HMRC’s One to Many Letters: Deemed Domicile

24 Feb 2021

HMRC’s Wealthy External Forum have issued a briefing to forum members about One to Many educational letters being sent to taxpayers dealt with by HMRC Wealthy who were not previously domiciled in the UK under common law and have become deemed UK domiciled for tax purposes under the legislation introduced in Finance Act 2017.

Where indviduals are represented by an agent the letter will be directed to the agent. Unrepresented individuals will receive the letter directly.

CIOT feedback: Our understanding has been that if an individual is deemed domiciled in the UK and their legal domicile is not relevant to their tax position (not claiming any protections, rebasing etc) boxes 23 to 23.3. do not need to be completed. Box 23 says “If you are domiciled outside the UK and it is relevant to your Income Tax or Capital Gains Tax for 2019-20…..”. However, the letter seems to suggest that anyone who is deemed domicile in the UK needs to complete boxes 23 to 23.3, even if not relevant to their tax position. The SA109 notes are not particularly clear.

HMRC’s initial response to the forum:

Following recent feedback, we would like to clarify the position around the completion of boxes 23 to 23.3 of SA109. The change from Remittance Basis to Deemed UK Domicile is a major life event. To ensure the correct treatment for tax purposes, and for our clarity when reviewing tax returns, we invite customers to complete boxes 23 to 23.3. This will assist us to ensure the customers’ affairs are correct.

However, please note there is no mandatory requirement to complete these boxes.

We queried this ‘voluntary’ basis. HMRC’s further response:

Thank you for your feedback.

With regards to this, we consider agents to be best placed to understand their client’s circumstances and to decide on whether additional information should be provided to explain the return entries. There is no requirement to provide additional information, but it can be helpful in clarifying the entries which have been made.

There is no direct link between those that provide or do not provide additional information and those that will be considered for enquiry. The decision to open an enquiry is made on a case-by-case basis.

We understand that it is better for customers and agents to have certainty over what action we require them to take, particularly when we are sending one-to-many letters like this one, and therefore we will ensure your helpful feedback is taken into account for any further activity on this subject.