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To view a pdf version of this Introduction, click here: [https://tfd.mankin.org.uk/images/e/e0/FD_Introduction.pdf]
 
  
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==Scope of this book==
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To view this in pdf format, click here: [https://tfd.wiki.anarres.org/images/e/e0/FD_Introduction.pdf  Introduction And What's New]
  
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There are three themes to this book:
+
==Abolition of domicile and scope of this book==
  
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(1)  Taxation of foreign domiciliaries
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In the 2025/26 edition of this work I said:
  
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(2)  Taxation of non-residents on UK assets
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2025 is a year that will be remembered in tax history.  It announced a set of reforms:
  
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(3)   Taxation of UK residents on foreign assets
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(1) For IHT:
−
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:(a) Long-term residence replaces domicile
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To attempt to cover these topics comprehensively is ambitious, perhaps quixotic. This book is in danger of bursting, because one cannot address the first topic without the second and third, and these territorial issues can only sensibly be discussed in a wider context: in taxation, as in life, everything is connected. Thus what started as a short book on foreign domiciliaries has become a work which seeks to address all territorial limits to UK taxation, and extends to other topics which often arise in this context, such as tax avoidance, and disclosure and compliance.
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:(b) Excluded property in trusts depends on the settlor’s LTR from time to time
 +
(2) For IT/CGT:
 +
:(a) FIG relief replaces the remittance basis
 +
:(b) Transitional rules include the Temporary Remittance Facility, 2025 rebasing, and a new definition of remittance (for pre-2025 unremitted income)
  
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===Approach of this book===
+
One might summarise this package as the abolition of domicile as a tax concept, or the abolition of non-dom tax reliefs;<ref>See [[Appendix 8 Domicile#Domicile: Introduction | Domicile: Introduction]]</ref> though as usual, the short label does not fully describe the details of the reforms.
 +
 +
This is the most important change in UK taxation since the introduction of CGT/CT in 1965, VAT in 1973, and CTT in 1974, ... It will take some years to work out its consequences.
 +
 +
The reader will find the results of the first year’s work on the topic, though there is no doubt much more to be thought about, and the FA 2026 (in part retrospective to 2025) adds to the task.
 +
 
 +
==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 Old Square Tax Chambers:
 +
 
 +
{| class="wikitable"
 +
|-
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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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| 46: National Insurance Contributions || Mary Ashley
 +
|}
 +
 
 +
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''.
 +
 +
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:
 
I set out statutory and other material verbatim:
  
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:... in the end one must always return to the words of the statute itself, for it is those words which must be construed.<ref>''Ransom v Higgs'' 50 TC 1 at p.32.</ref>
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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>
  
−
Returning to the verbatim text, it is surprising how often one finds that the words do not say quite what one expects.   
+
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 first class at Université Paris II Panthéon-Assas:<ref>Hyland. ''Gifts: A study in comparative law'', 1st ed (1989) p.xvi.</ref>  
+
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>
  
−
: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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: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 the explained that article 2 provides for the nonretroactivity of the law.  Mme Gobert looked at the student without smiling.  Then she repeate 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 no 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!''
+
: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 2019/20 in review==
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==The year 2025/26 in review==
  
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OTS stated in 2017:
+
The FA 2026 has changes to the FA 2025 reforms.  It has enacted the IHT business property reform, which takes effect in 2026/07, and the IHT pension reform, though that does not take effect until 2027.
 +
 +
HMRC have published GfC13 on disclosure duties.  The controversy of the year will be the proposed reforms to the uncertain tax treatment regime, announced in March 2026. 
 +
 +
The list of important decisions includes ''BlueCrest Capita''l and ''Holden'' on partnership tax,'' Oscroft'' on transactions in securities, and many cases on TAARs, including ''Tower One St George Wharf Ltd''.  The pace of reform is such that the law has often been amended before the issues can be litigated.  Cases on the pre-2025 law include ''Louwman'' on the pre-2025 protected trust regime, ''Alimahomed v HMRC'' on remittances, and ''Accuro Trust'' on the pre-2020 excluded property trust rules.  In the context of treaties we have Masters on employment income, and ''Methanex Trinidad'' on treaty shopping.
  
