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13 Jun 2023

Revisiting the Concept of Domicile: A Review of Jeremy Coller v HMRC – Chimezirim Echendu


Domicile

The remittance basis available to individuals domiciled outside the UK makes the question of their domicile an important one if they are UK resident. In the recent case of Jeremy Coller v HMRC [2023] TC 8738, the First Tier Tribunal (FTT) revisited, in quite exhaustive fashion, the general rules as they relate to the domicile of an individual.

The concept of domicile here is a common law one and refers to a person’s permanent home, not their tax residence as in some civil law countries, and a person can only have one domicile at any given time. For this subject the UK is broken down into its constituent parts, i.e. you have a Scottish or an English domicile and not a UK one.

There are three types of domicile: domicile of origin, dependence and choice.

A domicile of origin is acquired upon birth, and will follow the father’s domicile where the child’s parents are married (and the mother’s in any other case). The domicile of origin is the most tenacious domicile and cannot be shaken off; however, it can be replaced by cutting ties clearly with the domicile of origin and obtaining a domicile of choice after attaining majority.

A minor will have a domicile of dependence and this domicile is dependent on their parent’s domicile.

The issue of domicile is an extremely fact sensitive one and will be determined on a case-by-case basis, and this segues into our discussion of Coller v HMRC.

Facts

Jeremy’s father, John, was born in Austria in 1918 and arrived in England in 1938 with his parents and sister fleeing Nazi persecution. He had a domicile of origin in Austria. He volunteered in the British Army during World War II, and at the end of the war set up and ran businesses in London. He lived in London and married Sylvia in 1954 in London. All his children, including Jeremy (born in 1958), were born, raised and educated in England. John passed away in 1968.

Jeremy’s mother, Sylvia, was born in Dublin, Ireland in 1930. She had an Irish domicile of origin. After the death of her husband in 1968 she continued to live in England with her children, and lived in England until her death in 2022.

Jeremy, on attaining majority, continued to live in England apart from a gap year when he lived in Israel and France. He was educated in England and commenced his career after graduation in England. He acquired and owned properties in England, including his first childhood home.  He got married in London and lived in London with his wife and children. As at April 2012 he had been UK resident since birth for 55 years excluding the gap year and a 4 month secondment. He had no non-UK personal ties or connections apart from a rented accommodation in Israel.

Issues

The issue that fell for determination by the FTT was whether Jeremy had an English domicile of origin, dependency or choice?

  • The domicile of origin point hinged on whether, at the time of his birth, his father, John, had acquired a domicile of choice in England.
  • The domicile of dependency question was based on whether his father had acquired a domicile of choice before his death in 1968, and which metamorphosed into a domicile of choice for Jeremy when he attained majority in 1974.
  • The alternative was whether his mother acquired a domicile of choice after her husband’s death in 1968 such that Jeremy had a domicile of dependency which became a domicile of choice when he attained majority in 1974.
  • Finally, if he did not have a domicile of origin or dependency in England because of his parents’ non-English domicile, did he acquire an English domicile of choice on attaining majority between 1974 and 5 April 2012.

Arguments

The appellants argued that John, Sylvia and Jeremy had never acquired a domicile of choice in England, insisting that there was no evidence to show that they had come to a settled intention to make England their home. They argued that John’s desire was always to settle in the South of France. Similarly, it was their contention that Sylvia never really felt settled in England and her intention was always to return to Ireland.  Jeremy also contended that he had never formed the intention of settling down permanently in England and had only remained because his wife did not intend to leave England.

HMRC on the other hand argued that there was clear evidence on the relevant dates in question that Jeremy and his parents had acquired a domicile of choice in England. They contended that the parties had no ties or connections with their acclaimed domiciles of origin (Austria and Ireland). They had acquired properties in England and had a settled pattern of life in England.

Decision

The FTT found that John arrived in England because he was compelled to do so to escape Nazi persecution. He severed any connection with Austria as he retained no ties or attachments with it. His parents both died and were buried in England. On the evidence he clearly established a domicile of choice in England as he bought houses, started businesses, married and brought up three children. Further, there was nothing to show that he had the intention of settling in any place outside England and, thus, both at the time of Jeremy’s birth and at the time of his death John had a UK domicile of choice.

Equally, the FTT found that Sylvia, Jeremy’s mother, had acquired a domicile of choice in England at the date of her husband’s death and when Jeremy attained majority. The FTT stated that although the appellants had argued that her intention was to always return to Ireland, she remained resident in England after her husband’s death in 1968, remarried in England, acquired properties with her new husband, and although she could have returned to Ireland at different intervals between 1968 and 2022 when she died, she never did and remained resident in England. Furthermore, she was deeply settled in England both at the time of her husband’s death and when Jeremy attained majority.

In addition to Jeremy having an English domicile of origin because his father had an English domicile of choice at his birth, the FTT held that on 5 April 2012 Jeremy was domiciled in England based on the length of time he had spent in England and the substance of the residence. He was born and educated in England. He got married and worked in England and his children were all educated in England. The FTT agreed that Jeremy’s intention was to reduce his involvement in his business and move his permanent home to Israel. However, the intention to move to Israel was only formed and evidently acted upon in 2013.

Conclusion

This decision is a reminder that the assumption that a person whose father was born outside of the UK cannot have a UK domicile of origin is too simplistic. If a child is born in the UK, and at the time of birth their father has acquired a UK domicile of choice, the child will have a UK domicile of origin.

If you want to discuss further, please contact me, Chimezirim Echendu:

Chimezirim Echendu

International Associate

M: +44 (0)7496 410 126 or

E: chimezirim.echendu@uk.Andersen.com


Chimezirim Echendu

Chimezirim holds an LLM in international taxation from King’s College, London. A common law qualified lawyer, he has experience advising clients on both contentious and non-contentious tax matters. He advises clients on residence of companies and individuals, double taxation treaties, and international tax issues in alternative investment funds.

Email: Chimezirim Echendu