Non-doms must heed advice from experts as uncertainty grows, cautions Grunberg & Co

Those who are non-domiciled individuals (non-doms) in the UK for tax purposes are no strangers to the headlines in 2024, remarks the London-based firm, with beneficial tax treatments being significantly curtailed by recent reforms.

James Thomson, Tax Manager at Grunberg & Co, said: “Public attention became focussed on the non-dom status and the remittance basis of taxation around April 2022 when businesswoman Akshata Murti, wife of then-Chancellor, Rishi Sunak, and her non-dom status made headlines.

“This drew political attention to the remittance basis, which likely precipitated the recently announced  .”

However, warned the firm, less favourable tax outcomes for non-doms are often compounded by a failure to act on the advice of professionals – as highlighted by the case of one such individual that caught the attention of the accountancy sector this year.

Benoit d’Angelin found himself in hot water with HMRC due to his 2016 tax bill, when he claimed that £1.5 million of foreign income invested into his UK-based company was eligible for business investment relief – thereby allowing it to be remitted to the UK tax-free.

He then used director’s loans to meet personal expenses, which HMRC viewed as profit extraction outside the remittance basis, which ultimately landed d’Angelin with a £675,000 tax bill. He appealed, but the decision has now been upheld.

James continued:This is an interesting case where a non-domiciled individual was denied Business Investment Relief after investing foreign funds into his company and using a director’s loan account for personal items.”

It appears the taxpayer did not fully heed the professional advice received and the personal loans could be viewed as a potentially chargeable event due to him receiving an abnormal benefit related to the investment.

“There was arguably an extraction of value received tax-free from the target company that was not provided in the ordinary course of business on an arm’s length basis, exposing the availability of the tax relief on the investment of foreign funds into the company to attack by HMRC.”

Legislation on non-dom tax matters is not always clear and will soon be changed significantly. Contact us today to schedule a consultation and ensure you are prepared for the upcoming tax changes.

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