−
: 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 are aware of other serious contenders for that title, I would be interested to hear.</ref> 
+
===Simplification/complification===
  
−
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.
+
Office of Tax Simplification (now abolished) stated in 2017:
  
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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 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> 
−
+
 
 +
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.<br/>
 +
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.<br/>
 
OTS have published two (somewhat simplistic) discussions of tax complexity:
 
OTS have published two (somewhat simplistic) discussions of tax complexity:
−
 
+
:''Length of Tax Legislation as a Measure of Complexity'' (Apr 2012)   
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''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''
 
:''https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/193496/ots_length_legislation_paper.pdf''
−
 
 
OTS Complexity Index (2012)
 
OTS Complexity Index (2012)
−
:http://www.gov.uk/government/uploads/system/uploads/attachment_data/file/193493/ots_complexity_index_methodology_paper.pdf''</ref>
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''http://www.gov.uk/government/uploads/system/ploads/attachment_data/file/193493/ots_complexity_index_methodology_paper.pdf''</ref>
  
 
{|
 
{|
−
| width="200pt" | || width="400pt" | ||    
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| width="150pt" | || width="200pt" | ||   width="200pt" | ||  width="200pt" | ||  
 
|-
 
|-
 
| '''Finance Act(s)''' || '''Pages'''
 
| '''Finance Act(s)''' || '''Pages'''
 
|-
 
|-
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| 2012 || 703 pages (a record)
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| 2012 || 703 (a record) || 2019 || 337
 
|-
 
|-
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| 2013 || 648 pages
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| 2013 || 648 || 2020 || 217<ref> The unusually short length of the FA 2020 is due to the December 2019 election.</ref>
 
|-
 
|-
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| 2014  || 663 pages
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| 2014  || 668 || 2021 || 428
 
|-
 
|-
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| 2015 || 562 pages (2 Finance Acts)
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| 2015 || 597 (2 Finance Acts) || 2022 || 225
 
|-
 
|-
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| 2016  || 649 pages
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| 2016  || 662 || 2023 || 416 (2 Finance Acts)
 
|-
 
|-
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| 2017 || 813 (a new record)<ref>This is the combined length of the two FAs  2017.</ref>
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| 2017 || 829 (2 Finance Acts) || 2024 || 337
 
|-
 
|-
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| 2018  || 196  
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| 2018  || 196 || 2025 || 296
 
|-
 
|-
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| 2019 || 328
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| || || 2026 || 534
−
|-
+
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| 2020 || 186
+
 
|}
 
|}
  
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The unusually short length of the 2020 finance bill is likely due to the December 2019 election.
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The OTS 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.
−
 
+
−
In the same period, OTS has not achieved any 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>
+
−
 
+
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It is easier to <i>talk</i> of simplification:
+
−
 
+
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: Our system remains too complicated ... We will therefore simplify the tax system. <ref>Conservative party manifesto 2017 p.14
+
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:''https://s3.eu-west-2.amazonaws.com/manifesto2017/Manifesto2017.pdf''
+
 
 
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OOTLAR 2008 has 45 references to simplification </ref>
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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 23,374 pages in 2025/26 (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> however the figure is calculated, 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>
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+
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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. <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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Scotland continues its fiscal drift from the UK, with Northern Ireland and Wales following.
+
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+
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The most important change of the year is the move from IT to CT on property income of non-resident companies.
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FA 2020 introduced important changes; those closest to the themes of this book are:
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It is easier to ''talk'' of simplification.  In the ill-fated “mini” budget of October 2022:
  
