Difference between revisions of "Introduction"
From PCT Online 2025-26
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| − | ''' | + | '''Updated for 2019/20 edition''' |
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==Scope of this book== | ==Scope of this book== | ||
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(3) Taxation of UK residents on foreign assets | (3) Taxation of UK residents on foreign assets | ||
| − | To attempt to cover these topics comprehensively is ambitious, perhaps 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 | + | To attempt to cover these topics comprehensively is ambitious, perhaps 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 territorial limits to UK taxation. |
| − | ==The year | + | ==The year 2018/19 in review== |
OTS stated in 2017: | OTS stated in 2017: | ||
| − | : 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 | + | : 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> |
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. | 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. | ||
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:{| | :{| | ||
| − | |||
| − | |||
|- | |- | ||
| FA 2012: || 703 pages (a record) | | FA 2012: || 703 pages (a record) | ||
| Line 41: | Line 41: | ||
| FA 2014: || 663 pages | | FA 2014: || 663 pages | ||
|- | |- | ||
| − | | FAs 2015: || 562 pages | + | | FAs 2015: || 562 pages (two Finance Acts) |
|- | |- | ||
| FA 2016: || 649 pages | | FA 2016: || 649 pages | ||
| Line 47: | Line 47: | ||
| FA 2017: || 813 (a new record)<ref>This is the combined length of the two FAs 2017.</ref> | | FA 2017: || 813 (a new record)<ref>This is the combined length of the two FAs 2017.</ref> | ||
|- | |- | ||
| − | | FA 2018: || | + | | FA 2018: || 196 pages |
| + | |- | ||
| + | | FA 2019 || 328 | ||
|} | |} | ||
| Line 58: | Line 60: | ||
It is easier to <i>talk</i> of simplification: | It is easier to <i>talk</i> of simplification: | ||
| − | : Our system remains too complicated ... We will therefore simplify the tax system. <ref>Conservative party manifesto 2017 p.14 </ref> | + | : Our system remains too complicated ... We will therefore simplify the tax system. <ref>Conservative party manifesto 2017 p.14 |
| + | :''https://s3.eu-west-2.amazonaws.com/manifesto2017/Manifesto2017.pdf'' | ||
| + | |||
| + | OOTLAR 2008 has 45 references to simplification </ref> | ||
The reader may think that the satirists better identify the reality: | The reader may think that the satirists better identify the reality: | ||
| Line 67: | Line 72: | ||
Scotland continues its fiscal drift from the UK, with Northern Ireland and Wales now following. | Scotland continues its fiscal drift from the UK, with Northern Ireland and Wales now following. | ||
| − | + | FA 2019 has introduced: | |
| + | |||
| + | * An (unnecessary) CGT rewrite | ||
| + | |||
| + | * CGT on non-residents holding land and land-rich companies, | ||
| + | |||
| + | * Profit Fragmentation Arrangement code | ||
| − | The courts have decided many interesting cases, including <i>Barclays Wealth v HMRC</i>, <i> | + | The courts have decided many interesting cases, including <i>Barclays Wealth v HMRC</i>, <i>Ardmore Construction v HMRC; R (oao) Hely-Hutchinson) v HMRC</i>. |
| − | OECD has | + | The BEPS multilateral instrument has come into force. OECD has noted, I think correctly: |
OECD has produced the BEPS convention, noting, I think correctly: | OECD has produced the BEPS convention, noting, I think correctly: | ||
| Line 77: | Line 88: | ||
: International tax issues have never been as high on the political agenda as they are today. | : International tax issues have never been as high on the political agenda as they are today. | ||
| − | The growth in complexity is matched by a decline in HMRC efficiency. | + | The growth in complexity is matched by a decline in HMRC efficiency. The House of Lords Economic Affairs Committee issued an important report, recording: |
| − | : | + | :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>HLEconomic Affairs Committee“The Powers of HMRC: Treating Taxpayers Fairly” (2018) para 157. |
| − | + | ||
| − | : | + | :''https://publications.parliament.uk/pa/ld201719/ldselect/ldeconaf/242/242.pdf'' |
| + | |||
| + | 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 future== | ==The future== | ||
| − | 2020 | + | In 2020: |
| − | + | ||
| + | * The Fifth Anti-Money Laundering Directive takes effect | ||
| + | |||
| + | * Property income of non-resident companies is subject to corporation tax | ||
| + | |||
