn would have given their son a domicile of dependency in England, which would then have become a domicile of choice in England when he ceased to be a minor.
  4. If the prior three issues had given the taxpayer a non-UK Domicile of origin, had he acquired an English domicile of choice before his claims for the remittance basis in 2012?

FTT findings in respect of the father's domicile (issues 1 and 2):

• He had abandoned his Domicile of Origin in Austria:
  • He was born in Austria in 1918 and had a Domicile of Origin in Austria.
  • He arrived in England in 1938 having fled the Nazi persecution of the Jews and he never wanted to return to Austria.
• He had acquired a domicile of choice in England by the time of his son's birth in 1958 as:
  • While not legally able to abandon his Domicile of Origin without having acquired a new one, this is what he had practically done.
  • The FTT considered that he had demonstrated a deeply settled life in England as:
    • He served in the British army in World War 2.
    • He started what became a successful business in London thereafter.
    • He acquired citizenship in 1947, stating his long-term intention to remain.
    • He married in 1954 in London.
    • His three children were born and schooled in London.
    • Residential and investment properties were purchased in London.
    • While his social circle was limited in that he tended to socialise within a small North London community, that did not mean he did not feel settled in England.
  • While there were witness statements that he had the intention of moving to the south of France in his later years, the FTT considered that this was a 'pipe dream' as:
    • The time spent in the South of France consisted of relatively short summer holidays and his honeymoon.
    • There were no further links to the area such as current or prospective property ownership.
    • Further evidence of a connection with the area was vague and second-hand.

While concluding that that father had acquired a domicile of choice in the UK was enough to conclude on Issues 1 and 2 to dismiss the appeal, the FTT went on to consider the domicile of the taxpayer's mother (issue 3):

• She had acquired an English domicile of choice by the time of her husband's death in 1968 and by 17 May 1974 when her son ceased to be a minor.
  • She was born in Dublin in 1930 and had a Domicile of Origin in Ireland.
  • She had acquired a domicile of choice in the UK by 1974 as:
    • She was deeply settled in North London and maintained limited connections with Ireland.
    • She stayed in England from 1954 when she arrived as an economic migrant.
    • At the time of her huband's death, only limited support was available from her family should she have moved back to Ireland.
    • She stayed in England until her death and she did not look to relocate despite having opportunities to do so.
    • Actions are a more reliable indicator than oral evidence and the FTT considered that her signed statement of truth would contain unconscious bias.

The FTT concluded the mother had acquired a UK domicile of choice which would have given her son a Domicile of Dependency in England.

FTT findings in respect of the son's domicile:

• He would have acquired a domicile of choice in the UK prior to 5 April 2012 (if his Domicile of Origin was outside the UK) as:
  • He was educated in the UK and he retained close ties to Manchester University.
  • He had extensive UK-based philanthropic activities through a UK incorporated Foundation.
  • His social life, including private members', tennis and football clubs, and synagogues and was based in London.
  • He brought up his children from his marriage in London, he spent the majority of his life within a relatively small area of North London as did his family.
  • Properties owned were in London. Properties outside the UK were only purchased from 2013.
  • His stated intention to relocate to Israel was only formulated after his divorce in 2012.
  • Recent evidence supporting his ultimate relocation to Israel did not assist in fathoming his mindset in 2012 at which time he had visited Israel only twice.

This would have found Issue 4 in favour of HMRC.

The appeal was dismissed.

Comment

While an FTT case does not set a legal precedent the decision raises interesting issues for children of immigrants to the UK.

This case illustrates that when claiming to be domiciled outside the UK, the burden of proof is on HMRC to prove otherwise.

In this case, HMRC have successfully convinced the FTT that the fact pattern shows that domiciles of choice in the UK were acquired by the protagonists.

It will be interesting to see if this case is appealed to the Upper Tribunal.

Useful guides on this topic

Non-domicile status, deemed domicile & tax
Who is non-UK domiciled? What does this mean for UK Income Tax, Capital Gains Tax and Inheritance Tax? What reliefs are available to non-doms?

Remittance basis (overseas income)
What is the remittance basis? Who can claim it and when? What are the advantages of claiming the remittance basis and how much is the remittance basis charge?

Domicile and the remittance basis: At a glance (freeview)
What is domicile? What is the remittance basis and when does it apply?

Remittances: what is a remittance for the remittance basis rules?
What is a remittance in terms of the remittance basis of taxation, with practical examples? What are the remittance matching rules? What is clean capital? 

External links

Jeremy Coller v HMRC [2023] TC08738