The Gvt and the Domicile ruse
Discussion
Since this straddles law and Taxation, I was not sure where to post, so I am starting here...feel free to move...
During a legal conference I attended last week, the subject of 'Domicile' came up in the context of Taxation. This is very topical as it happens with the Gvt making lots of popular noises about getting the rich to pay their 'share' of Taxation on what they earn, and coming down hard on this that 'evade' tax with all sorts of spurious schemes.
All hog-wash actually!
One thing is clear. Many of the Super-Rich state that their 'Domicile' ie 'where they deem to live permanently with no intention of moving to another legally recognised state or country' is in fact outside the UK Tax law Jurisdiction, despite earning money through work in the UK, BUT not paying Tax in the UK.
Another wrinkle used currently is to have a Company owned predominantly by say 'your Spouse', that is non-UK based say in Jersey, and your spouse is supposedly 'Domicile' in Monaco (can't believe that in reality for one second). Any payments for your work is charged by the non-UK company net of UK Tax, and you get 'dividends' only, thus avoiding most if not all UK taxation.
The problem, so simple to fix, is the very old law of 'Domiciliary', which I understand is no longer used by many countries. The simple fix that would force all these 'avoiders' of tax cough up would be to scrap 'Domicile' as a basis of deciding taxation jurisdiction and replace it with 'Normalisation' which basically and simplistically as I understand it means that if you live in the UK and work in the UK, then you Pays up yer Tax in the UK!
....AND IT IS RELATIVELY CHEAP TO DO, UNLIKE THE MILLIONS BEING SEEN TO BE SPENT ON CATCHING 'EVADERS' BY HMRC.
...But the Conservative Govt won’t do that! Oh No! In fact this has been brought up several times, but I understand conveniently buried!
I would guess, far too many fingers in that pie would get burnt for it to get passed!
Jobs for the boys anyone?
That is politics for you!
During a legal conference I attended last week, the subject of 'Domicile' came up in the context of Taxation. This is very topical as it happens with the Gvt making lots of popular noises about getting the rich to pay their 'share' of Taxation on what they earn, and coming down hard on this that 'evade' tax with all sorts of spurious schemes.
All hog-wash actually!
One thing is clear. Many of the Super-Rich state that their 'Domicile' ie 'where they deem to live permanently with no intention of moving to another legally recognised state or country' is in fact outside the UK Tax law Jurisdiction, despite earning money through work in the UK, BUT not paying Tax in the UK.
Another wrinkle used currently is to have a Company owned predominantly by say 'your Spouse', that is non-UK based say in Jersey, and your spouse is supposedly 'Domicile' in Monaco (can't believe that in reality for one second). Any payments for your work is charged by the non-UK company net of UK Tax, and you get 'dividends' only, thus avoiding most if not all UK taxation.
The problem, so simple to fix, is the very old law of 'Domiciliary', which I understand is no longer used by many countries. The simple fix that would force all these 'avoiders' of tax cough up would be to scrap 'Domicile' as a basis of deciding taxation jurisdiction and replace it with 'Normalisation' which basically and simplistically as I understand it means that if you live in the UK and work in the UK, then you Pays up yer Tax in the UK!
....AND IT IS RELATIVELY CHEAP TO DO, UNLIKE THE MILLIONS BEING SEEN TO BE SPENT ON CATCHING 'EVADERS' BY HMRC.
...But the Conservative Govt won’t do that! Oh No! In fact this has been brought up several times, but I understand conveniently buried!
I would guess, far too many fingers in that pie would get burnt for it to get passed!
Jobs for the boys anyone?
That is politics for you!
Cameron was challenged on exactly this situation by John Humphries on radio 4 this morning. They were not mentioning any names. But, it was pretty clear that Humphries was trying to get the PM to condemn Sir Phillip Green over his tax situation. Cameron was having none of it. It was quite fun to listen to.
So how much would you need to earn to make this worthwhile then? Would it be worth it for a contracting Engineer say? Could I just set up my Ltd company in my wife's name in Jersey and carry on as normal accept paying a whacking great tax bill at the end of every year? Sounds appealing.
