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==Scope of this book==
 
  
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To view this Introduction in pdf format, click here: [https://tfd.wiki.anarres.org/images/6/6d/FD_Introduction_%281%29.pdf  '''Introduction And What's New''']
  
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==Scope of this book==
  
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There are three themes to this book:
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There are three original themes to this book:
  
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(1) Taxation of foreign domiciliaries
  
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(2) Taxation of non-residents on UK assets
  
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(1)   Taxation of foreign domiciliaries
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(3) Taxation of UK residents on foreign assets
  
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(2)  Taxation of non-residents on UK assets
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To attempt to cover these topics comprehensively is ambitious, perhaps quixotic, and if books could burst, this one might. But these territorial issues must be understood in a wider context: in taxation, as in life, everything is connected.  So I discuss private client topics which go beyond the original themes of this book:
  
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(3)  Taxation of UK residents on foreign assets
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* substantial: fundamental terms and concepts, and tax avoidance codes
  
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* procedural: disclosure/compliance, tax return filing positions, CDD, TRS
  
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==Co-authorship==
  
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To attempt to cover these topics comprehensively is ambitious, perhaps rather 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.
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This book has always benefited from comments and contributions from readers and discussions with my colleagues in chambers.  It has now grown beyond my ability to maintain it all.  The following chapters are now in the good hands of junior members of my chambers:
  
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{| class="wikitable"
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|-
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! scope="col" style="width: 300px;text-align:left;"| '''Chapter: Topic'''
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! scope="col" style="width: 200px;text-align:left;"| '''Responsible author'''
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|-
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| 35: Travel expenses: employment income || Rebecca Sheldon
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|-
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| 46: National Insurance Contributions || Mary Ashley
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|-
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| App 2: Dwelling/private residence || Ross Birkbeck
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|}
  
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These names will be familiar to readers: Rebecca as the moderator of the online edition of this work; Mary as co-author of my ''Taxation of Charities''; and Ross appeared as advocate in many of the cases he discusses.
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If any readers are attracted to the challenge of adopting a chapter or section from this book please contact the author.
  
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==Brexit==
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==A statute-focussed approach==
  
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I set out statutory and other material verbatim:
  
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:... in the end we must always return to the words of the statute<ref> ''R.F.C. 2012 Plc v AG'' [2017] UKSC 45 (the ''Ranger''s case) at [11]; see [[Settlement, Bare Trust, and Associated Terminology#A judicial gloss | A judicial gloss]]</ref>
  
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The referendum of 23 June 2016 is a decision of immense significance.  We face an extended period of uncertainty, in politics, economics, law and taxation. Readers may agree with Martin Wolf, chief economics commentator at the FT, who commented on the day after the referendum (I omit some of his invective):
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Returning to the verbatim text, it is surprising how often one finds that the words do not say what one expects. 
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This is not just a common law approach.  Richard Hyland tells this story of his class at Université Paris II Panthéon-Assas:<ref>Hyland. ''Gifts: A study in comparative law'', 1st ed (1989) p.xvi.</ref>
  
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:Mme Gobert asked simply: ''L’article 2 du Code civil, qu’est-ce qu’il dit?'' Article 2 of the Civil Code, what does it say?
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:My classmates were some of the best private law students in France.  This was a question to which they knew the answer.  One of them explained that article 2 provides for the nonretroactivity of the law.  Mme Gobert looked at the student without smiling.  Then she repeated the question.  ''L’article 2 du Code civil, qu’est-ce qu’il dit?'' A different student mentioned Paul Roubier’s suggestion that a new law may be applied to ''les situations juridique en cours''.  Again she repeated the question.  ''L’article 2 du Code civil, qu’est-ce qu’il dit?''  Another student tried, and then another, each new voice attempting yet a more refined statement of the concepts involved. After each comment she responded in the same way.  It was my first French law class, so I did not know what to think.  It seemed like a Zen-like version of the Socratic method.  The French students were terrified.  This was material they thought they knew, and yet they could not guess what was on her mind.  Finally, one of the students had the presence of mind simply to read the code provision aloud.  Mme Gobert’s eyes lit up.  ''Mais bien sûr!'' she responded ''C’est ça qu’il dit!''
  
