I am not sure I can add much to this tweet:
This tax treatment of wealthy non-doms - below - is in sharp contrast to the inflexible rules for the Self-Employement Income Support Scheme which denies help to millions of selfemployed who are just outside the dates or just under the 50% profits rule. pic.twitter.com/kVRM5FLoFU
— Paul Lewis (@paullewismoney) May 17, 2020
How is it HMRC can play make believe for the wealthy but show so little understanding to others?
Of course the rule of law does need to be upheld, but with sensitivity.
Cases like this, which simply evidence that a blind eye is being turned to tax owed by the wealthiest, really do not help HMRC's case When it claimed that it is an even-handed institution. The overwhelming evidence is that it is not.
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“Trapped”?? They are here by choice. A man has just flown from New Zealand to the UK and then by borrowed car to Skye to “isolate”. Tax them.
(https://www.thenational.scot/news/18456205.ian-blackford-says-stay-away-authors-12-000-mile-trip-skye/)
“How is it HMRC can play make believe”
“a blind eye is being turned to tax owed by the wealthiest, really do not help HMRC’s case”
HMRC are applying the law. Do you not agree that the Coronavirus outbreak amounts to ‘exceptional circumstances’ beyond the control of the individual? I know that you are often years behind with your knowledge of tax law (you missed that dividend tax credits were abolished four years ago) but the statutory residence test has been around since 2013 and HMRC must follow this.
No blind eye is being turned to anything by HMRC. They are duty bound to follow the law as laid down by parliament. It seems a blind eye is being turned by you to the law so that you can unfairly score a cheap anti-HMRC point. This really does not help your case.
It is playing ‘make believe’ to say that the law should be what you wish it were not what it actually is.
Argue that the law should be changed if you want, but don’t criticise HMRC for following it.
The term exceptional circumstance is open to interpretation
The whole point I am making is that HMRC do say in a fashion that appears biased
With respect, it’s you who is wholly missing the point here
Please read what was written
“The term exceptional circumstance is open to interpretation
The whole point I am making is that HMRC do say in a fashion that appears biased”
Biased how? HMRC have accepted that these are exceptional circumctances. Appeals against penalties for late filing are being allowed, payment deferrals are being allowed, HMRC enquiries are on hold.
To show bias you have to show that there are groups where HMRC are saying that the Coronavirus pandemic does NOT amount to exceptional circumstances.
Can you give any example where HMRC are saying this is NOT an exceptional circumstance? If you cannot, you cannot claim bias.
I presume you are entirely deliberately missing the points I and others have made
I do not post to debate with those wilfully setting up straw man arguments
Answer the issue I raised or stop wasting my time
Are you really suggesting that HMRC should spend time and money litigating to determine if someone, who had plans to leave the UK but was forced to remain here by travel restrictions imposed to address the current pandemic, is subject to “exceptional circumstances” or not? I think the current circumstances are “exceptional” – they are certainly not usual or typical.
A similar point arises in relation to business executives, who found themselves stuck in the UK due to the travel restrictions and who would rather be working elsewhere but are forced to take business decisions while they are here, and whose companies might risk being treated as resident in the UK or as having a UK permanent establishment due to their presence in the UK.
And then the same points apply in reverse to UK people who were overseas when travel restrictions were imposed – on holiday in Milan, say, and who found themselves stuck in Italy longer than they had expected.
The OECD mentions similar “force majeure” disregards in countries such as Australia, Iceland, and Ireland. http://www.oecd.org/coronavirus/policy-responses/oecd-secretariat-analysis-of-tax-treaties-and-the-impact-of-the-covid-19-crisis-947dcb01/
This is more about residence, incidentally, not domicile, and the same statutory residence test, with the same exceptions, applies to people who are poor of course. But I suppose it is a convenient brickbat to beat any foreigners who have the temerity to visit the UK.
Thet litigate many things significantly less important
So why not this? Especially in a marginal case
But you’re still missing the key point, which is why is discretion discretionary?