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* New IHT excluded property rules for gifts to trusts and transfers between trusts
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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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* Revisions to CGT private residence relief
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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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The Fifth Anti-Money Laundering Directive takes effect.
+
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+
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The courts have decided too many cases to list them all; of particular interest are ''Embiricos v HMRC'' on closure notices in domicile appeals; ''Fisher v HMRC'' and ''Rialas v HMRC'' on TOAA; ''HMRC v Hyrax Resourcing'' on avoidance; ''Jimenez (oao) R v First-tier Tribunal'' on territorial limitation.
+
 
 
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The BEPS multilateral instrument has come into force and the number of DTAs which incorporate its terms gradually increases.  OECD has noted, I think correctly:
+
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''</ref>
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: International tax issues have never been as high on the political agenda as they are today.
+
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+
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The growth in complexity is matched by a decline in HMRC efficiency. The House of Lords Economic Affairs Committee issued an important report, recording:
+
−
 
+
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:in compliance and enquiry cases, the behaviour of some HMRC staff falls well below the standard set in the Charter. HMRC needs to have better systems in place to identify and address any problem behaviours as a matter of urgency.<ref>HL Economic Affairs Committee“The Powers of HMRC: Treating Taxpayers Fairly” (2018) para 157.
+
−
 
+
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:''https://publications.parliament.uk/pa/ld201719/ldselect/ldeconaf/242/242.pdf''
+
 
 
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Also see ''Pokorowski v HMRC'' [2019] UKFTT 0086 (TC). The taxpayer had lost his job, exhausted his savings, was evicted from his house, and his belongings were thrown into the street where they were lost or stolen. The taxpayer failed to submit his return on time.  The Tribunal said that “HMRC's decision to pursue Mr Pokorowski for penalties in the circumstances of this appeal is a scandal.”</ref>
+
The reader may think that satirists better identify the reality:
  
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===Judicial delay===
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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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The most worrying development to those who care about the administration of justice is the delay in resolving tax disputes. Recent ToA cases are not atypical:
+
−
 
+
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{| class="wikitable"
+
−
|-
+
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| "col" style="width:10px; text-align:left;" | '''Case'''
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| "col" style="width:200px; text-align:left;" | '''Assessment years'''
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| "col" style="width:100px; text-align:left;" | '''Decision'''
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| "col" style="width:150px; text-align:left;" | '''Tribunal delay'''<ref> But these cases are not final.</ref>
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| "col" style="width:200px; text-align:left;" | '''FTT delay'''<ref> Time from commencement of hearing until judgment.</ref>
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| "col" style="width:200px; text-align:left;" | '''Total delay'''
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|-
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| ''Rialis'' || 2005/6, 2006/7 || 2019 || FTT || 13 months || 13 years
+
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|-
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| ''Fisher'' || 2000/01 - 2007/08 || 2020  || UT || 20 months || 20 years
+
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|-
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| ''Davies'' || 2003/04 || 2020 || UT || 10 months || 16 years
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|}
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The causes of delay are many, but the reader may think that the delay between FTT hearing and judgment is particularly grievous. We need to return to first principles:
+
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+
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:The delay of justice is a denial of justice. Magna Carta will have none of it. “To no one will we deny or delay right or justice”. All through the years men have protested at the law’s delay and counted it as a grievous wrong, hard to bear. Shakespeare ranks it among the whips and scorns of time.<ref> Hamlet Act III, sc. 1.</ref>  Dickens tells how it exhausts finances, patience, courage, hope.<ref> Bleak House, ch. 1.</ref>  To put right this wrong, we will in this court do all in our power to enforce expedition.<ref> Lord Denning in ''Allen v. Sir Alfred McAlpine & Sons'' [1968] 2 QB 229.</ref>
+
−
 
+
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In ''Rolled Steel Ltd. v British Steel Corporation'' a judge delayed giving judgment for eight months:
+
−
 
