How will non-domiciles and non-residents adapt going forward and how can we best advise them? Amidst the many specific strategies and creative thought, a few general trends are emerging.
"...the perils of proceeding without planning are great…"
Firstly, with careful planning and by taking advantage of the opportunities embedded in the legislation, many foreign domiciles and non-residents may in reality face few additional tax liabilities that cannot be managed. Conversely the perils of proceeding without planning are great. Protected settlements – the new golden trusts – are clearly a huge opportunity. However, trust structures, their activities and investments need very careful legal analysis.
If you take advice there is certainly a great deal that can be done, but how will non-residents and foreign domiciles know to take advice? By then the damage may be done. All that careful tax planning and all of those expensive fees are wasted. The greatest burden of the new regime may therefore be the need for constant vigilance. Whilst careful monitoring may be critical, pre-empting mishaps would be wise, whether with appropriate deed or adjuster clause, and jurisdictions demonstrating the flexibility to assist when mistakes are made may be a valuable consideration. Finally, it is critical to factor into all new thinking the attitude of the UK taxing authorities to tax planning. Otherwise, the reality for many may be extensive and intrusive tax investigations.
Compliance is particularly difficult for non-resident individuals, directors and trustees – firstly the rules are complex, secondly, they may not be aware of the rules at all or how they link within the UK system and finally the timeframes for reporting are extremely tight.
So how best to face the future? Whilst I have no crystal ball, the ordeal of Requirement to Correct has thrown up some interesting and helpful suggestions. Firstly, a comprehensive review may offer the best base from which to move forward. Secondly do not be overly optimistic when viewing domicile and residence. Finally, take expert advice and follow it. It may offer invaluable protection.
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