Two points:
1. It's "ruse";
2. Tax is always a trade-off between generating income and not driving away those people and corporations who could base themselves anywhere in the world but instead choose to generate cash in our little corner of the world - tax too much and the wealth-creators will bugger off to Zurich or wherever else takes their fancy;
so - yes you could bring in all sorts of rules to screw the rich, but would they still be there when you tried to apply them?
1. It's "ruse";
2. Tax is always a trade-off between generating income and not driving away those people and corporations who could base themselves anywhere in the world but instead choose to generate cash in our little corner of the world - tax too much and the wealth-creators will bugger off to Zurich or wherever else takes their fancy;
so - yes you could bring in all sorts of rules to screw the rich, but would they still be there when you tried to apply them?
V8 Vum said:
Eric Mc said:
The rules covering domicle have been established for hundreds of years. Nothing has been changed on this score.
...Which is why it is not fit for purpose any more and needs to be scrapped???!V8 Vum said:
Eric Mc said:
The rules covering domicle have been established for hundreds of years. Nothing has been changed on this score.
...Which is why it is not fit for purpose any more and needs to be scrapped???!Domicile is actually quite difficult to change. It hinges on where you were born - which most people have little control over.
Eric Mc said:
Why?
Domicile is actually quite difficult to change. It hinges on where you were born - which most people have little control over.
No!, that is your 'Domicile of Origin', very different as you can 'deem' to change your Domicile by simply moving, living and holding the belief that you will not be leaving - ever!.... This is called your 'Domicile of Choice'.... until you move again, and believe likewise for the new location! (that is what is so silly about it!)Domicile is actually quite difficult to change. It hinges on where you were born - which most people have little control over.
The second you pack up and move (with intent to stay forever in your new location), you actually lose the 'Domicile of Choice', and your 'Domicile of choice' does not revert to any previous one (if you have done this exercise before). During that transition though, your Domicile automatically reverts to your 'Domicile of Origin', which has caught out a few that have procrastinated between locations!
Blib said:
Cameron was challenged on exactly this situation by John Humphries on radio 4 this morning. They were not mentioning any names. But, it was pretty clear that Humphries was trying to get the PM to condemn Sir Phillip Green over his tax situation. Cameron was having none of it. It was quite fun to listen to.
What is there to condemn? Philip Green is resident and domiciled in the UK for tax purposes and does pay UK income tax.His wife, a South African citizen, does indeed live in Monaco, where is children are/were educated.
It seems some can't accept that we've moved on from the days when a wife was considered her husband's property and couldn't possibly have financial affairs of her own.
V8 Vum said:
Eric Mc said:
The rules covering domicle have been established for hundreds of years. Nothing has been changed on this score.
...Which is why it is not fit for purpose any more and needs to be scrapped???!The Uk politicians are loathe to change the domicile rules because they know that currently, London and by extension the Uk as a whole, walks a very fine line between having ones cake and eating it. It does so very successfully. London at the moment is the go-to city, its the *the* place to live and be seen in the world. We benefit enormously from the income this generates. We start changing the tax rules even more to penalise...and we are by far not very tax friendly to start with...this lot and that balance that is currently weighted in our favour will change and London will fall off its perch. The money will go elsewhere.
cerbfan said:
So how much would you need to earn to make this worthwhile then? Would it be worth it for a contracting Engineer say? Could I just set up my Ltd company in my wife's name in Jersey and carry on as normal accept paying a whacking great tax bill at the end of every year? Sounds appealing.
No reason why not, I have a friend who registered offshore for his limited company and pays no UK tax (corperation tax. Personally, unless you are really sure you are sorted IR35 wise, I would not like to come to the attention of HMRC by paying zero.
Two guys I know who payed zero tax as they were working in the middle east had an argument with HMRC about it, turned out they worked out travel dates incorrectly or some such.....HMRC took both guys life savings.
cerbfan said:
So how much would you need to earn to make this worthwhile then? Would it be worth it for a contracting Engineer say? Could I just set up my Ltd company in my wife's name in Jersey and carry on as normal accept paying a whacking great tax bill at the end of every year? Sounds appealing.
