For Inheritance Tax (IHT) purposes, ascertaining where an individual was domiciled when they died is of critical importance. As a tax tribunal ruling showed, the answer to that question is often far from straightforward and can require minute analysis of all the major incidents of the deceased’s life, from cradle to grave.
The case concerned a pharmacist who died in his late 80s. His estate was valued at £2.48 million, of which about £680,000 was in UK assets, the remainder being held overseas. The executor of his estate asserted that he was domiciled in India when he died and that IHT was therefore not payable. HM Revenue and Customs (HMRC), however, took the contrary view.
Ruling on the matter, the First-tier Tribunal (FTT) noted that it was undisputed that his domicile of origin was not in England. He was born in British India in 1929 and spent most of his early life moving with his family between the subcontinent and east Africa. He relocated to the UK in the early 1970s, establishing a pharmacy business, and remained in this country for 43 years prior to his death.
The executor asserted that the pharmacist remained domiciled in India throughout his life. He always had a definite intention to return there on his retirement. Although he had to defer his planned departure from England for family reasons, he never abandoned that intention. His return to India was, for him, not just a vague possibility or a nebulous sentiment about dying in the land of his fathers.
The FTT noted that the considerable length of his residence in England was a starting point but was not determinative of an intention to live here indefinitely. HMRC had not identified a single event or moment in his life at which he resolved to make England his permanent home. He could, however, have formed such an intention over a relatively long period of time and proof of a Damascene moment was not required.
In dismissing the executor’s appeal, the FTT found that the pharmacist acquired a domicile of choice in England at some point prior to his death. It noted, amongst other things, that he had given up his Indian citizenship in 1961 in order to take up British citizenship. He made only two brief trips to India after moving to the UK and there was very little evidence that he maintained close ties to the land of his birth. Having settled permanently in England, he had, at most, only a vague and floating idea that he would one day return to India.