That is what I was arguing
Well, I suppose we could see what HMRC’s guidance, published before the coronavirus pandemic, says about the test of “exceptional circumstances”, and then look at the new guidance to see if they have announced a new and unusual concessionary treatment to benefit the wealthy, or have just announced (shock horror) that they accept the current situation is indeed exceptional, to avoid having to deal with hundreds or thousands of claims or appeals that would undoubtedly succeed.
https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm13210
“Whether circumstances can be regarded as exceptional for the purpose of the SRT will always depend on the particular facts, an individual’s circumstances and choices available to them.”
https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm13240 gives some examples and says
“Exceptional circumstances will normally apply where the individual has no choice concerning the time they spend in the UK, or in coming back to the UK. The situation must be beyond the individual’s control.
…
The type of events which may give rise to exceptional circumstances will be, by their nature, out of the ordinary and it is difficult to be prescriptive about what characteristics such an event would exhibit. However, local or national emergencies, such as civil unrest, natural disasters, the outbreak of war or a sudden serious or life threatening illness or injury to an individual are examples of circumstances that are likely to be exceptional.
…
For days spent in the UK due to exceptional circumstances to be ignored, an individual must intend to leave the UK as soon as those circumstances permit. If an individual does leave the UK once the exceptional circumstances have ended, HMRC will usually accept this as evidence of such an intention.”
It even gives the following example: “… if an individual is a passenger on a commercial aircraft that is forced to make an emergency landing in the UK, and there is no available onward flight to their original destination for 2 days afterwards. The 2 days that would otherwise count as time spent in the UK would be ignored due to exceptional circumstances.”
And then what the new guidance actually says: https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm11005
“The coronavirus (COVID-19) pandemic may impact your ability to move freely to and from the UK or, require you to remain unexpectedly in the UK. … Whether days spent in the UK can be disregarded due to exceptional circumstances will always depend on the facts and circumstances of each individual case. … However, if you are quarantined … advised by a health professional or public health guidance to self-isolate … advised by official Government advice not to travel … unable to leave the UK as a result of the closure of international borders … asked by your employer to return to the UK temporarily … the circumstances are considered as exceptional.”
Where is the beef?
(That said, Paul Lewis’s comment about undue restrictions in the Self-Employment Income Support Scheme, and its inflexible application, is bang on the money. But it is nothing to do with non-doms or the statutory residence test.)
So you wholly agree: discretion is used partially
And that was the whole point of this
Everything else misses the point – or proves it
No, I don’t agree that this application of paragraph 22, Schedule 45 Finance Act 2013 involves HMRC exercising discretion in any meaningful sense. http://www.legislation.gov.uk/ukpga/2013/29/schedule/45/enacted
Para 22 simply says, for the purposes of the statutory residence test:
“If P [i.e. the relevant person] is present in the UK at the end of a day, that day counts as a day spent by P in the UK”
but the legislation itself includes cases which do not count: the first is arriving one day, leaving the next, and not engaging in activities unrelated to passage through the UK in the middle; and the second is:
“P would not be present in the UK at the end of that day but for exceptional circumstances beyond P’s control that prevent P from leaving the UK, and P intends to leave the UK as soon as those circumstances permit.”
The legislation even gives: “Examples of circumstances that may be “exceptional” are (a) national or local emergencies such as war, civil unrest or natural disasters, and (b) a sudden or life-threatening illness or injury.”
That plainly applies, and (like HMRC) I don’t see any point arguing about it, if someone’s factual position fits that description.
I do not see how applying that legislation to the coronavirus situation (again, this is the statutory residence test that applies to every natural person, rich or poor, not just even tax-dodging non-doms with horns, etc.) involves any kind of discretion, or make believe, or turning a blind eye to tax owed by the wealthiest, or giving concessionary treatment to the rich.
It is simply HMRC applying the law as they should.
And you still miss the point that Paul Lewis and I made
Why was the discretion made that way?
As I said “Paul Lewis’s comment about undue restrictions in the Self-Employment Income Support Scheme, and its inflexible application, is bang on the money. But it is nothing to do with non-doms or the statutory residence test.”