In 2021 the proposed Registration of Overseas Entities Act will set up a beneficial ownership register of overseas entities that own UK property. | In 2021 the proposed Registration of Overseas Entities Act will set up a beneficial ownership register of overseas entities that own UK property. | ||
Budget 2018 provides: | Budget 2018 provides: | ||
| − | : | + | :the government will publish a consultation on the taxation on trusts, to make the taxation of trusts simpler, fairer and more transparent. |
| − | + | 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, law and taxation. | We face an extended period of change and uncertainty, in politics, economics, law and taxation. | ||
We will continue to live in fiscally exciting times. | We will continue to live in fiscally exciting times. | ||
| − | + | ||
==Thanks ...and request for help== | ==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. I owe a great debt to Jane Hunt and Ruth Shaw who work | + | I am very grateful to my colleagues in chambers, especially Robert Venables QC and Philip Simpson QC, for discussions on many aspects of tax. Martin Bontea as research assistant resolved many puzzles. I owe a great debt to Jane Hunt and Ruth Shaw who work diligently on this challenging text throughout the year. |
Comments from readers and professional clients continue to be of the greatest value and interest to the author. | Comments from readers and professional clients continue to be of the greatest value and interest to the author. | ||
| − | 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. | + | 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 22 February 2019, it seeks to state the law for 2019/20. |
| − | ==Further advice== | + | ==Further advice and Disclaimer== |
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 <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. <i>https://www.kessler.co.uk</i>. |
==TFD Online== | ==TFD Online== | ||
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(3) to correct or contribute to the book | (3) to correct or contribute to the book | ||
| − | TFD Online is moderated by Ross Birkbeck, a member of Tax Chambers, 15 Old Square, | + | TFD Online is moderated by Ross Birkbeck, a member of Tax Chambers, 15 Old Square, Lincoln’s Inn. |
| − | + | ||
| − | TFD Online is accessible on | + | 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. |
==Disclaimer== | ==Disclaimer== | ||
| Line 133: | Line 149: | ||
CIOT issue <i>professional guidance</i> with a disclaimer: | CIOT issue <i>professional guidance</i> with a disclaimer: | ||
| − | :While every care has been taken in the preparation of this guidance 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>CIOT, <i>Professional Conduct in Relation to Taxation</i> ( | + | :While every care has been taken in the preparation of this guidance 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>CIOT, <i>Professional Conduct in Relation to Taxation</i> (2016), para 1.12 |
<i>http://www.tax.org.uk/professional-standards/professional-rules/professional-conduct-relation-taxation</i> | <i>http://www.tax.org.uk/professional-standards/professional-rules/professional-conduct-relation-taxation</i> | ||
| Line 139: | Line 155: | ||
The second sentence is an improvement on the common but rather bizarre form that guidance on legal issues “does not constitute legal advice”.</ref> | The second sentence is an improvement on the common but rather bizarre form that guidance on legal issues “does not constitute legal advice”.</ref> | ||
| − | When that appeared in 2011 it seemed extraordinary. But | + | 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 of this work. But could anyone have thought that a claim might arise in absence of this disclaimer? |
==A note to the lay reader== | ==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: | + | 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== | ==Edition history== | ||
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| 3<sup>rd</sup> 2004 || 7<sup>th</sup> 2008 || 11<sup>th</sup> 2012 || 15<sup>th</sup> 2016 | | 3<sup>rd</sup> 2004 || 7<sup>th</sup> 2008 || 11<sup>th</sup> 2012 || 15<sup>th</sup> 2016 | ||
|- | |- | ||
| − | | 4<sup>th</sup> 2005 || 8<sup>th</sup> 2009 || 12<sup>th</sup> 2013 || 16<sup>th</sup> 2017 | + | | 4<sup>th</sup> 2005 || 8<sup>th</sup> 2009 || 12<sup>th</sup> 2013 || 16<sup>th</sup> 2017 || |
| + | |- | ||
| + | | 17<sup>th</sup> 2018 | ||
|} | |} | ||
Revision as of 12:58, 2 April 2019
Updated for 2019/20 edition
Contents
Scope of this book
There are three 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. 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 territorial limits to UK taxation.
