Non-UK domicile status: Can you rely on a previous agreement with HMRC?

Andrew Parsons explains what your domicile status is, its tax implications and the recent case of HSBC boss, Stuart Gulliver.

What is domicile status?

Domicile is different to residence. Domicile is a legal concept and is based on your long term intentions as to the country that you intend to make your home in and to reside in. Residence, for tax purposes, is mainly based on the amount of time that you are actually physically present in the UK in any given tax year.

It is possible to be resident in the UK for many years and domiciled in a different country. If recent proposals become law it will mean that once you have been resident in the UK for 15 out of the previous 20 years you are deemed to be UK domiciled for all taxes, this deemed UK domicile can be lost if you then move away from the UK for sufficient time.

Individuals who are UK resident but not UK domiciled can claim to be taxed in the UK on only their UK source income and capital gains and only on non-UK income and capital gains if they are transferred to the UK. This is known as the ‘remittance basis’ of taxation, for longer term UK residents (more than 7 years) there is a charge that must be paid to be able to claim it. This is as opposed to UK resident and UK domiciled individuals who are taxed on their worldwide income and capital gains. Therefore, this can be a very beneficial tax status if it applies to you.

However, how much reliance can the taxpayer place on a position agreed with HMRC in an earlier year when considering subsequent tax years?

HSBC boss Stuart Gulliver was involved in an enquiry into his domicile status in 2015.  The 2017 First Tier Tribunal decision in Gulliver v HMRC concerned a determination by HMRC in 2003 about the taxpayer’s domicile status and how this determination in 2003 affected whether HMRC could or could not investigate in the same matter in 2015.

Mr Gulliver is the Chief Executive of HSBC and has spent many years working and living outside the UK.  His domicile of origin is in the UK and he claims a domicile of choice in Hong Kong.  HMRC raised an enquiry in 2015 into Mr Gulliver’s 2013/14 tax return.  The material point under enquiry was Mr Gulliver’s domicile status and specifically whether he had shed his UK domicile of origin for a domicile of choice in Hong Kong and, if that is correct then, whether that domicile of choice in Hong Kong has been subsequently abandoned which would mean that his UK domicile of origin had reverted.

In 2002 Mr Gulliver established a trust, and had he been domiciled in the UK at that time an inheritance tax charge would have arisen.  HMRC confirmed in writing in 2003 that there was no inheritance tax charge arising when the trust was established, implying that they agreed that Mr Gulliver was not UK domiciled and had therefore shed his UK domicile of origin in favour of a domicile of choice in Hong Kong.


When the enquiry was raised by HMRC in 2015, Mr Gulliver did not respond to the many queries that related to the question of whether he had acquired a domicile of choice in Hong Kong.  This was on the basis that this had been previously established in 2003.  Mr Gulliver’s argument was that having made the determination in 2003 that he had acquired a domicile of choice in Hong Kong, HMRC were then ‘stuck with’ this decision.   Mr Gulliver requested that the Tribunal order HMRC to close the enquiry on the grounds that the information requested by HMRC that related to whether or not he had acquired a domiciled of choice in Hong Kong was not relevant.

Mr Gulliver lost and his request that the Tribunal order the enquiry to be closed was refused.

The reason for the Tribunal’s decision is that “income tax and capital gains tax are charged by reference to separate tax years” and “a determination of fact made in relation to one tax year is not binding in relation to a later tax year”.

This case highlights that taxpayers claiming to be not-UK domiciled should be prepared to be able to justify their domicile status to HMRC on a year by year basis.  Previously it has been the case that the onus was on HMRC to show that a tax-payer claiming to be non-UK domiciled was in fact UK domiciled.

It remains to be seen how Mr Gulliver will proceed and it may be that he seeks a Judicial Review.

What is clear is that although this particular case focussed on domicile there are broader considerations for all taxpayers.  The implication of the case is that it should not be taken as a given that a determination of facts by HMRC in one year means that this position is fixed into the future.  For example this principal could potentially apply when considering if an activity is trading or non-trading.  Taxpayers should be careful to consider positions of fact regularly and how this may impact their tax position and to review and document their circumstances appropriately.

This post was written by Andrew Parsons of the Price Bailey Private Client Tax Team. For further help or information on domicile tax status fill in the form below.

We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information in this article only serves as a guide and no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm.


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