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==The year 2023/24 in review, and the future==
  
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:The Conservatives will now end up with new leadership.  They will then have to do what the Brexiters failed ... to do during their ...  campaign, namely, map out a strategy and tactics for unravelling the UK's connections with the EU.  This will probably consume the energies of that government and its successors over many years.<ref>Financial Times, 24 June 2016.</ref>
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HMRC have had an unbroken run of successes establishing a UK domicile.  ''Fisher'' finally reached Supreme Court, only to be promptly reversed by the F(no.2)A 2024. We have the first case on the statutory residence test, introduced in 2013 (''A Taxpayer v HMRC''), now on the way to the Court of Appeal, and the first on the remittance basis, introduced in 2008 (''Seghal v HMRC''). Scotland continues its fiscal drift from the UK, with Northern Ireland and Wales following.   
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But the changes of 2023/24 are overtaken by the surprise announcement in the Spring Budget 2024 of the abolition of domicile as a connecting factor for UK tax, from 2025/26, and the replacement of the remittance basis with a short term relief for foreign income/gains.  The next edition of this book will be different from the present, and will have a new title.
  
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===Simplification/complification===
  
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OTS stated in 2017:
  
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In the medium and long term, say the next 5-10 years, changes will be profound. In the short term - for the next two years or so - matters will proceed more or less as in the past.   
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: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 made no attempt to do so.  But if any readers are aware of other serious contenders for that title, I would be interested to hear.</ref> 
  
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This claim had been made at least since 2010.<ref>For older references see the Introduction to the 2016/17 edition 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.
  
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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.
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OTS have published two (somewhat simplistic) discussions of tax complexity:
  
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==The year 2015/16 in review==
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''Length of Tax Legislation as a Measure of  Complexity'' (Apr 2012) 
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:''https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/193496/ots_length_legislation_paper.pdf''
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OTS Complexity Index (2012)
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:''http://www.gov.uk/government/uploads/system/uploads/attachment_data/file/193493/ots_complexity_index_methodology_paper.pdf''</ref>
  
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{|
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| width="150pt" | || width="200pt" | ||  width="200pt" | ||  width="200pt" | || 
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|-
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| '''Finance Act(s)''' || '''Pages'''
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| 2012  || 703 (a record) || 2018 || 196
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|-
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| 2013  || 648 || 2019 || 337
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|-
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| 2014  || 668 || 2020 || 217<ref> The unusually short length of the FA 2020 is due to the December 2019 election.</ref>
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| 2015  || 597 (2 Finance Acts) || 2021 || 428
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|-
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| 2016  || 662 || 2022 || 225
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|-
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| 2017 || 829 (2 Finance Acts) || 2023 || 416 (2 Finance Acts)
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|}
  
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The Office of Tax Simplification estimated HMRC guidance at 90,000 pages in 2018;<ref>OTS, “Guidance for taxpayers: a vision for the future” (2018) para 1.21.  These pages have assuredly not been printed or counted.  Quantification raises methodological issues which deserve a short essay to itself.  We have reached the stage where the amount of HMRC guidance is impossible to quantify: the words are uncountable.  Within the limits of guesswork, and assuming 500 words per page (single spacing), the figure of 90,000 pages seems to me to be on the low side.  There are 150 HMRC Manuals, just for a start.
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Perhaps the focus of enquiry should be whether HMRC guidance is too short, because 90,000 pages would not be sufficient to do justice to the topic. The legislation, measured by pages of the Orange & Yellow tax handbooks, can be counted and amounts to 20,836 pages in 2020/21 (that does not include DTAs, which would be another 3,000 pages).  The Tax Cases reports, which began in 1875, and ceased publishing in 2014, reached 82 volumes and did not cover VAT.</ref> whatever the true figure, it will have grown considerably since then.  This guidance was “not comprehensive” - something of an understatement; but according to the OTS “real life cannot be reduced to a neat description in a few (!) pages of writing”.<ref>Para 1.24.</ref> F(no.2)A 2023 abolished the OTS.  In its 12 years of existence, the OTS did not achieve much simplification, at least in relation to topics covered in this book, and I do not think it will be missed.<ref>This view is not unanimous; according to CIOT:
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:“OTS has achieved a great deal”; letter to Chancellor of the Exchequer (24 October 2022).</ref>
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It is easier to ''talk'' of simplification.  In the ill-fated “mini” budget of October 2022:
  
