Is permanent residence different to domicile?

Back in March 2000, Lord Ashcroft undertook:

"to take up permanent residence in the UK again before the end of this calendar year."

Many people assumed this meant that he would cease to retain his non dom status. In fact as all half decent tax advisers will tell you there is an enormous difference between the concepts of residence and domicile. Even a 'permanent' resident can, if not currently domiciled here, retain their non dom status. This is because that status is dependent on a number of other factors including where they anticipate ending their days.

Lord Ashcroft's advisers will have been well aware of the ambiguity of his statement and that he could retain his non-dom status whilst also being "fully tax resident" in the UK. He will have been liable to UK tax on all UK 'source' income, such as from property, jobs and investments held in the UK. Non-dom status allows income and gains that arise outside of the UK to escape UK tax unless the money is 'remitted' to the UK.

As regards his future intentions, Lord Ashcroft has chosen his words very carefully. He says:

As for the future, while the non-dom status will continue for many people in business or public life, David Cameron has said that anyone sitting in the legislature - Lords or Commons - must be treated as resident and domiciled in the UK for tax purposes. I agree with this change and expect to be sitting in the House of Lords for many years to come.

I suspect that this is intended to enable him to avoid losing his non dom status until 6 April 2010.

When the issue of non doms was last discussed in the context of Zac Goldsmith I expressed the view that he had fallen into a trap. As noted in the comments on that blog post, Mr Goldsmith's subsequent comments confirmed the veracity of my observation. It is for the same reason that Lord Ashcroft is unable to confirm explicitly that he intends to cease being a non dom or that he has already done so.