The year 2018/19 in review
OTS stated in 2017:
- The UK tax code is widely cited as being the longest in the world”.[1]
This claim had been made at least since 2010.[2] In recent years Parliament added:[3]
FA 2012: 703 pages (a record) FA 2013: 648 pages FA 2014: 663 pages FAs 2015: 562 pages (two Finance Acts) FA 2016: 649 pages FA 2017: 813 (a new record)[4] FA 2018: 196 pages FA 2019 328
In the same period, OTS has not achieved perceptible improvement, at least in relation to the topics covered in this book. [5]
It is easier to talk of simplification:
- Our system remains too complicated ... We will therefore simplify the tax system. [6]
The reader may think that the satirists better identify the reality:
- We will further complicate the UK tax system so that large companies can no longer find loopholes. [7]
Scotland continues its fiscal drift from the UK, with Northern Ireland and Wales now following.
FA 2019 has introduced:
- An (unnecessary) CGT rewrite
- CGT on non-residents holding land and land-rich companies,
- Profit Fragmentation Arrangement code
The courts have decided many interesting cases, including Barclays Wealth v HMRC, Ardmore Construction v HMRC; R (oao) Hely-Hutchinson) v HMRC.
The BEPS multilateral instrument has come into force. OECD has noted, I think correctly:
OECD has produced the BEPS convention, noting, I think correctly:
- International tax issues have never been as high on the political agenda as they are today.
The growth in complexity is matched by a decline in HMRC efficiency. The House of Lords Economic Affairs Committee issued an important report, recording:
- 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.[8]
The future
In 2020:
- The Fifth Anti-Money Laundering Directive takes effect
- Property income of non-resident companies is subject to corporation tax
In 2021 the proposed Registration of Overseas Entities Act will set up a beneficial ownership register of overseas entities that own UK property.
Budget 2018 provides:
- the government will publish a consultation on the taxation on trusts, to make the taxation of trusts simpler, fairer and more transparent.
A call for evidence (misdescribed as a consultation document) was published November 2018.[9] 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, 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. Martin Bontea as research assistant resolved many puzzles. I owe a great debt to Jane Hunt and Ruth Shaw who work diligently on this challenging text throughout the year.
Comments from readers and professional clients continue to be of the greatest value and interest to the author.
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 22 February 2019, it seeks to state the law for 2019/20.
Further advice and Disclaimer
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 Ross Birkbeck, 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 this volume.
Disclaimer
CIOT issue professional guidance with a disclaimer:
- While every care has been taken in the preparation of this guidance 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.[10]
When that appeared in 2011 it seemed extraordinary. But nowadays no professional body issues guidance without a disclaimer.[11] 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 of 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 | 5th 2006 | 9th 2010 | 13th 2014 | |
| 2nd 2003 | 6th 2007 | 10th 2011 | 14th 2015 | |
| 3rd 2004 | 7th 2008 | 11th 2012 | 15th 2016 | |
| 4th 2005 | 8th 2009 | 12th 2013 | 16th 2017 | |
| 17th 2018 |
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.
- James Kessler QC
- Old Square Tax Chambers
- 15 Old Square
- Lincoln's Inn
- WC2A 3UE
kessler@kessler.co.uk
Footnotes
- ↑ 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.
- ↑ For the older references see the Introduction to the 15th (2016/17) of this work.
- ↑ 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) OTS Complexity Index (2012)
- ↑ This is the combined length of the two FAs 2017.
- ↑ 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. 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.
- ↑ Conservative party manifesto 2017 p.14 OOTLAR 2008 has 45 references to simplification
- ↑ Official Monster Raving Loony Party Manifesto 2017
- ↑ HLEconomic Affairs Committee“The Powers of HMRC: Treating Taxpayers Fairly” (2018) para 157. 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.”
- ↑ HMRC, “The Taxation of Trusts: A Review (Nov 2018)
- ↑ CIOT, Professional Conduct in Relation to Taxation (2016), para 1.12 http://www.tax.org.uk/professional-standards/professional-rules/professional-conduct-relation-taxation The second sentence is an improvement on the common but rather bizarre form that guidance on legal issues “does not constitute legal advice”.
- ↑ 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.”