It depends on where your wife was born, where she lives, where your children go to school and what UK assets your wife earns. It also technically can depend on whether you are in a working marriage and where you live and hold assets and operate from. Going offshore is by no means as easy as people would have you think. Most people who have done it will be proven to have done it wrong of they are investigated.
V8 Vum said:
...
So...."basically and simply" define "live in the UK" and "work in the UK". Remembering that you need to cover the majority to avoid them slipping the tax net and also the evIl tax avoiders wealthy enough to live elsewhere.(We already have constructs around the amount of time spent here too before you go down that path).
Bing o said:
Or you could say:
Hey, you create employment for thousands who all pay tax, so we won't piss you off and take your companies with you.
This obsession the west has with taxing more and more is sad at best, perverse at worst.
The tax is paid by the people who earnt the money NOT by the Employer. To suggest the Employer should be exempt from tax is a bit like saying I should get a tax rebate when I have my car serviced. After all, I an enabling the mechanic to pay tax - the Govt should be grateful for this and reduce my share of the burden accordingly Hey, you create employment for thousands who all pay tax, so we won't piss you off and take your companies with you.
This obsession the west has with taxing more and more is sad at best, perverse at worst.
One of the main reason that people such as Philip Green are able to earn such large amounts is BECAUSE he operates in a society such as the UK. but he doesn't want to pay towards the "upkeep" of the UK. That's wrong IMO.
Bing o said:
Or you could say:
Hey, you create employment for thousands who all pay tax, so we won't piss you off and take your companies with you.
This obsession the west has with taxing more and more is sad at best, perverse at worst.
The tax is paid by the people who earnt the money NOT by the Employer. To suggest the Employer should be exempt from tax is a bit like saying I should get a tax rebate when I have my car serviced. After all, I an enabling the mechanic to pay tax - the Govt should be grateful for this and reduce my share of the burden accordingly Hey, you create employment for thousands who all pay tax, so we won't piss you off and take your companies with you.
This obsession the west has with taxing more and more is sad at best, perverse at worst.
One of the main reason that people such as Philip Green are able to earn such large amounts is BECAUSE he operates in a society such as the UK. but he doesn't want to pay towards the "upkeep" of the UK. That's wrong IMO.
Countdown said:
The tax is paid by the people who earnt the money NOT by the Employer. To suggest the Employer should be exempt from tax is a bit like saying I should get a tax rebate when I have my car serviced. After all, I an enabling the mechanic to pay tax - the Govt should be grateful for this and reduce my share of the burden accordingly
One of the main reason that people such as Philip Green are able to earn such large amounts is BECAUSE he operates in a society such as the UK. but he doesn't want to pay towards the "upkeep" of the UK. That's wrong IMO.
It's the upkeep of the benefits classes which means people see 30-50% of their pay stolen from them at source, leaving them unable to spend money in shops such as Mr Greens, in the local pubs that are now dying etc etc. Collect the same amount of tax, just do it through low income tax, and increasing the volume of consumption tax take as a result (harder to avoid and easier to administer as well). All IMO of course.One of the main reason that people such as Philip Green are able to earn such large amounts is BECAUSE he operates in a society such as the UK. but he doesn't want to pay towards the "upkeep" of the UK. That's wrong IMO.
Bing o said:
It's the upkeep of the benefits classes which means people see 30-50% of their pay stolen from them at source, leaving them unable to spend money in shops such as Mr Greens, in the local pubs that are now dying etc etc. Collect the same amount of tax, just do it through low income tax, and increasing the volume of consumption tax take as a result (harder to avoid and easier to administer as well). All IMO of course.
But missing the point that regardless of net benefit to anyone, high taxes on the income of the well off is an ideological cornerstone of British left wingery. They really would rather these people lived overseas and contributed nothing than lived in the UK and contributed significant sums of money via a reasonable, relatively flat tax structure, and much more via living and spending their money in the country. Gassing Station | News, Politics & Economics | Top of Page | What's New | My Stuff