It's been revealed that Zac Goldsmith has been claiming that he is not domiciled in the UK for tax purposes. Zac is the green adviser to David Cameron and a prospective Tory MP for Richmond Park.Non UK domiciled taxpayers are not required to pay UK income tax on income that arises overseas as long as it is not remitted to or enjoyed in the UK. If they are resident here non-doms are fully taxable on their UK source income. As of last year any UK residents who claim the tax benefits of being non-doms are liable to pay an annual £30,000 charge in lieu of the tax on their overseas income.
The article in the Sunday Times contains extensive reference to trust assets made available to Zac as a result of late father's largess. What the article doesn't do however is to explain the justification for Zac's (admission that he) claims to be domiciled outside of the UK.
His status would seem to be derived from his father's non-dom status at the time that Zac was born. This is commonly the case and would mean that Zac has a domicile of origin in a specific overseas country. However this is not the end of the story. Zac has spent most of his life in the UK. So he might be thought to have established a domicile of choice here - and thus have forsaken his non-dom status. Indeed a spokesman is reported to have stated that Zac:
"has already taken the decision to relinquish his non-domicile status.”I'm sorry? Either he has established a domicile of choice here or he hasn't. As HMRC's own guidance says in HMRC 6:
Broadly, to acquire a domicile of choice you must leave your current country of domicile and settle in another country.The booklet goes onto confirm that it's a lot more complex than this and there are a series of useful flowcharts (on pages 25-28) that are intended to help people understand their domicile status. I fear that Zac has already established a domicile of choice in England.
I hope he has already filed his 2008/09 tax return. Otherwise he will be hard pushed to claim non-dom status on it if he has already decided to accept that he is domiciled here in future. Indeed HMRC could question the legitimacy of the claim on previous tax returns as there has to be a date from which someone's circumstances change and from which they are to be treated as domiciled here. Would that have been the date on which he was elected as the local Conservative Parliamentary candidate in March 2007?
Lesson? Tax rules are complex - never allow your spokesman to make statements that could impact your tax position unless they understand the implications of what they are saying and this accords with the facts.
This story has been featured in a number of papers and news stories today. Zac has indicated that he has not benefitted significantly from his non dom status. He claims that substantially all of his income and gains arise in the UK are thus subject to tax here.
ReplyDeleteHMRC6 states that non-dom status descends from father to son if and only if the parents are married at the date of birth. If they're not, it descends, if at all, from the mother.
ReplyDeleteWikipedia states that Goldsmith's ma & pa were both married to someone else at the DOB. They married later to make the children legitimate.
Any suggestions as to how & why the marriage rule was relaxed for Goldsmith?
And pretty much as anticipated by my blog post, Zac is now reported to have accepted that he has already established a domicile of choice here, with effect from 6 April 2009.
ReplyDeleteIn reply to 'Rob's uncle' - Maybe the rule wasn't relaxed. The suggestion that Zac's non-dom status is due to his father's domicle status is mere conjecture. Perhaps it was determined by ref to his mother's status - always assuming that she was a non-dom too.
ReplyDeleteTo the extent I care (and it is not much), it might be that the charming Zac may have had his domicile of dependency changed during his minority as a consequence of his father doing a runner from the UK. As to him acquiring a domicile of choice in England, I doubt it. All, at the very most he will do (and, if so, it will be more than those other charmers, Laidlaw and Ashcroft) will be to decline to claim the remittance basis.
ReplyDeleteAccording to Wikipedia, his mother is the Annabel after which the nightclub is named.
THe point everyone seems to be overlooking is that the real tax saving for Zac is that his father was non domiciled when he died, and presumably also when any family trusts were established. So even now Zac has conceded he is UK domiciled, the likelihood is that his family fortune will continue to be tax sheltered except for what he draws/spends. Not such a big sacrifice then !!!
ReplyDeleteDo you have copy writer for so good articles? If so please give me contacts, because this really rocks! :)
ReplyDelete