+
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:... long delays in delivering judgment can cause disquiet and suspicion amongst litigants who lose - and those who win may feel they have been deprived of justice far too long. Delays of this length should not occur unless there are compelling reasons why they should; and, if there are such reasons, it would be prudent of a judge to refer to them briefly.<ref>[1986] 1 Ch 246.</ref>
+
−
 
+
−
In another case,<ref>''Bishopsgate Investment Management Ltd. v Maxwell'' [1994] 1 All ER 261.</ref> CA criticised a judge for a five-month delay in giving judgment after a five-day hearing. The time taken to deliver judgment was excessive.
+
−
+
−
In another case, a delay of 15 months was criticised in such terms that the judge at fault resigned:
+
  
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:Conduct like this weakens public confidence in the whole judicial process. Left unchecked it would be ultimately subversive of the rule of law. Delays on this scale cannot and will not be tolerated. A situation like this must never occur again.<ref>''Goose v Wilson Sandford'' [1998]  Lexis Citation 2577.</ref>
+
==Withdrawal of paper edition==
  
−
The reader may think that the time gap between hearing and judgment ought not normally to exceed 3 weeks, 6 weeks in exceptional circumstances, and nothing short of force majeure could justify longer.
+
This work is now only available online.  Some readers will miss the paper edition, but online is better as it is undatable, searchable and portable. The online archive will preserve snapshots of the text at the beginning and end of the tax year.
  
 
==The future==
 
==The future==
  
−
In 2021 the proposed Registration of Overseas Entities Act will set up a beneficial ownership register of overseas entities that own UK property.
+
There is a review into the settlement code, transfer of asset code and s.86/s.87 TCGA.<ref>''https://www.gov.uk/government/calls-for-evidence/personal-tax-offshore-anti-avoidance-legislation/personal-tax-offshore-anti-avoidance-legislation''</ref>  According to OOTLAR 2025:<ref>''https://www.gov.uk/government/publications/budget-2025-overview-of-tax-legislation-and-rates-ootlar/budget-2025-overview-of-tax-legislation-and-rates-ootlar''</ref>
  
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FA 2021 will impose a 2% SDLT surcharge on non-UK residents purchasing residential property in England and Northern Ireland, to take effect from 1 April 2021.
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:Following the 2025 call for evidence on Personal Tax Offshore Anti-Avoidance Legislation, the government has committed to an ambitious reform agenda and intends to substantially simplify the legislation in this area.  
−
+
:HMRC will adopt a co-creation approach by engaging a small group of external experts from representative bodies, complemented by broader stakeholder engagement, to help shape the reforms. Representatives will be invited to share ideas on potential new policy and modernised legislation. While the core group will be intentionally small to maintain momentum, the government remains committed to inclusive engagement throughout this process.
−
Budget 2018 provided:
+
  
−
:the government will publish a consultation on the taxation on trusts, to make the taxation of trusts simpler, fairer and more transparent.
+
It continues to be the case that anything could happen, and pointless to speculate.  This work seeks to state the law for 2026/27.
−
 
+
−
A call for evidence (misdescribed as a consultation document) was published November 2018.<ref>HMRC, “The Taxation of Trusts: A Review (Nov 2018)
+
−
+
−
:''https://www.gov.uk/government/consultations/the-of-taxation-of-trusts-a-review''</ref>  It is not possible to guess what will emerge from the process of the review; or at least, studying this paper will not assist in the guesswork.
+
−
+
−
We face an extended period of change and uncertainty, in politics, economics, public health, 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.  Shaun Fu and Aditya Vora as research assistants 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 readers and professional clients continue to be of the greatest value and interest to the author.
+
−
+
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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 30 April 2020, it seeks to state the law for 2020/21.  
+
  
  
 
