An explanation of cause is not a justification by reason (CS Lewis)

The non-dom rule, a relic of the British Empire, appears all but set to go. In brief, the rule provides that non-domiciled individuals pay tax only on income earned in the UK and to pay on a remittance basis for that money brought into the UK. It also carries many other tax advantages relating to CGT and Stamp Duty. These details need not be teased out on this forum and indeed others have explained in far greater detail the general idiosyncrasies of the non-dom rule.

I wish here to touch upon one particularly strange and awkward feature, and it relates to me. It should first be recalled that domicile of origin is generally determined by that of a child’s father, if legitimate, or mother, if the child is illegitimate. This domicile of origin remains unless one acquires a new domicile by choice or dependence. The former arises where a person intends to make the country of residence their sole or principal permanent home and continues to reside there indefinitely. The latter concerns children under the age of 16 and persons suffering from mental ailments who will be considered to have the domicile of either their father, if legitimate, or mother, if illegitimate.

Now, returning to me, I was born and raised in the Republic of Ireland to two Irish born parents. My domicile of origin accordingly is the Republic of Ireland. Since 2012, I have lived in the UK, and will in reality probably live here for the rest of my life, but have the intention of returning to Ireland. Thus, I maintain my domicile of origin.

If I were to marry a British woman and have a child with her, the curiosity of the non-dom rule is that this British born child could live in the UK for their entire life also and yet still be considered non-dom! However one might feel more generally about the non-dom scheme, this feature surely should appear to all to be uncomfortably benevolent (and socially regressive, one might note).

With both the main political parties now scrutinizing the rule (here and here) however, the writing looks like it is on the wall for both this historical anachronism and my hypothetical British born child. The quote above from CS Lewis appears particularly apt in this regard for whilst we may be able to reveal the origin of the idiosyncratic feature explained herein, we are found wanting for justification in this day and age.


About taxatlincolnox

Tax law academic. With this blog, I seek merely to contribute to the debate. All thoughts are mine, of course.
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