The new statutory residence test is pretty mechanical in its approach, base on day counting, and has much less scope for discretion than the old impressionistic test of residence. Which is good in some ways, as people know where they are and there is less scope for argument, but bad in others, as there are clear lines so it is easier for well-advised people to manage their affairs to stay just on the “right” side of the line. In most cases I’d prefer may laws to be based on underlying principles rather than the strict application of written rules.
The fault is not with the statutory residence test, which is operating much as it should. It is with the strict rules of the COVID support schemes, applied inflexibly (another case in point is people making applications for universal credit which are declined, but then also losing access other benefits they were receiving before they made the application). That may be systematic bias, and you know who to blame.
The reference to “wealthy non-dons” “make believe” and “blind eye” is a red herring (and a dog whistle).
It is not “one rule for the rich” as the title of your post suggests. It applies to every person and is mainly aimed at those who are not usually resident in the UK. They can be rich or poor. They might be a billionaire oligarch or they might be a nurse or they might be a fruit picker.
Also, the reference in the Sunday Times article to non-doms is misleading because the rules do not apply solely to non-doms.
“Why was the discretion made that way?”
It’s not discretion, it’s a matter of law. Discretion is not the same as an exception provided in law. All kinds of exceptions are provided by law, in tax and outside. That does not mean the Self Employment Income Support Scheme is perfect.
If you want to argue that a Philippine care home worker who would only be UK tax resident by virtue of the fact that she cannot return home, should pay tax on a gain she has made on the disposal of her Philippine home and which she needs to remit to feed or house herself in the UK, then by all means do so.
There is no way that HMRC would win a court case arguing that COVID-19 is an exceptional circumstance. There is no “discretion” being applied here, only the law. If you or Maugham think otherwise, feel free to litigate HMRC in the courts. Although knowing Maugham, he would probably ask supporters to crowd fund his suits which he knows has little chance of succeeding, merely for the publicity, despite the ample assets he holds himself.
Ian
What you continually miss – and which Paul Lewis, Jo Maugham and I have not missed – is that the bias is systemic
The bias is inbuilt to the law
So, this is a reasonable excuse but reasonable excuse in many areas of law is nigh on impossible to achieve
And your comment on Maugham, very politely, shows just petty (at best) you must be
If you’re here to defend privilege – and it seems you are – please don’t call again
Richard
In one sense it is quite good that in unusual times HMRC can respond flexibly and generously to a group of their users…… but then I get this flood of anger sweep in as we know that this sort of treatment is reserved for a small group of the rich and powerful. Ordinary folk trying to deal with the tax/benefit system see a different face.
….. and just as I calm down I reflect on the nonsense that is ‘non-dom’ taxation…. and I am grumpy again.
Time to get into the garden!!
Being grumpy is good
Surprisingly I am not, unless you scratch the surface and then I am…
It’s all because that ‘small group’ are still seen as ‘wealth creators’ – I’m sure of it or providers of ‘inward investment’ .
It’s total bollocks of course.
It is, of course, just that
Is it not time to abolish the status of non-Dom? I believe is it a relic of the days of Empire? Does it serve any purpose?
Yes….
Haven’t I already discussed that recently?
Oh dear. The article is wrong and the tweet is wrong.
The rule that’s being relaxed is nothing to do with non-doms. The whole point of being a non-dom is that you can spend as much time as you like in the UK. The relaxation is around the statutory residence rule, which is relevant to people who normally spend more than (broadlyt) 90 days outside the UK but are now “trapped” here. Some of those may be wealthy tax exiles. Some may just be normal ex-pats (or indeed foreigners visiting the UK).
As a tax expert you really should have spotted this, Richard.
The residency rule has application to non-Dom’s too…..maybe you were not aware of that?
Yes it does, but that’s irrelevant and misleading.
But the point I keep making is not
Talking of different rules… I wondered if you had responded to the Commons International Trade Committee inquiry into Freeports: https://committees.parliament.uk/work/231/uk-freeports/
This is in addition to the Government consultation which I saw you intended to respond to. Deadline Friday.
I am running out if time to do so
I started a draft but a great deal of work is behind schedule