icaew representation 109/17 tax representation - ICAEW.com

Oct 10, 2017 - domiciliaries) through a foreign company or partnership;. - relevant loans .... transitional issues due to a lack of data. There is no ... In the current Finance Bill 2017-19 the window for cleansing is 2 years (6 April 2017 to 5 April ...
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ICAEW REPRESENTATION 109/17 TAX REPRESENTATION

FINANCE BILL 2017-19, CLAUSE 15, CLAUSES 29,30,31,33 & SCHEDULES 8 - 10 DOMICILE, OFFSHORE TRUSTS, OVERSEAS PROPERTY ETC

Text of submission by ICAEW Tax Faculty on 10 October 2017 to House of Commons Public Bill Committee in response to invitation dated 14 September 2017 to “have your say”

Contents Paragraphs Who we are

1

Summary of the measures

2-3

Introduction

4 - 12

Executive summary

13

Comments on Finance Bill 2017-19 Clause 15

14 - 16

Clause 29 and schedule 8

17 - 149

Clause 30

150 -153

Clause 31 and schedule 9

154 - 158

Clause 33 and schedule 10

159 - 186

Who we are

Appendix 1

The ICAEW Tax Faculty Ten Tenets

Appendix 2

Cleansing and foreign exchange example

Appendix 3

Explanatory notes for finance act 2008 changes to the remittance basis

Appendix 4

The Institute of Chartered Accountants in England and Wales Chartered Accountants’ Hall Moorgate Place London EC2R 6EA UK icaew.com/taxfac

T F E

+44 (0)20 7920 8646 +44 (0)20 7920 0547 [email protected]

ICAEW tax representation: FB17-19 cl 15, cl 29,30,31,33 & Sch 8-10 Domicile, offshore trusts, overseas property etc

FINANCE BILL 2017-19, CLAUSE 15 & CLAUSES 29,30,31,33 & SCHEDULES 8 -10 DOMICILE, OFFSHORE TRUSTS, OVERSEAS PROPERTY ETC

WHO WE ARE 1. Please see Appendix 1. SUMMARY OF THE MEASURES 2. The main changes, which will be effective from 6 April 2017, are as follows: 





Anyone born in the UK with a UK domicile of origin who is UK resident in a tax year will be deemed domiciled in the UK for all tax purposes. This is subject to a period of grace for Inheritance Tax (IHT) purposes if the individual was not UK resident in either of the preceding two tax years. A long term resident foreign domiciliary – one who has been UK resident in at least 15 of the immediately preceding 20 tax years – will be deemed domiciled in the UK. Provided they are not also a formerly domiciled resident such individuals can benefit from reliefs/transitional provisions and offshore trust protections. The scope of IHT will be extended so as to apply to: - UK residential property owned by foreign domiciliaries (or trusts settled by foreign domiciliaries) through a foreign company or partnership; - relevant loans (broadly a loan where the funds are used for the acquisition, maintenance or enhancement of an interest in UK residential property); and - security, collateral or guarantees given on such a relevant loan.

3. Also effective from 6 April 2017, a limited number of relaxations to Business Investment Relief (BIR) are introduced to encourage greater take up of the relief. The opportunity is also taken to legislate for HMRC’s view that for BIR purposes corporate partners are not treated as carrying on a trade by virtue of the partnership carrying on a trade. HMRC has always interpreted the legislation in that way but until this change it was not shared generally. INTRODUCTION 4. By way of background, and in the interest of having links to all of the HM Treasury/HMRC material and all our responses in one place, we have charted the course of these proposals below. 5. As will become evident, various versions of draft legislation have been published in the course of getting to The Finance Bill 2017-19 clauses. One of the minor issues from draft to draft has been identifying the changes made. In the interests of speed and efficiency for all concerned parties, we encourage both HMRC and HMT to either publish tracked changes (redline) versions of new legislation alongside the clean versions or to publish WORD copies so that a quick track changes comparison can be ca