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The chancellor stated in 2011:
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:the government will embed tax simplification into the institutions of government ...  and set a mandate to HM Treasury and HMRC to focus on simplifying the tax code.<ref>HM Treasury, “The Growth Plan 2022". 
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:''https://www.gov.uk/government/publications/the-growth-plan-2022-documents''
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The emphasis, or one might say, rhetoric, of simplification has fluctuated.  OOTLAR 2008 had 45 references to simplification. OOTLAR 2021 had none.  The “Growth Plan 2022” had 15.
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In (I think) 2013 the government came up with the slogan “Creating a simpler, fairer tax system”, which OTS adopted; it imagines away a troubling reality in which simplicity and fairness are competing values which require hard choices.
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:''https://www.gov.uk/government/policies/creating-a-simpler-fairer-tax-system''</ref>
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The reader may think that satirists better identify the reality:
  
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: 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
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:<i>https://www.loonyparty.com/2017-general-election-manicfesto</i>></ref>
  
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Spring Budget 2024 announced the abolition of furnished holiday letting relief from 2025/26.  This will be a simplification; though that is not much to set against the size of this year’s two Finance Acts.
  
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:Our tax code has become so complex that it recently overtook India to become the longest in the world.<ref>Budget speech 2011. It is hard to empirically assess a claim that the UK has the longest tax code in the world, but there seem to be no other serious contenders for that title.</ref> 
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==The future==
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Parliament subsequently added:
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:FA 2011:  403 pages
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:FA 2012:  703 pages (a record)
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:FA 2013:  648 pages
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:FA 2014:  663  pages
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:FAs 2015:  562 pages
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:FA 2016:  583 pages�
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In the same period, the OTS has achieved little.<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".
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<i>http://www.ifs.org.uk/uploads/publications/TLRC/TLRC_OTS_DP_11.pdf</i>
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In (I think) 2013 the government came up with the slogan "Creating a simpler, fairer tax system" under which the OTS now operates; which imagines away a troubling reality in which simplicity and fairness are competing values which require hard choices.
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<i>https://www.gov.uk/government/policies/creating-a-simpler-fairer-tax-system</i> </ref>
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The choice of India as comparator was strange.<ref>The comparison seems to originate from CIOT, "The Making of Tax Law" (2010) para 3.3,<i> http://old.tax.org.uk/ciot_media/themakingoftaxlaw.pdf</i>.</ref>  Four years of Indian Finance Acts together are shorter than any single UK finance act since 1999.<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 far exceed the Finance Act numbers set out here. 
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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.
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The OTS have published two (somewhat simplistic) discussions of tax complexity:
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<i>Length of Tax Legislation as a Measure of  Complexity </i>(Apr 2012) 
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<i>https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/193496/ots_length_legislation_paper.pdf</i>
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The OTS Complexity Index (2012)
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<i>http://www.gov.uk/government/uploads/system/uploads/attachment_data/file/193493/ots_complexity_index_methodology_paper.pdf</i></ref>  The graph speaks for itself.
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It is easier to <i>talk</i> of simplification.  Budget 2014 used the word simplification 23 times; even including a reference to simplifying partnership taxation!<ref>Budget 2014 para 1.123: "The government's aim is that the tax system is simple to understand and easy to comply with. ... the government will ... simplify the taxation of employee benefits and expenses, employee share schemes and partnerships."</ref> Those who have wrestled with the FA 2014 partnership provisions may smile, grimly.  In Budget 2015 the word was used 17 times, rising to 36 times in Budget 2016.
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Scotland continues its fiscal drift from the UK, with Wales set to follow in due course.
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The FA 2016 has abolished tax credits, a far reaching reform on dividend taxation, reduced CGT rates, and (yet again) recast the transactions in securities rules.  It has extended the scope of taxation of royalties and transactions in UK land.
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An (I think, novel) development is the enactment of tax reliefs whose effect, or full effect, is postponed until 2020, election year, with a view to minimising cost and maximising political benefit.  Examples are the reduction in CT rates; the IHT residence nil rate band (which may claim a prize for unnecessary tax complication); and investors's relief for CGT.
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The Courts have decided many interesting cases, including:
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<i> :Bowring v HMRC</i> [2015] UKUT 550 (TCC) upholding flip-flop schemes.
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<i>Hely-Hutchinson, R (oao) v HMRC</i>  [2015] EWHC 3261 (Admin) requiring fairness where HMRC withdraw a statement of practice or concession.
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In the last edition of this work I said <i>Anson v HMRC</i> has resolved the status of US LLCs.  How wrong!  HMRC have announced that they do not intend to follow the Supreme Court decision, so the dispute will continue for another round. 
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More wisely, and as anticipated in this work, HMRC backtracked on its  demand to repay pre-2014 loans secured on foreign income/gains or face the penalty of a remittance basis charge.
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The OECD has produced its final set of BEPS reports, noting, I think correctly, that "International tax issues have never been as high on the political agenda as they are today."
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2017 will bring the commencement of the new deemed domicile rule and IHT transparency for companies, unexpected announcements in Summer Budget 2015.
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We will continue to live in fiscally exciting times.
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We face an extended period of change and uncertainty, in politics, economics, law and taxation, and will continue to live in fiscally exciting times.
  
