The significance of domicile
The professional negligence case of Mehjoo v Harben Barker has focused the attention of the accountancy profession on the issue of domicile. In that case, a non-UK domiciled individual, (“non-dom”), Hossein Mehjoo, won a claim in the High Court against his accountants who had failed to consider his domicile status in providing tax advice. We are currently awaiting the outcome of the accountants’ appeal. Whatever the decision, it has highlighted the need for practitioners to note domicile status in their client records and tailor their advice accordingly.
The incidence of UK inheritance tax (IHT) depends on a person’s domicile. An individual who is UK domiciled or deemed domiciled will be subject to IHT on all his worldwide assets, while an individual who is not UK domiciled will benefit from the “excluded property” provisions.
The concept of excluded property
There are a number of categories of excluded property, of which the most important is property situated outside the UK, owned by a non-UK domiciled individual. (IHTA 1984, s6). Excluded property is not subject to inheritance tax.