In this connection, the Government released a document entitled: “Reviewing the residence and domicile rules as they affect the taxation of individuals: a background paper”.
The stated aims of this paper were to:
· describe the current rules;
· analyse international experience; and
· develop the principles that the Government believes should underpin any change.
In particular, the Government stated that such principles:
· should be fair;
· should support the competitiveness of the UK economy; and
· should be clear and easy to operate.
These principles gave rise to a number of questions and issues, upon which the Government sought comment from all interested parties. In particular, contributions from those most affected – both employees and employers – were sought.
It is understood that the Inland Revenue received a number of representations and comments on the way the residence and domicile rules should operate. Indeed, following some activity as regards collecting data on non-UK domiciled employees, a number of commentators thought that a change to the rules would be announced in the 2004 Budget. However, nothing materialised.
The Government has as part of its 2005 Budget offering stated that it is continuing to review the residence and domicile rules as they affect the taxation of individuals and will proceed on the basis of evidence and in keeping with its principles. It would welcome further contributions to the debate, which will then be taken forward by the publication of a consultation paper setting out possible approaches to reform.