 
==Thanks ...and request for help==
 
==Thanks ...and request for help==
  
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I am very grateful to my colleagues in chambers, especially Robert Venables KC, Philip Simpson KC and Rory Mullen KC, for discussions on many aspects of tax.  Yijia Liu as research assistant resolved many puzzles.  I owe a great debt to Jane Hunt and Ruth Shaw who work committedly on this text throughout the year.
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Comments from my readers and clients continue to be of the greatest value and interest.  I am very grateful to all who commented, and in particular to John Barnett and Sam Dewes (who commented on a variety of topics), and Mark Pearce (cryptoassets).  In order not to be defeated by the size of this work, readers' help is needed more than ever.  If anyone would like to offer to write or revise a section - or chapter - of this book please get in touch.
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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.  On the basis of what is known at 1 April 2024, and assuming the F(no.2) Bill 2024 is enacted in its present form, it seeks to state the law for 2024/25.
  
  
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I am very grateful to my colleagues in chambers, especially Robert Venables QC, Amanda Hardy QC and Philip Simpson QC, for discussions on many aspects of tax.  Emma Lidström undertook the daunting task of copy editor.  I owe a great debt to Jane Hunt and Ruth Shaw who work patiently on this challenging text throughout the year.
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{|
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Comments from readers and professional clients continue to be of the greatest value and interest to the author.
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| James Kessler KC ||
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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 1 September 2016.
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| Old Square Tax Chambers ||
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| 15 Old Square<br/>Lincoln’s Inn<br/>WC2A 3UE || || ''[email protected]''<br/>''https://www.kessler.co.uk ''
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James Kessler QC
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==OBTAINING FURTHER ADVICE - AND DISCLAIMER==
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==Further advice==
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==Obtaining Further Advice - And Disclaimer==
  
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===Further advice===
  
 
If you want advice on which you are legally entitled to rely you can obtain it - but not from this work.
 
If you want advice on which you are legally entitled to rely you can obtain it - but not from this work.
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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 https://www.kessler.co.uk''
  
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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>.
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===TFD Online===
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==TFD Online==
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TFD Online is an online version of this book and more.  It can be used:
 
TFD Online is an online version of this book and more.  It can be used:
Line 168: Line 156:
 
(3)  to correct or contribute to the book
 
(3)  to correct or contribute to the book
  
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TFD Online is moderated by [https://www.taxchambers.com/team/rebecca-sheldon/ Rebecca Sheldon], a member of Tax Chambers, 15 Old Square, Lincoln’s Inn.
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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 volume 1.
  
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===Disclaimer===
  
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TFD Online is moderated by Oliver Marre, a member of Tax Chambers, 15 Old Square, Lincoln's Inn.
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The professional bodies issue the <i>Professional Conduct in Relation to Taxation </i> with a disclaimer:
  
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TFD Online is accessible on <i>http://www.foreigndomiciliaries.co.uk</i>.  An authorisation code is in the inside cover of this volume.
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:While every care has been taken in the preparation of this guidance<ref>PCRT is not in fact guidance: it is mandatory</ref> 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 not be taken to substitute appropriate legal advice.<ref><i>Professional Conduct in Relation to Taxation</i> (2019), Forward.
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:<i>https://www.tax.org.uk/professional-standards/professional-rules/professional-conduct-relation-taxation</i>
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The second sentence is an improvement on the common form that guidance on legal issues “does not constitute legal advice”. That seems an idiosyncratic use of the word “advice"”; but for the meaning of “advice” see [[Customer Due Diligence#Tax adviser | Tax adviser]]</ref>
  
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When that appeared in 2011 it seemed extraordinary.  But nowadays no professional body issues guidance without a disclaimer.<ref> For instance, the Law Society likewise issue a disclaimer for their Practice Notes: The standard form is:
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:“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 ''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 on this work.  But could anyone have thought that a claim might arise in absence of this disclaimer?
  
