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bigduckontax, Accountant
Category: Tax
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There I am an Irish national living in Australia since

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Hi there
I am an Irish national living in Australia since 2009. Prior to that I lived in the UK for 7 years. For 2 of those tax years (2007-2009) I earned through an ebt scheme and have now received an accelerated payment notice for both those years.
Hmrc also sent through a settlement offer with significant inheritance tax added.
My question is around whether it would be relevant to claim non Dom status to help mitigate this IHT. From the research I've done I pretty much fill every criteria for non Dom status.
In your professional opinion, is this a reasonable way of proceeding ?
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.

Hello, I am Keith, one of the experts on Just Answer, and happy to help you with your question.

Firstly, when you left the UK did you send a Form P85 to your tax office. If you did not then you should do so now, fortunately there is no time limit for its submission, the form is available on the net and can be filed on line. HMRC will then classify you as non-resident.

I am in total confusion as to HMRC's action referring to Inheritance Tax (IHT). IHT is only levied on death, but it can follow you after you have left the UK if you are domiciled in the UK. From the tenor of the question you are not domiciled in the UK and never have been; more likely Ireland or posibly Australia, but not the UK. In the UK it takes about 16 years to establish domicile and with only 7 years of residence you would never be so domiciled. There can be IHT complications with EBT schemes, but without more detail I cannot assist at this stage.

You do not need to claim non domiciled status, it is for HMRC to show that you are UK domiciled, which clearly you are not. HMRC are very hot on changhes in domicile, but they cannot have it both ways.

You may need trusted, UK professional assistance in this matter to fight your corner..

Customer: replied 2 years ago.
Thanks for your quick reply Keith.
Yes I did return a p85 in 2009 when I left the UK.
The ebt arrangement was through loans from a trustee, which as part of the settlement offer will be written off and so in the opinion of hmrc, require payment of IHT.. Very confusing.
So it's in your opinion not appropriate for hmrc to charge IHT to someone who has never been considered domicile in the UK ?
Expert:  bigduckontax replied 2 years ago.

Contractor Umbrella gives the following guidance:

'“In addition, anti-forestalling provisions apply to the payment of sums (including loans) and the provision of readily convertible assets for the purposes of securing the payment of sums (including loans) where the sum is paid or the asset is provided between 9 December 2010 and 5 April 2011 where, if paid or provided on or after 6 April 2011, they would be caught by the legislation'

From this HMRC would appear to be jumping the gun as your EBT ended on 5 April 2009. In fact HMRC have been clamping down on the use of EBTs, but as you see it appears to apply from 9 December 2010. In fact your domicile would not matter in this, the application of IHT is a quirk revolving around EBTs being structured as loans.

At this stage I would be inclined to reject HMRC's approach as the event occurred before the relevant date. It is not unknown for HMRC to make errors of this nature, whether deliberately or through ingorance by their own staff, I cannot comment. In your rejection of their claims ask for their statutory authority for their actions.