Introduction

This chapter has been updated for the 2018/19 edition

Scope of this book

There are three themes to this book:

(1) Taxation of foreign domiciliaries

(2) Taxation of non-residents on UK assets

(3) Taxation of UK residents on foreign assets

To attempt to cover these topics comprehensively is ambitious, perhaps quixotic. This book is in danger of bursting, particularly because these territorial issues can only sensibly be discussed in a wider context. But one cannot address the first topic without the second and third: in taxation, as in life, everything is connected. Thus what started as a book on foreign domiciliaries has become a book which seeks to address all the territorial limits to UK taxation.

The year 2017/18 in review

OTS stated in 2017:

The UK tax code is widely cited as being the longest in the world”.

This claim had been made at least since 2010. In recent years Parliament added:

FA 2011:	403 pages
FA 2012:	703 pages (a record)
FA 2013:	648 pages
FA 2014:	663 pages
FAs 2015:	562 pages
FA 2016:	649 pages
FA 2017:	813 (a new record)
FA 2018:	187 pages

In the same period, OTS has not achieved perceptible improvement, at least in relation to the topics covered in this book.

It is easier to talk of simplification:

Our system remains too complicated ... We will therefore simplify the tax system.

The reader may think that the satirists better identify the reality:

We will further complicate the UK tax system so that large companies can no longer find loopholes.

Scotland continues its fiscal drift from the UK, with Northern Ireland and Wales now following.

The FA 2018 has introduced the second stage of the protected-trust regime, which is a revolution in the taxation of offshore trusts. It also provides legislative authority for implementing the BEPS multilateral convention.

The courts have decided many interesting cases, including Barclays Wealth v HMRC, Barker v Baxendale Walker Solicitors; R (oao) Hely-Hutchinson) v HMRC.

OECD has published the 2017 update to the Model Tax Convention,

OECD has produced the BEPS convention, noting, I think correctly:

International tax issues have never been as high on the political agenda as they are today.

The growth in complexity is matched by a decline in HMRC efficiency. A contribution to the Trusts Discussion Forum provides:

I’m now at the point where I diarise my chasing letters and complaints ahead of time, and have template letters for this purpose. Initial letter, a chasing letter a month later, a second chasing letter a month after that, and a formal complaint a month after that. It is not unusual for me to have half a dozen open complaints against HMRC at any given time, but whatever it is I was complaining about is generally sorted within 30 days of the complaint letter. In one case I was even able to get them to pay our costs for chasing them.

Even three years ago I could not have imagined having to take this approach to HMRC, and I can only speculate as to how demoralising it is for the remaining staff.

The future

2020 will bring property income of non-resident companies into the scope of corporation tax.

In 2021 the proposed Registration of Overseas Entities Act will set up a beneficial ownership register of overseas entities that own UK property.

Budget 2018 provides:

As announced at Autumn Budget 2017, the government will publish a consultation on the taxation on trusts, to make the taxation of trusts simpler, fairer and more transparent.

The paper was published 7 November 2018. It is not so much facile as vacuous. The tenor is that “we think something should be done, but do not know what”. It is not possible to guess what will ultimately emerge from the process of the review, or at least, studying this paper will not assist in the guesswork.

The government has yet to map out a strategy and tactics for unravelling the UK’s connections with the EU. In the 2017/18 edition of this work I said: “This is a daunting task, and will take a generation if not more.” One year on, we are no further ahead.

We face an extended period of change and uncertainty, in politics, economics, law and taxation.

We will continue to live in fiscally exciting times.

Thanks ...and request for help

I am very grateful to my colleagues in chambers, especially Robert Venables QC and Philip Simpson QC, for discussions on many aspects of tax. I owe a great debt to Jane Hunt and Ruth Shaw who work patiently on this challenging text throughout the year.

Comments from readers and professional clients continue to be of the greatest value and interest to the author.

The pleasure in writing this book consists in the interest of the questions which it raises, and the success which it may have achieved in answering them. It seeks to state the law as at 6 April 2018.

Further advice

If you want advice on which you are legally entitled to rely you can obtain it - but not from this work.

In particular, you may instruct the author to advise. I enjoy writing, but spend most of my time giving independent specialist professional advice in private client matters, especially areas covered in this work. For further details see https://www.kessler.co.uk.

TFD Online

TFD Online is an online version of this book and more. It can be used:

(1) to search the text of this book or to access it online.

(2) to see if the book has been updated

(3) to correct or contribute to the book

TFD Online is moderated by Mary Ashley, a member of Tax Chambers, 15 Old Square, Lincoln's Inn.

TFD Online is accessible on https://www.foreigndomiciliaries.co.uk. An authorisation code for a 3 week trial period is in the inside cover of this volume.

Disclaimer

CIOT issue professional guidance with a disclaimer:

While every care has been taken in the preparation of this guidance the PCRT Bodies do not undertake a duty of care or otherwise (?) for any loss or damage occasioned by reliance on this guidance. Practical guidance cannot and should no be taken to substitute appropriate legal advice.

When that appeared in 2011 it seemed extraordinary. But it rapidly became ubiquitous; nowadays no professional body ever issues guidance without a disclaimer Similarly, and a fortiori, the views expressed in this book are put forward for consideration only and are not to be relied upon. Neither the author nor the publisher accept responsibility for any loss to any person arising as a result of any action or omission in reliance of this work. But could anyone have thought that a claim could arise in absence of this disclaimer?

A note to the lay reader

This book is not intended as a self-help guide, and is addressed to tax practitioners. In earlier editions I said: " ... but it is readable for a lay person". I think that is still true, though the text is more daunting than when I first wrote those words, because the law it describes has become much more complicated. However, initiation in these matters must often be by the taxpayer. If you wish to research this subject in depth, and so take more control of your own tax affairs, read on. But for implementation you will need to find professionals to advise you. Self-help guides extol "the benefit of bypassing expensive lawyers"; but the bypass may prove the more expensive route in the long run.

Edition history

1st 2001	5th 2006	9th 2010	13th 2014
2nd 2003	6th 2007	10th 2011	14th 2015
3rd 2004	7th 2008	11th 2012	15th 2016
4th 2005	8th 2009	12th 2013	16th 2017

This book was called Taxation of Foreign Domiciliaries for 9 editions; it changed to Taxation of Non-Residents and Foreign Domiciliaries in the 10^th edition.

James Kessler QC

Old Square Tax Chambers

15 Old Square

Lincoln's Inn

WC2A 3UE

[email protected]

https://www.kessler.co.uk