The View from No 50
K P Bonney & Co
Chartered Accountants and
Chartered Tax Advisers
Ilkley LS29 6JA
Tel: 01943 870933
Fax: 01943 870925
you ever wondered why wealthy people like Madonna, Mohammed Al Fayed and the
Arsenal back four (Ashley Cole excepted – still an
Arsenal player at the time of writing) choose to live in
you are resident in the
government has made noises in recent years about reforming the basis on which
non domiciled individuals are charged to income tax. But it has never reached a decision about
what alternative system to impose. There
is, of course, a strong case for leaving things as they are. After all the presence of these high profile
people in the
Could you benefit from non domicile status?
you were born in the UK of UK domiciled parents the answer is no. But in other circumstances the answer could
be yes and that could be your passport to legitimate avoidance of
What exactly determines your domicile?
At birth you acquire a domicile of origin. Normally, your domicile of origin is the domicile of your father. A posthumous child or an illegitimate child receives the domicile of its mother.
if you are born in the UK of US domiciled parents, you are domiciled in the
A domicile of origin is difficult to shed. Your domicile of origin stays with you until you acquire a domicile of choice in another country.
You acquire a domicile of choice by forming the intention to make a country other than your country of origin your permanent home.
The onus of proving that domicile has changed from domicile of origin to domicile of choice falls on the person who alleges the change has taken place.
are probably thousands of people in the
A recent case highlighted how difficult it is to shed your domicile of origin. This case was not a tax case but its outcome depended on the domicile of the subject.
Mr Nathanael died unexpectedly in his early sixties. He had been born in
Ms Renata Cyganik, the fiancée of Mr Nathanael, claimed under the Inheritance (Provision for Family and Dependants) Act 1975. That Act gives the Court limited power to vary the terms of an individual’s will to allow provision for the deceased’s dependants.
was not in doubt that Mr Nathanael had a domicile of
Court considered all the facts that linked Mr Nathanael
The case shows the adhesive and enduring character of a domicile of origin.
could you be domiciled outside the
Advice – If, having read this piece, you consider you might
not be domiciled in the
AS YOU WERE
In his review of H M Revenue and Customs Online Services, published in March 2006, Lord Carter of Coles recommended, amongst other things, that the deadline for filing tax returns be shortened from 31 January to 30 November with effect from 2008.
We in the tax profession are all for efficiency and modern working practices but we foresaw tremendous problems with this proposal.
The good news is that Lord Carter has listened to our representations and has changed his mind. The filing date will remain 31 January.
What a refreshing change to find someone in the ‘establishment’ who is willing to listen and brave enough to change his mind.
ADVISORY FUEL RATES FROM
amount of VAT you can reclaim on your business mileage allowances changed for
business journeys taking place on or after
This change affects you if
your business is registered for VAT and
the business pays its employees a mileage rate for their business mileage or
you charge the business a mileage rate for your own business mileage.
Recognising that the cost of fuel has increased, HMRC has increased the advisory fuel rates. The advisory fuel rate is that part of the mileage allowance which your business pays to you and / or its employees and which the business can treat as the cost of the fuel. For example, suppose you run a petrol fuelled car with an engine capacity of 1800cc and you charge your business 40p per mile for business journeys. According to the new tables, the fuel element of the 40p is now 13p. Before 1 July the fuel element was 12p.
Why is this important? It is important because your business can reclaim VAT on the fuel element. The 13p breaks down as to 11.06p net and 1.94p VAT.
So when entering up your accounting records and preparing your VAT return the breakdown of the mileage allowance is
Advice – Make sure you use the new advisory fuel rates for
journeys taking place from
A FOOTBALL AGENT CALLED THOMAS STRANGE
A football agent called Thomas Strange was shopping for a tombstone. After he had made his selection the stonecutter asked him what inscription he would like on it.
“Here lies Thomas Strange, an honest man and a football agent,” he responded.
“Sorry, but I can’t do that,” replied the stonecutter. “It’s against the law to bury two people in the same grave, and the authorities would be confused. However, I could put ‘Here lies an honest football agent.’”
“But that won’t let people know who it is” protested the agent.
“Sure they will,” replied the stonecutter. “Everyone who reads it will think, ‘That’s Strange!’”
Copyright: K P Bonney & Co LLP 2006. All rights reserved. No part of this publication may be produced, stored in a retrieval system, or transmitted in any form or by any means, electronic mechanical, photocopying, recording or otherwise without prior written permission of the publishers. Disclaimer: The publishers have taken all due care in the preparation of this publication. No responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication can be accepted by the authors or the publisher.
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