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|-
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| James Kessler QC ||
+
| James Kessler KC ||
 
|-
 
|-
 
| Old Square Tax Chambers ||
 
| Old Square Tax Chambers ||
 
|-
 
|-
−
| 15 Old Square || || ''[email protected]''
+
| 15 Old Square<br/>Lincoln’s Inn<br/>WC2A 3UE || || ''[email protected]''<br/>''https://www.kessler.co.uk ''
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|-
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| Lincoln’s Inn || || ''https://www.kessler.co.uk ''
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|-
 
|-
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| WC2A 3UE ||
 
 
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−
==OBTAINING FURTHER ADVICE - AND DISCLAIMER==
+
==Obtaining Further Advice - And Disclaimer==
  
 
===Further advice===
 
===Further advice===
Line 197: Line 145:
 
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.
 
 
−
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 <i>https://www.kessler.co.uk</i>
+
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==
+
===Disclaimer===
  
−
TFD Online is an online version of this book and more. It can be used:
+
The professional bodies issue the <i>Professional Conduct in Relation to Taxation </i> with a disclaimer. The Forward provides::
  
−
(1)  to search the text of this book or to access it online.
+
:While all reasonable care has been taken in the preparation of this document, the PCRT Bodies do not owe any duty of care and as a result cannot be held responsible for any loss or damage caused by any reliance on this document. This document is not a substitute for appropriate legal advice.
  
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(2) to see if the book has been updated
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When that appeared in 2011 it seemed extraordinary. But nowadays no professional body issues any statement or 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 ''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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(3)  to correct or contribute to the book
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===A note to the lay reader===
  
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TFD Online is moderated by Ross Birkbeck, a member of Tax Chambers, 15 Old Square, Lincoln’s Inn.
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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 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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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 this volume.
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==Disclaimer==
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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 no be taken to substitute appropriate legal advice.<ref><i>Professional Conduct in Relation to Taxation</i> (2019), Forward.
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<i>http://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 but rather bizarre form that guidance on legal issues “does not constitute legal advice”.</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: “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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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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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.
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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> from the 10<sup>th</sup> to the 23<sup>rd</sup> edition and to ''Kessler on Private Client Taxation'' from the 24th edition.<ref>The text of earlier editions is available on [https://privateclienttax.co.uk/index.php/Archive_editions earlier editions] is available on ''https://www.privateclienttax.co.uk'' </ref>
  
 
== Footnotes==
 
== Footnotes==
  
 
<references/>
 
<references/>

Latest revision as of 14:37, 20 April 2026

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

Abolition of domicile and scope of this book

In the 2025/26 edition of this work I said:

2025 is a year that will be remembered in tax history. It announced a set of reforms:

(1) For IHT:

(a) Long-term residence replaces domicile
(b) Excluded property in trusts depends on the settlor’s LTR from time to time

(2) For IT/CGT:

(a) FIG relief replaces the remittance basis
(b) Transitional rules include the Temporary Remittance Facility, 2025 rebasing, and a new definition of remittance (for pre-2025 unremitted income)

One might summarise this package as the abolition of domicile as a tax concept, or the abolition of non-dom tax reliefs;[1] though as usual, the short label does not fully describe the details of the reforms.

This is the most important change in UK taxation since the introduction of CGT/CT in 1965, VAT in 1973, and CTT in 1974, ... It will take some years to work out its consequences.

The reader will find the results of the first year’s work on the topic, though there is no doubt much more to be thought about, and the FA 2026 (in part retrospective to 2025) adds to the task.

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 Old Square Tax Chambers:

Chapter: Topic Responsible author
35: Travel expenses: employment income Rebecca Sheldon
46: National Insurance Contributions Mary Ashley

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.

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[2]

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:[3]

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 2025/26 in review

The FA 2026 has changes to the FA 2025 reforms. It has enacted the IHT business property reform, which takes effect in 2026/07, and the IHT pension reform, though that does not take effect until 2027.

HMRC have published GfC13 on disclosure duties. The controversy of the year will be the proposed reforms to the uncertain tax treatment regime, announced in March 2026.

