Case Studies

HMRC Investigations Case Study 1

Domicile Issues

A married couple had emigrated from the UK in the 1970’s. Now retired, they had returned to the UK following political and economic upheaval in their adopted homeland. HMRC were arguing that their “domicile of origin” (acknowledged to be in the UK) had revived as a result of their actions. [The incidence of taxation is, of course, potentially much lower for someone of foreign domicile]. Following our intervention, HMRC were persuaded to accept that the couple retained a “domicile of choice” outside the UK, following which a significant tax repayment claim was submitted.

Comment: Domicile is a difficult concept and is sometimes mis-understood. Recent changes have affected many foreign nationals who are resident in the UK. Nevertheless, the underlying principle of taxation by reference to domicile looks set to remain a part of the UK system. It is clear that once an individual’s domicile has been established, the burden of proving a change falls on he who asserts that change. Thus many people with foreign domicile have been able to live happily in the UK for long periods of time. For further information see the attached article below.
 
Taxation Article 12.7.2007 (220Kb)

HMRC Investigations Case Study 2

The power of a common sense approach and negotiation

A case had been working with the Revenue for four years and had reached an impasse. The case was destined to be listed for hearing before the Special Commissioners. HMR&C had disputed the proportion of loan interest claimed on a substantial retail complex that had been rented to the company by the director. Unfortunately the director had no receipts, the expenditure in part had been funded through his director's loan account. The case had become more complex due to the liquidation of the company and the directors personal IVA. HMRC were maintaining that a high proportion of the loans had been used to fund the director's personal lifestyle which had been quite lavish. The absence of receipts to support the expenditure weakened the defence.