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===A note to the lay reader===
  
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==Disclaimer==
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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 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. 
  
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===Edition history===
  
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:::{|
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| width="120pt" | || width="120pt" | ||  width="120pt" | ||
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|-
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| 1<sup>st</sup>  2001 || 8<sup>th</sup>  2009  || 15<sup>th</sup> 2016 || 23<sup>rd</sup> 2023
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|-
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| 2<sup>nd</sup> 2003 || 9<sup>th</sup>  2010  || 16<sup>th</sup> 2017
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|-
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| 3<sup>rd</sup> 2004 || 10<sup>th</sup> 2011 ||  17<sup>th</sup> 2018
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|-
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| 4<sup>th</sup> 2005 || 11<sup>th</sup> 2012  || 18<sup>th</sup> 2019
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|-
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| 5<sup>th</sup> 2006 || 12<sup>th</sup> 2013  || 19<sup>th</sup> 2020
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| 6<sup>th</sup> 2007 || 13<sup>th</sup> 2014  || 20<sup>th</sup> 2021
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|-
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| 7<sup>th</sup> 2008 || 14<sup>th</sup> 2015 || 21<sup>st</sup> 2022
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|}
  
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CIOT issue <i>professional guidance</i> with a disclaimer:
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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.<ref>The text of [https://www.foreigndomiciliaries.co.uk/index.php/Archive_editions earlier editions] is available on ''https://www.foreigndomiciliaries.co.uk'' </ref>
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:While every care has been taken in the preparation of this guidance CIOT ... do not undertake a duty of care or otherwise (?) for any loss or damage occasioned by reliance on this guidance.<ref>CIOT, <i>Professional Conduct in Relation to Taxation</i> (2015), para 1.10
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<i>http://www.tax.org.uk/Resources/CIOT/Documents/2015/05/PCRT%20final%20CIOTATT%202015.pdf</i>
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The Law Society make a similar 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>
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When that appeared in 2011 it seemed extraordinary.  But it rapidly became ubiquitous; nowadays no professional body ever issues guidance without a disclaimer (often including a statement, which seems bizarre to me, that guidance on the law "does not constitute legal advice".)  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 any 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?
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==A note to the lay reader==
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This book is not intended as a self-help guide, and is addressed to tax practitioners, but it is readable for a lay person. 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. 
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==Edition history==
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1<sup>st</sup> Edition 2001    5<sup>th</sup> Edition 2006  9<sup>th</sup> edition 2010  13<sup>th</sup> edition 2014
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2<sup>nd</sup> Edition 2003    6<sup>th</sup> edition 2007  10<sup>th</sup> edition 2011  14<sup>th</sup> edition 2015
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3<sup>rd</sup> Edition 2004    7<sup>th</sup> edition 2008  11<sup>th</sup> edition 2012  15<sup>th</sup> edition 2016
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4<sup>th</sup> Edition 2005    8<sup>th</sup> edition 2009  12<sup>th</sup> edition 2013 
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This book was called <i>Taxation of Foreign Domiciliaries</i> for 9 editions; it changed to <i>Taxation of Non-residents & Foreign Domiciliaries</i> in the 10<sup>th</sup> edition.
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== Footnotes==
 
== Footnotes==
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<references/>

Latest revision as of 10:26, 5 November 2024

To view this Introduction in pdf format, click here: Introduction And What's New

Scope of this book

There are three original 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, and if books could burst, this one might. But these territorial issues must be understood in a wider context: in taxation, as in life, everything is connected. So I discuss private client topics which go beyond the original themes of this book:

  • substantial: fundamental terms and concepts, and tax avoidance codes
  • procedural: disclosure/compliance, tax return filing positions, CDD, TRS

Co-authorship

This book has always benefited from comments and contributions from readers and discussions with my colleagues in chambers. It has now grown beyond my ability to maintain it all. The following chapters are now in the good hands of junior members of my chambers:

Chapter: Topic Responsible author
35: Travel expenses: employment income Rebecca Sheldon
46: National Insurance Contributions Mary Ashley
App 2: Dwelling/private residence Ross Birkbeck

These names will be familiar to readers: Rebecca as the moderator of the online edition of this work; Mary as co-author of my Taxation of Charities; and Ross appeared as advocate in many of the cases he discusses.

