Residence and Domicile Enquiries

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The team at Pannu Tax have extensive experience of helping clients to resolve HMRC residence and domicile enquiries.

The number of HMRC enquiries into the residence status of individuals has increased significantly over the last 7-8 years. This is partly due to the increasing success HMRC has experienced in the Courts (arguably starting with the 'Shepherd' and 'Gains Cooper' victories'), the establishment of HMRCs High Net Worth Unit (which deals with the tax affairs of the wealthiest taxpayers in the UK and is able to 'man mark' them with senior HMRC inspectors) and the concentration of HMRCs residence specialists into centres of excellence.

VIDEO - Residence & Domicile Enquiries

Prior to the introduction of the new statutory residence test?

Prior to the introduction of the new statutory residence test in April 2013, whether an individual was regarded as UK tax resident or not was based largely on a series of tax cases stretching back to the early 1900's. This led to significant uncertainty and a number of 'grey areas'. Understanding this case law and the principles which apply are vitally important if you are to successfully resolve a tax residence enquiry.

With the increasing focus on offshore tax issues we have also seen an increase in the number of enquiries into the domicile status of taxpayers.

What should I expect if HMRC has opened an enquiry into my residence or demicile status?

An enquiry into your residence and/or domicile position can be highly intrusive, requiring a detailed analysis of your lifestyle, business affairs, family connections etc. both prior to and post your departure from the UK. Having the evidence available to support your position and being able to articulate the facts effectively (by reference to the decided case law) is crucial in ensuring a successful outcome.

The type of information and questions commonly asked by HMRC include:

  • Detailed analysis of your movements prior and post your departure from the UK (including copies of any diaries which show the purpose and reason for each visit);
  • Details of UK and overseas bank accounts and investments including personal bank and credit card statements (this can help establish your whereabouts on any particular day);
  • copies of mobile phone bills (to see if these are consistent with the diary data);
  • Photographs or other evidence showing the nature of your 'new overseas home (is it commensurate with your lifestyle and home in the UK?);
  • details of personal friends and family (including details of any parties or communications with friends prior to leaving the UK);

In addition, meetings and interviews are often requested by the inspector.

The key to achieving a successful conclusion is in effectively managing the fact finding stage of the personal tax residence enquiry. This means understanding what to provide to HMRC and the best way to present the facts and evidence. Completing this effectively not only requires experience of these types of enquiries but also a detailed knowledge of HMRCs legal powers to obtain information and documents from you (the taxpayer) and third parties (e.g. banks, your advisors, business customers and suppliers etc.).

Managing the facts and evidence is crucial because the inspector will use the facts you have presented to form his view on whether HMRC is prepared to accept that you are/were non resident for tax purposes.

What should I expect from my advisor if I am involved in a personal residence tax enquiry?

You should expect your advisor to:

  • Have recent and detailed experience of dealing with these type of residence enquiries;
  • Understand the stages of the enquiry process, enabling a coherent strategy to be agreed from the outset;
  • Have detailed knowledge of HMRCs internal processes and legal powers to obtain documents and information;
  • Be able to properly articulate the facts and present the evidence to HMRC
  • Have a detailed understanding of the decided tax cases as it relates to personal tax residence;
  • Be able to negotiate effectively with HMRC and understand the internal restrictions and governance processes the inspector has;
  • If necessary, understand and have experience of the other potential routes to resolving a residence enquiry (such as Alternative Dispute Resolution)

How Can Pannu Tax Help?

We have extensive recent experience of HMRC personal residence enquiries and so understand the process and how to respond properly to ensure that you get the best possible outcome. We have successfully resolved these type of enquiries for our clients. Where agreement has not been possible, we have recent experience of the Tax Tribunal and Judicial Review proceedings, working with specialist tax legal advisors and Tax Counsel.

We can:

  • Undertake a review of your residence position prior to a HMRC enquiry and ensure you have the evidence and facts available to support your position. If any risk areas are highlighted, we will work with you to mitigate these;
  • If you are already under enquiry, deal with the issues effectively from start to finish, working closely with you or alongside your existing advisor;
  • It doesn't matter how far the enquiry has progressed or how long the matter has been running; we have experience of being able to add value and make a positive impact in moving matters to a conclusion.

At Pannu Tax you will be advised by some the UKs leading tax investigations and dispute specialists who have the practical experience and the technical knowledge required to provide you with the type of effective support you need.

By engaging with Pannu Tax you will have access to their extensive experience and in depth and up to date knowledge of HMRCs procedures, powers and processes (usually only found in the top global accountancy firms) but at an affordable price.

To get further information or for a free, confidential and no obligation discussion please contact us on 0800 246 5915, complete the contact form or email us direct at info@pannutax.co.uk.

Expertise & Experience

At Pannu Tax you will be advised by some the UK's leading tax investigations and dispute specialists who have the practical experience and the technical knowledge required to provide you with the type of effective support you need.

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How can we help?

For a free, confidential and no obligation discussion call us on 0800 246 5915 or email us direct at info@pannutax.co.uk


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