Zero tolerance declared for spurious non-dimiciled claims

Advisers have warned those planning to claim non-domiciled status in order to
avoid the offshore bank account crackdown that they face an uphill struggle.

The warning follows comments from HM Revenue & Customs that it would not
tolerate disingenuous non-domiciled claims as way of avoiding the amnesty.

‘Where we suddenly see non-domiciled applications from people in their
forties, fifties and sixties who have never claimed to be non-doms before, we
are going to take a very hard look at them and challenge applications in the
civil courts if we have to,’ an HMRC spokesman said.

Bill Dodwell, head of tax policy at Deloitte, said people suddenly claiming
non-domiciled status would find it very difficult to do so if challenged by

‘It is very hard to argue that you are not domiciled if you have UK
nationality and have spent many years here. It is difficult to lose your
domiciled status. It is a matter of fact. You can’t simply put in an application
form and suddenly become non-domiciled,’ Dodwell said.

Dodwell said the recent Robert Gaines-Cooper case, where it was ruled by the
special commissioners that businessman Gaines-Cooper could not claim domicile
status in Seychelles, as he was still inextricably linked to the UK, had set the
benchmark for others attempting to claim non-dom status.

Gaines-Cooper had set up as many as 100 businesses around the world, but was
told he would be treated as domiciled in England for tax purposes.

‘He never did wholly reject England nor, indeed, that small part of it
located in Berkshire and Oxfordshire, where he had so many ties and connections.
On the contrary, he felt its pull upon his affections and interests all his
days,’ the commissioners said.

HMRC’s determination to prevent people from skirting its offshore bank
account amnesty drive follows suggestions that the number of requests for
non-domiciled status has surged recently as taxpayers rush to claim non-dom
status, which will exempt them from paying tax on foreign income.

This would allow them to avoid having to disclose the details of money held
in offshore bank accounts to HMRC.

Figures released by HMRC showed that during 2004/05 112,000 people had
applied for non-domiciled status.

The number of applications represents a 74% increase on 2002 figures and
experts believe that by the end of this year the number of applications could
surge past 200,000.

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