If any readers are attracted to the challenge of adopting a chapter or section from this book please contact the author.

A statute-focussed approach

I set out statutory and other material verbatim:

... in the end we must always return to the words of the statute[1]

Returning to the verbatim text, it is surprising how often one finds that the words do not say what one expects.

This is not just a common law approach. Richard Hyland tells this story of his class at Université Paris II Panthéon-Assas:[2]

Mme Gobert asked simply: L’article 2 du Code civil, qu’est-ce qu’il dit? Article 2 of the Civil Code, what does it say?
My classmates were some of the best private law students in France. This was a question to which they knew the answer. One of them explained that article 2 provides for the nonretroactivity of the law. Mme Gobert looked at the student without smiling. Then she repeated the question. L’article 2 du Code civil, qu’est-ce qu’il dit? A different student mentioned Paul Roubier’s suggestion that a new law may be applied to les situations juridique en cours. Again she repeated the question. L’article 2 du Code civil, qu’est-ce qu’il dit? Another student tried, and then another, each new voice attempting yet a more refined statement of the concepts involved. After each comment she responded in the same way. It was my first French law class, so I did not know what to think. It seemed like a Zen-like version of the Socratic method. The French students were terrified. This was material they thought they knew, and yet they could not guess what was on her mind. Finally, one of the students had the presence of mind simply to read the code provision aloud. Mme Gobert’s eyes lit up. Mais bien sûr! she responded C’est ça qu’il dit!

The year 2023/24 in review, and the future

HMRC have had an unbroken run of successes establishing a UK domicile. Fisher finally reached Supreme Court, only to be promptly reversed by the F(no.2)A 2024. We have the first case on the statutory residence test, introduced in 2013 (A Taxpayer v HMRC), now on the way to the Court of Appeal, and the first on the remittance basis, introduced in 2008 (Seghal v HMRC). Scotland continues its fiscal drift from the UK, with Northern Ireland and Wales following.

But the changes of 2023/24 are overtaken by the surprise announcement in the Spring Budget 2024 of the abolition of domicile as a connecting factor for UK tax, from 2025/26, and the replacement of the remittance basis with a short term relief for foreign income/gains. The next edition of this book will be different from the present, and will have a new title.

Simplification/complification

OTS stated in 2017:

The UK tax code is widely cited as being the longest in the world”.[3]

This claim had been made at least since 2010.[4] In recent years Parliament added:[5]

Finance Act(s) Pages
2012 703 (a record) 2018 196
2013 648 2019 337
2014 668 2020 217[6]
2015 597 (2 Finance Acts) 2021 428
2016 662 2022 225
2017 829 (2 Finance Acts) 2023 416 (2 Finance Acts)

The Office of Tax Simplification estimated HMRC guidance at 90,000 pages in 2018;[7] whatever the true figure, it will have grown considerably since then. This guidance was “not comprehensive” - something of an understatement; but according to the OTS “real life cannot be reduced to a neat description in a few (!) pages of writing”.[8] F(no.2)A 2023 abolished the OTS. In its 12 years of existence, the OTS did not achieve much simplification, at least in relation to topics covered in this book, and I do not think it will be missed.[9]

It is easier to talk of simplification. In the ill-fated “mini” budget of October 2022:

the government will embed tax simplification into the institutions of government ... and set a mandate to HM Treasury and HMRC to focus on simplifying the tax code.[10]

The reader may think that satirists better identify the reality:

We will further complicate the UK tax system so that large companies can no longer find loopholes.[11]

Spring Budget 2024 announced the abolition of furnished holiday letting relief from 2025/26. This will be a simplification; though that is not much to set against the size of this year’s two Finance Acts.

The future

We face an extended period of change and uncertainty, in politics, economics, law and taxation, and 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 KC, Philip Simpson KC and Rory Mullen KC, for discussions on many aspects of tax. Yijia Liu as research assistant resolved many puzzles. I owe a great debt to Jane Hunt and Ruth Shaw who work committedly on this text throughout the year.

Comments from my readers and clients continue to be of the greatest value and interest. I am very grateful to all who commented, and in particular to John Barnett and Sam Dewes (who commented on a variety of topics), and Mark Pearce (cryptoassets). In order not to be defeated by the size of this work, readers' help is needed more than ever. If anyone would like to offer to write or revise a section - or chapter - of this book please get in touch.