The list of important decisions includes BlueCrest Capital and Holden on partnership tax, Oscroft on transactions in securities, and many cases on TAARs, including Tower One St George Wharf Ltd. The pace of reform is such that the law has often been amended before the issues can be litigated. Cases on the pre-2025 law include Louwman on the pre-2025 protected trust regime, Alimahomed v HMRC on remittances, and Accuro Trust on the pre-2020 excluded property trust rules. In the context of treaties we have Masters on employment income, and Methanex Trinidad on treaty shopping.

Simplification/complification

Office of Tax Simplification (now abolished) stated in 2017:

The UK tax code is widely cited as being the longest in the world”.[4]

This claim had been made at least since 2010.[5] In recent years Parliament added:[6]

Finance Act(s) Pages
2012 703 (a record) 2019 337
2013 648 2020 217[7]
2014 668 2021 428
2015 597 (2 Finance Acts) 2022 225
2016 662 2023 416 (2 Finance Acts)
2017 829 (2 Finance Acts) 2024 337
2018 196 2025 296
2026 534

The OTS estimated HMRC guidance at 90,000 pages in 2018;[8] however the figure is calculated, 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”.[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]

Withdrawal of paper edition

This work is now only available online. Some readers will miss the paper edition, but online is better as it is undatable, searchable and portable. The online archive will preserve snapshots of the text at the beginning and end of the tax year.

The future

There is a review into the settlement code, transfer of asset code and s.86/s.87 TCGA.[12] According to OOTLAR 2025:[13]

Following the 2025 call for evidence on Personal Tax Offshore Anti-Avoidance Legislation, the government has committed to an ambitious reform agenda and intends to substantially simplify the legislation in this area.
HMRC will adopt a co-creation approach by engaging a small group of external experts from representative bodies, complemented by broader stakeholder engagement, to help shape the reforms. Representatives will be invited to share ideas on potential new policy and modernised legislation. While the core group will be intentionally small to maintain momentum, the government remains committed to inclusive engagement throughout this process.

It continues to be the case that anything could happen, and pointless to speculate. This work seeks to state the law for 2026/27.


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

Disclaimer

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

While all reasonable care has been taken in the preparation of this document, the PCRT Bodies do not owe any duty of care and as a result cannot be held responsible for any loss or damage caused by any reliance on this document. This document is not a substitute for appropriate legal advice.

When that appeared in 2011 it seemed extraordinary. But nowadays no professional body issues any statement or 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 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 22nd 2023
2nd 2003 9th 2010 16th 2017 23rd 2024
3rd 2004 10th 2011 17th 2018 24th 2025
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 from the 10th to the 23rd edition and to Kessler on Private Client Taxation from the 24th edition.[15]

Footnotes

  1. ↑ See Domicile: Introduction
  2. ↑ R.F.C. 2012 Plc v AG [2017] UKSC 45 (the Rangers case) at [11]; see A judicial gloss
  3. ↑ Hyland. Gifts: A study in comparative law, 1st ed (1989) p.xvi.
  4. ↑ 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.
  5. ↑ For older references see the Introduction to the 2016/17 edition of this work.
  6. ↑ 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/ploads/attachment_data/file/193493/ots_complexity_index_methodology_paper.pdf
  7. ↑ The unusually short length of the FA 2020 is due to the December 2019 election.
  8. ↑ 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 23,374 pages in 2025/26 (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.
  9. ↑ Para 1.24.
  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. ↑ https://www.gov.uk/government/calls-for-evidence/personal-tax-offshore-anti-avoidance-legislation/personal-tax-offshore-anti-avoidance-legislation
  13. ↑ https://www.gov.uk/government/publications/budget-2025-overview-of-tax-legislation-and-rates-ootlar/budget-2025-overview-of-tax-legislation-and-rates-ootlar
  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 earlier editions is available on https://www.privateclienttax.co.uk
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