View source for 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”.<ref>It is hard to empirically assess the claim that the UK has the longest tax code in the world, and OTS makes no attempt to do so.  But if any readers ae aware of other serious contenders for that title, I would be interested to hear.</ref>   

This claim had been made at least since 2010.<ref>For the older references see the Introduction to the 15th (2016/17) of this work.</ref>  In recent years Parliament added:<ref>Finance Act page counts are a rough proxy for the ever growing complexity of the UK tax system, but not an altogether bad one.  A (slightly) better proxy would also consider secondary legislation and HMRC guidance; and, perhaps, case law; then the page counts would multiply the Finance Act numbers set out here tenfold.

For a discussion of the multidimensional concept of tax complexity, see Tran-Nam and Evans, “Towards the Development of a Tax System Complexity Index” (2014) Fiscal Studies Vol 35 p.341.
	
OTS have published two (somewhat simplistic) discussions of tax complexity:

''Length of Tax Legislation as a Measure of  Complexity'' (Apr 2012)  
:''https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/193496/ots_length_legislation_paper.pdf''
	
OTS Complexity Index (2012)
:http://www.gov.uk/government/uploads/system/uploads/attachment_data/file/193493/ots_complexity_index_methodology_paper.pdf''</ref>

:{|
|-
| 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)<ref>This is the combined length of the two FAs  2017.</ref>
|-
| 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. <ref>See eg IFS, “OTS: Looking Back and Looking Forward” TLRC Discussion Paper No. 11 (2014) tactfully referring to “insufficient buy-in to the simplification process by HMRC, HM Treasury and government”.  But this view is not held by OTS: see Sherwood, Evans and Tran-Nam “The Office of Tax Simplification - The Way Forward?” [2017] BTR 249.
:<i>http://www.ifs.org.uk/uploads/publications/TLRC/TLRC_OTS_DP_11.pdf</i> 

In (I think) 2013 the government came up with the slogan “Creating a simpler, fairer tax system” under which OTS now operates; which imagines away a troubling reality in which simplicity and fairness are competing values which require hard choices.
:<i>https://www.gov.uk/government/policies/creating-a-simpler-fairer-tax-system</i> </ref>


It is easier to <i>talk</i> of simplification:

: Our system remains too complicated ... We will therefore simplify the tax system. <ref>Conservative party manifesto 2017 p.14 </ref>



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. <ref> Official Monster Raving Loony Party Manifesto 2017
:<i>https://www.loonyparty.com/2017-general-election-manicfesto</i>></ref>



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 <i>Barclays Wealth v HMRC</i>, <i>Barker v Baxendale Walker Solicitors; R (oao) Hely-Hutchinson) v HMRC</i>.
	
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.<ref>6 October 2017 under thread “HMRC delays”.
:See http://trustsdiscussionforum.co.uk</ref>

==The future==


The government intends to introduce: 

(1) CGT on non-residents gains from disposals of UK property.<ref>HMRC, “Taxing gains made by non-residents on UK immovable property: Consultation document” (Nov 2017) 
:''https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/661 467/Taxing_gains_made_by_non-residents_on_UK_immovable_property_-_cons ultation.pdf </ref>  This is to take effect in 2019/20''. 

(2) Corporation tax on non-UK resident companies' UK property income and gains.<ref>See HMRC “Non-resident companies chargeable to Income Tax and non-resident CGT: Consultation Document” (Mar 2017) 
:''https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/601 032/Non-resident_companies_chargeable_to_Income_Tax_and_non-resident_CG T_-_consultation.pdf'' 

HMRC “Non-resident companies chargeable to income tax and non-resident CGT: summary of responses” (Dec 2017) 
:''https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/664 178/Non-resident_companies_chargeable_to_income_tax_and_non-resident_CG T_summary_of_responses.pdf''</ref>  This is to take effect in 2020/21.  


Both changes It will add to complexity.  CT is a more sophisticated tax than IT, in many respects, in particular the taxation of interest (loan relationships) and hybrids.  Private client practitioners advising foreign companies will have to master CT rules which hitherto they could leave for corporate tax practitioners.
	
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 <i>http://www.kessler.co.uk</i>.


==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 <i>http://www.foreigndomiciliaries.co.uk</i>.  An authorisation code for a 3 week trial period is in the inside cover of this volume.

==Disclaimer==


CIOT issue <i>professional guidance</i> 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.<ref>CIOT, <i>Professional Conduct in Relation to Taxation</i> (2015), para 1.10

<i>http://www.tax.org.uk/professional-standards/professional-rules/professional-conduct-relation-taxation</i>

The second sentence is an improvement on the common but rather bizarre form that guidance on legal issues “does not constitute legal advice”.</ref>

When that appeared in 2011 it seemed extraordinary.  But it rapidly became ubiquitous; nowadays no professional body ever issues guidance without a disclaimer<ref>For instance, the Law Society likewise issue a disclaimer for their Practice Notes: The standard form is: “While care has been taken to ensure that they are accurate, up to date and useful, the Law Society will not accept any legal liability in relation to them.” </ref>   Similarly, and <i>a fortiori</i>, 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==


{|
| width="200pt" | ||width="200pt" | ||width="200pt" | ||width="200pt" | ||
|-
| 1<sup>st</sup> 2001 || 5<sup>th</sup> 2006 || 9<sup>th</sup> 2010 || 13<sup>th</sup> 2014
|-
| 2<sup>nd</sup> 2003 || 6<sup>th</sup> 2007 || 10<sup>th</sup> 2011 || 14<sup>th</sup> 2015
|-
| 3<sup>rd</sup> 2004 || 7<sup>th</sup> 2008 || 11<sup>th</sup> 2012 || 15<sup>th</sup> 2016
|-
| 4<sup>th</sup> 2005 || 8<sup>th</sup> 2009 || 12<sup>th</sup> 2013 || 16<sup>th</sup> 2017
|}

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




:James Kessler QC
:Old Square Tax Chambers
:15 Old Square            
:Lincoln's Inn                
:WC2A 3UE


<i>kessler@kessler.co.uk

http://www.kessler.co.uk</i>


== Footnotes==


<references/>