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. On the basis of what is known at 1 April 2024, and assuming the F(no.2) Bill 2024 is enacted in its present form, it seeks to state the law for 2024/25.


James Kessler KC
Old Square Tax Chambers
15 Old Square
Lincoln’s Inn
WC2A 3UE 		[email protected]
https://www.kessler.co.uk

Obtaining Further Advice - And Disclaimer

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 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 Rebecca Sheldon, 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 volume 1.

Disclaimer

The professional bodies issue the Professional Conduct in Relation to Taxation with a disclaimer:

While every care has been taken in the preparation of this guidance[12] 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 not be taken to substitute appropriate legal advice.[13]

When that appeared in 2011 it seemed extraordinary. But nowadays no professional body issues guidance without a disclaimer.[14] 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 on this work. But could anyone have thought that a claim might 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 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 8th 2009 15th 2016 23rd 2023
2nd 2003 9th 2010 16th 2017
3rd 2004 10th 2011 17th 2018
4th 2005 11th 2012 18th 2019
5th 2006 12th 2013 19th 2020
6th 2007 13th 2014 20th 2021
7th 2008 14th 2015 21st 2022

This book was called Taxation of Foreign Domiciliaries for 9 editions; it changed to Taxation of Non-Residents and Foreign Domiciliaries in the 10th edition.[15]

Footnotes

  1. ↑ R.F.C. 2012 Plc v AG [2017] UKSC 45 (the Rangers case) at [11]; see A judicial gloss
  2. ↑ Hyland. Gifts: A study in comparative law, 1st ed (1989) p.xvi.
  3. ↑ It is hard to empirically assess the claim that the UK has the longest tax code in the world, and OTS made no attempt to do so. But if any readers are aware of other serious contenders for that title, I would be interested to hear.
  4. ↑ For older references see the Introduction to the 2016/17 edition of this work.
  5. ↑ 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
  6. ↑ The unusually short length of the FA 2020 is due to the December 2019 election.
  7. ↑ OTS, “Guidance for taxpayers: a vision for the future” (2018) para 1.21. These pages have assuredly not been printed or counted. Quantification raises methodological issues which deserve a short essay to itself. We have reached the stage where the amount of HMRC guidance is impossible to quantify: the words are uncountable. Within the limits of guesswork, and assuming 500 words per page (single spacing), the figure of 90,000 pages seems to me to be on the low side. There are 150 HMRC Manuals, just for a start. Perhaps the focus of enquiry should be whether HMRC guidance is too short, because 90,000 pages would not be sufficient to do justice to the topic. The legislation, measured by pages of the Orange & Yellow tax handbooks, can be counted and amounts to 20,836 pages in 2020/21 (that does not include DTAs, which would be another 3,000 pages). The Tax Cases reports, which began in 1875, and ceased publishing in 2014, reached 82 volumes and did not cover VAT.
  8. ↑ Para 1.24.
  9. ↑ This view is not unanimous; according to CIOT:
    “OTS has achieved a great deal”; letter to Chancellor of the Exchequer (24 October 2022).
  10. ↑ HM Treasury, “The Growth Plan 2022".
    https://www.gov.uk/government/publications/the-growth-plan-2022-documents
    The emphasis, or one might say, rhetoric, of simplification has fluctuated. OOTLAR 2008 had 45 references to simplification. OOTLAR 2021 had none. The “Growth Plan 2022” had 15. In (I think) 2013 the government came up with the slogan “Creating a simpler, fairer tax system”, which OTS adopted; it imagines away a troubling reality in which simplicity and fairness are competing values which require hard choices.
    https://www.gov.uk/government/policies/creating-a-simpler-fairer-tax-system
  11. ↑ Official Monster Raving Loony Party Manifesto 2017
    https://www.loonyparty.com/2017-general-election-manicfesto>
  12. ↑ PCRT is not in fact guidance: it is mandatory
  13. ↑ Professional Conduct in Relation to Taxation (2019), Forward.
    https://www.tax.org.uk/professional-standards/professional-rules/professional-conduct-relation-taxation
    The second sentence is an improvement on the common form that guidance on legal issues “does not constitute legal advice”. That seems an idiosyncratic use of the word “advice"”; but for the meaning of “advice” see Tax adviser
  14. ↑ 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.”
  15. ↑ The text of earlier editions is available on https://www.foreigndomiciliaries.co.uk
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