The point of getting this certification is to enable the bank to pay interest on his deposits gross, that is, without withholding tax being deducted. The other options are that tax will be deducted at source or that the interest will be reported to the UK authorities.The European savings directive has come into force as a form of cross-border control to stop people from using offshore savings vehicles to avoid income tax. It is also supposed to fight in the war against money-laundering by criminals and terrorists. It is plainly a problem that many people have used these vehicles deliberately to avoid tax but there are also many people who mistakenly believe that they do not have to pay tax on money they have deposited offshore. But just because the interest is paid gross does not mean it should not be declared. Carlos is in this position but with the added complication of having a foreign domicile. He will not have to pay tax on income from foreign sources, as long as it is not remitted to the UK. He is happy that this money is never used for any UK purposes but does not want to have to go as far as reclaiming the tax if it does not have to be paid. I explained to Carlos that this request presents me with some difficulty. His bank has suggested that confirmation of domicile status can be provided by his financial adviser but, strictly speak- ing, the only way one can get proper certification in the UK is from HM Revenue & Customs. However, it seems that many offshore banking institutions are content to have other forms of certification. A further problem arises because it is merely a matter of opinion as to the nature of one’s domicile status. I explained to Carlos that he can go to his normal tax office to ask for certification and it is a case of giving fundamental details such as name, address and so on. I understand that is is currently taking a couple of months to do this, however. Having said all this, I have written Carlos a letter stat- ing that, subject to these various caveats, it is my opinion that he can claim to be non-domiciled in England and Wales as far as UK tax is concerned. This is based on the information he has given me during the various meetings and conversations we have had. The pertinent points are that he was born and raised in Venezuela and that his father is Venezuelan. He holds a Venezuelan passport and, although he has now received a UK passport, this is by virtue of his mother’s being British. The UK pass- port facilitates him working here and travelling. When he came to the UK in 1999, Carlos was only intending to be here for a short while but he stayed longer because of his work. He has said it was never his intention to settle in the UK as his home and at various times he has planned to move to Spain. He has now said he aims to leave the UK permanently next year to return home to Venezuela. I think the main point is that, having a Venezuelan domicile of birth, he has never intended to renounce or to choose a UK domicile of choice. He clearly views Venezuela as being his home. Again, I stressed to Carlos that this is merely my opinion based on the information he has given me. I also stressed that even if this income is paid gross and is subject to the remittance basis by virtue of non-domicile status, it is necessary for him to declare this income on his tax return each year, using the foreign pages which cover this situation. As with a lot of current legislation aimed at tack- ing fraud and money laundering, there is a risk that compliance puts financial advisers in a very tricky position and great care should be exercised. Most advisers are not going to want simply to refuse their clients’ requests in areas such as this.
Trying to generate a high income from investments during times oflow inflation, low bond yields and low interest rates can be very difficult. To try and achieve this in the current environment, many funds are investing in very high-yielding stocks, or higher-yielding bonds – which may mean greater risk to investors’ portfolios. Equity income funds, […]
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IFAs who steer clear of healthcare cover are missing a decent chance to strengthen their offering and increase the lifetime value of their clients.
Those Lanson girls really are eager. Ex-Money Marketing hack now at the Daily Mail James Coney got a pleasant call from a Lansonette with a press release which she described as being “really relevant at the moment”. Was it on the subject of the party political conferences taking place over the next few weeks, the […]
Rob Burnett, Head of European Equities, Neptune An inflection point was reached during the middle of 2016 as investors realised that interest rates simply could not fall any further. We believe this was the catalyst for the outperformance of value strategies over quality growth, with the share prices of banks, materials companies and energy stocks […]
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