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Sam Pathak
Sam Pathak, Mr S Pathak MBA FCCA CTA
Category: UK Tax
Satisfied Customers: 464
Experience:  Tax Consultant & Freelance Lecturer over 9 years experience
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I am a UK citizen and I want to become non-domicile.

Customer Question

I am a UK citizen and I want to become non-domicile.

I am of Pakistani heritage, my wife is also Pakistani born and I have been living in Pakistan with my family for the past 3 years.

I am selling my house in the UK and conduct my Internet business from Pakistan, although I have a despatch office in the UK.

I would like to know the most cost-effective route to presenting my case to HMRC. I know I need to complete a form, but what about supplementary evidence, etc. Should I just go ahead and make the application myself as it is a genuine case?

I
Submitted: 4 years ago.
Category: UK Tax
Expert:  Sam Pathak replied 4 years ago.

 

UK Domicile:

Being UK citizen does not always mean you are UK Domiciled for UK tax purposes. UK Domicile is inherited on birth from English/UK father, generally, called 'Domicile of Origin' unless you have opted for UK 'Domicile of Choice' which is less likely.

 

UK House:

Before I fully address your matter, I need few more details from you:

When did you buy this house?

Did you or your family always live in this house until you moved to Pakistan 3 years ago?

Do you have any other house in the UK?

 

Thank you and look forward to hearing from you.

 

Regards

Sam Pathak

 

 

Customer: replied 4 years ago.
Hi

I purchased this house in July 2005. It is my first and only home. Prior to that I was living with my parents.

Let me know if you need any other info.
Expert:  Sam Pathak replied 4 years ago.

 

UK House:

Thank you for the info.

In this case, 'Domicile' is not an issue here, the issue is something called UK 'Ordinary Residence' for the purpose of UK Tax.

When you sell the house, generally it will be liable to UK Capital Gains Tax (CGT) on the gain. But, since you have always lived in the house (except last 3 years), the gain will be exempt anyway,

as the last 3 years will always be treated as 'deemed occupation' in the house by UK HM Revenue & Customs (HMRC) for the purpose of CGT, and so whole of the gain is exempt under 'Principal Private Residence (PPR) Exemption' rules.

 

Hope it helps.

Thanks

 

Regards

Sam Pathak

 

 

Customer: replied 4 years ago.
Hi

Ok, I think you have assumed I require non-dom, to avoid CGT. (actually I never thought about that!).

I want to become non-dom as I am conducting my business from abroad now and want to minimise my reporting to HMRC. I beleive in future I will gain many benfits from being non-dom when and if my busines expands.
Expert:  Sam Pathak replied 4 years ago.

 

UK Domicile:

As I stated earlier,

Being UK citizen does not always mean you are UK Domiciled for UK tax purposes. UK Domicile is inherited on birth from English/British father, generally, called 'Domicile of Origin' unless you have opted for UK 'Domicile of Choice' which is less likely.

 

Based on the above, you may wish to confirm yourself if you are UK or Pakistani Domicile.

 

Internet Business in the UK:

As you said you have despatch office in the UK, HMRC is likely to argue that you are 'trading within the UK' (as opposed to 'trading with the UK'), and so UK business profit is likely to be within the scope UK Tax - regardless of your Domicile status,

unless you can demonstrate that you have no permanent establishment (PE) of business in the UK - for which, for example, you collect all orders over the internet, run internet business (process the order, receive the money etc) from outside the UK and despatch the delivery directly from outside the UK.

 

Thanks

 

Regards

Sam Pathak

 

Customer: replied 4 years ago.
Hi

Yes, I was born in the UK and am UK domicilled.

I understand that I will continue to pay UK tax based on my operations within the UK. However, if I conduct business in the USA and repatriate the profits to Pakistan and if I am non-dom, then the UK tax man has no claim on this income - right? It is for these type of reasons why I wish to become non-dom.

I basically want to know should i just complete the form and send it in. Or should I seek professional advice before completing the form. Or else do you suggest I approach this matter - (cost effectively!).
Expert:  Sam Pathak replied 4 years ago.

Correct, when you are foreign domiciled, generally, your non-UK income is outside the UK Tax net (only UK sourced income will be within the UK tax).

It is always advisable to have a professional adviser, however, considering that you seem to be fairly knowledgeable of UK Tax system and to be cost-effective, you could complete the form and send it, to start with.
And, once your business grows to a stage you may consider to appoint UK Tax Adviser.

Hope the above helps.

Thank you.

Regards
Sam Pathak

Customer: replied 4 years ago.
Ok, so just to confirm - you think I should just go ahead a fill the form?

Do you have a link to download the form?
Expert:  Sam Pathak replied 4 years ago.

 

As you stated, where you have genuine and straightforward case, you can complete the relevant forms/details yourself and submit to HMRC as this will be cost effective although having professional adviser would always be handy.

 

And,

With regards XXXXX XXXXX form - which form exactly are you referring to, I mean for what purpose precisely? Tax Return or Form to be Non-Dom or .......

 

Thank you and look forward to hearing from you.

 

Regards

Sam Pathak

 

 

 

 

 

Customer: replied 4 years ago.
Hi

Form to apply for non-domicile.

Thanks
Expert:  Sam Pathak replied 4 years ago.

 

Changing UK Domicile:

There is no single form as such to fill to change the UK Domicile straight to Non-UK Domicile. It is not like changing ' UK Residence' status.

Domicile is a matter of general law, not the tax law as such.

You can only change the UK Domicile after you had established/acquired new Domicile in another country.

 

For your detail info, I have inserted a link/doc below, it is very big (81 pages) pdf doc, you would only need to go through pages 22, 23 and 21, for this purpose.

,

http://www.hmrc.gov.uk/cnr/hmrc6.pdf

 

This is a very useful info doc as it gives you insight into all foreign issues in relation to the UK Taxes, should you wish.

 

Finally, would you please click on 'accept' to enable me to receive my wages. Thank you very much.

 

With very best wishes

 

Regards

Sam Pathak

 

 

Sam Pathak, Mr S Pathak MBA FCCA CTA
Category: UK Tax
Satisfied Customers: 464
Experience: Tax Consultant & Freelance Lecturer over 9 years experience
Sam Pathak and 3 other UK Tax Specialists are ready to help you
Customer: replied 4 years ago.
No problem, thanks for your help.

Atif
Expert:  Sam Pathak replied 4 years ago.

 

Dear Atif,

 

Thank you very much.

 

Please feel free to write me whenever you have any further UK Tax related queries.

 

With very best wishes for your business and everything.

 

Thank you for your feedback.

 

Best Regards

Sam Pathak

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