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Taxation: Domicile

Volume 457: debated on Thursday 8 March 2007

To ask the Chancellor of the Exchequer (1) what assessment he has made of the compatibility of HM Revenue and Customs’ policy in relation to domicile and non-domicile tax status with the Race Relations Act 1976; (125822)

(2) what legal advice HM Revenue and Customs received on domicile and non-domicile tax status and race discrimination laws in each of the last four years;

(3) what plans he has to review domicile and non-domicile tax status;

(4) how many UK citizens have non-domicile tax status; and how many investigations HM Revenue and Customs undertook into the tax returns of those with non-domicile tax status in each of the last 10 years for which figures are available;

(5) how much tax he estimates was avoided by those declaring themselves non-domiciled in each of the last five years for which figures are available.

We consider that policy in relation to domicile and non-domicile tax status is compatible with the Race Relations Act 1976. All Acts of Parliament are subject to compatibility tests under the provisions of the Human Rights Act 1998, which considers issues of discrimination in their widest context.

HM Treasury is leading the on-going review of residence and domicile as these affect the tax liability of individuals.

No information is available on the number of UK citizens with non-domicile tax status or on the number of investigations undertaken by HM Revenue and Customs (HMRC) into the tax returns of those with non-domicile tax status. Overall, approximately 110,000 individuals claimed non-domicile tax status through self assessment tax returns in the year 2004-05.

No estimates of potential UK tax liability are available. In general, individuals do not have to inform HMRC of their foreign income or gains unless this is relevant to their UK tax liability.