Domicile of choice – understanding the evidence of a life
It is well known that an individual under English rules can only have one domicile, one of which may be a domicile of choice. It is also well known that a domicile of choice requires both physical residence in a country and an intention to stay there permanently or indefinitely. We have to assess this in two situations – first, when looking at an individual with an English domicile of origin who has moved away to assess if they have acquired a domicile of choice elsewhere, and second, when looking at an individual with a non-UK domicile of origin who has moved to the UK to assess if they have acquired a domicile of choice in the UK. In both situations, the question is whether the domicile of origin has been displaced, but the tax consequences of it doing so may be very different. It requires a careful assessment of the factual situation and the individual’s thinking.
There has been quite a stream of domicile cases in recent years, and the First-Tier Tribunal Tax Chamber has just released its judgement in another, Ameet Shah (As Executor of the Estate of Anantrai Maneklal Shah Deceased) v HMRC, which is concerned with domicile of choice. HMRC contended that the deceased had acquired a domicile of choice in England and Wales whereas the son of the deceased argued that he had retained a domicile of origin in India.
The facts were not disputed. The deceased was in his mid-80s at the time of death, and he had lived in the UK since 1972. He was born in Karachi in 1929 (then in British India), spent his early childhood in Tanzania, attended secondary school in Kararchi, followed by university in Karachi and Gujarat, and then returned to Tanzania. He studied pharmacy in England in the 1950s but returned to Tanzania. In 1961 on the independence of Tanzania, he was offered and took British citizenship. In 1972 he moved to Mumbai from Tanzania before moving to the UK. He acquired a pharmacy business which he sold in 1994 but he continued to act as a locum pharmacist until 1997. His daughter died in 2009 and his wife in 2010. He sold his house in late 2010 and then moved to live in rented accommodation near his son, and subsequently in a flat owned by his son.
The deceased was clearly a long-term resident in the UK at his death. What was at issue was whether it could be demonstrated that there was a contingency upon which the deceased would leave the UK and whether he had retained strong links with the country of domicile of origin. It was argued that he had had a definite intention to return to India which had been deferred because of the health of his daughter and his wife and his wish to see his grandsons completing their education. HMRC argued that he had acquired a domicile of choice at some point after 1973 and had not abandoned this at the date of death. Key times which might have been contingencies when the deceased could have moved (leaving Tanzania in the 1970s, selling his business in the UK, retiring in the UK, the deaths of his daughter and wife) had come and gone, and his links with India did not seem strong.
The fact that HRMC could not pinpoint an exact time when the deceased formed an intention to remain in England indefinitely was not regarded by the Tribunal as a weakness – ‘An intention to remain does not have to be a Damascene moment and can develop over a relatively long period of time ‘ (para 50). They bore in mind the statements in Agulian and another v Cyganik  EWCA Civ 129 about looking back at the whole of an individual’s life, the statements in Holiday v Musa  EWCA Civ 335 about balancing continuing connections and the statements in Henwood v Barlow Clowes International Ltd [20008[ ECWA Civ 577 that a person’s connections with their domicile of origin may not be large if they were brought up elsewhere.
Taking everything into account across the course of his life, the Tribunal found that the deceased ‘had, at most, only a vague and floating idea of moving to India at some point ‘(para 77). There were no significant connections to India and no concrete plans to move to India on retirement. Instead, the Tribunal found that over the course of his life, close family was what was important and seems to have been behind his decisions. Although there was some indication that he may have been considering a visit to Bangalore to visit a retirement village, given that his earlier moves had generally been to where his family was, rather than to moving to an unknown area with no nearby family, the Tribunal considered that it was unlikely that the deceased would have moved.
Well advised clients often prepare or contribute to domicile statements. These will trace chronological life events but this case is a reminder that looking at the important elements of a person’s life and the decisions and choices they have made is what the court will do and what advisers have to understand.