An application for a closure notice in respect of an HMRC inquiry into the appellant’s domicile status was refused, as HMRC was not bound by its previous confirmation of the taxpayer’s domicile.

The appellant, a UK national with a UK domicile of origin, spent significant amounts of time living in the Far East. In December 2015, HM Revenue and Customs (HMRC) opened an inquiry into the appellant’s tax return for 2013/14. The appellant’s domicile status was the only material point outstanding.

In October 2002, the appellant’s advisers had written to HMRC explaining that, in September 2002, the appellant transferred £273,677 (from funds held outside the UK) to a discretionary trust. This sum was above the inheritance tax (IHT) nil rate band, and the contribution would, therefore,  have  given  rise  to   an  IHT  liability  of some

£4,735 if the appellant was UK domiciled at any time in the three years up to the transfer.

The advisers explained why in their view the appellant was domiciled in Hong Kong. Following further correspondence, HMRC confirmed in March 2003 that the transfer did not attract IHT. In doing so, HMRC was accepting that the appellant had acquired a domicile of choice in Hong Kong.

At the time of the correspondence with HMRC in 2002, it was expected that the appellant would stay in the UK for two years, whereupon he would return to Hong Kong. However, events turned out differently, and the appellant was resident in the UK for tax purposes for 13 years.

The appellant applied to the First-tier Tribunal (FTT) for a direction that HMRC issue an enquiry closure notice for 2013/14 within a specified period, as  (among  other things) HMRC had previously determined that the appellant acquired a domicile of choice  in  Hong Kong, and were effectively ‘stuck with’  the  consequences  of that   determination.

However, the FTT disagreed. Income tax and capital gains tax are charged by reference to separate tax years. A determination of fact made in relation to one tax year was not binding in relation to a later tax year. Even if, in 2003, a court or tribunal had decided that the appellant had a Hong Kong domicile of choice or HMRC and the appellant reached an agreement under TMA 1970, s 54 to this effect, there was no impediment to HMRC arguing, in proceedings relating to the tax year 2013/14 tax year, that the appellant never acquired a Hong Kong domicile of choice: The appellant’s application was refused.

Gulliver v Revenue and Customs [2017] UKFTT 222 (TC)