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Old Sep 14th 2016, 10:32 am   #31
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Default Re: Pensions - escaping UK taxation

I think the question of domicile is a good deal more subtle than that. The flowchart below comes from the HMRC Guidance Notes on domicile - I've added the red line to show where most of us will fall.

The problem is the box which says "While in another country, did you settle there and now plan to return to that territory permanently?".

Now this question is written from the standpoint of leaving the UK and you may answer that you left many years ago but this may not be so because every time you move from one country to another you are deemed to have re-acquired UK residence. So you need to look at this chart as if from the moment you moved to your current country of residence.

NH mentioned demonstrating no intention of returning to the UK but you also need to demonstrate having no intention of leaving the country in which you claim to be domiciled, because to leave would be to take you back to the start of the flow chart and deemed UK domicile.

It's why IMHO, having a Plan B could be as bad as saying you plan to go back to the UK to die (even if you actually die beforehand).

There is, of course, the question of how HMRC can determine any of this and that will depend very much on the attitude of the executors to your Will (since they will have to decide whether to inform HMRC), the location of your assets, how they are held and the attitude of the institutions managing your assets and whether, if HMRC are informed, they decide to mount an investigation.

Since as BB says, we will be hobnobbing with the angels by the time any of this happens, it will be too late to be involved in that debate and it is the evidence held by others which will be the determing factor.
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Old Sep 14th 2016, 10:48 am   #32
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Default Re: Pensions - escaping UK taxation

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Originally Posted by bakedbean View Post
That's very interesting, neon.

So it's the intention "not to return" which is the most important. So.... should one actually write to explain to HMRC that one does not wish to return under any circumstances? and say to them....like...Just for Your Information regarding Domicile (hint)

It's an interesting one, isn't it, because you cannot really sort it out as one will be hobnobbing with the angels by the time it is relevant.

I may be writing to HMRC in the near future, so maybe I should put it as a PS hehe.
Residency also has an effect, there is no hope of say, living in France and declaring that Malaysia is you Domicile of Choice. The full guidance (I've only tried to give a summary) can be found starting here https://www.gov.uk/hmrc-internal-man...asis/rdrm22300. Click through to each next page. To quote from page 22320 'Intention does not depend on the individual’s wishes in respect of his or her domicile; it is not an intention to acquire a domicile but the intention to reside in a particular territory indefinitely.' and 'An important aspect of the existence, or otherwise, of the necessary intention is whether or not there is a contingency upon the occurrence of which the individual’s residence in a particular territory is anticipated to end. If there is an intention to return to the domicile of origin on a clearly foreseen and reasonably anticipated contingency, there is no intention to remain indefinitely. However, if the contingency is vague or sufficiently conditional, an intention to remain indefinitely could exist and a domicile of choice be acquired.'

With the latter in mind I think any discussion in the 'What is your Plan B' thread is to be treated with care.
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Old Sep 14th 2016, 11:03 am   #33
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Default Re: Pensions - escaping UK taxation

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Originally Posted by InVinoVeritas View Post
NH mentioned demonstrating no intention of returning to the UK but you also need to demonstrate having no intention of leaving the country in which you claim to be domiciled, because to leave would be to take you back to the start of the flow chart and deemed UK domicile.


There is, of course, the question of how HMRC can determine any of this and that will depend very much on the attitude of the executors to your Will (since they will have to decide whether to inform HMRC), the location of your assets, how they are held and the attitude of the institutions managing your assets and whether, if HMRC are informed, they decide to mount an investigation.

Since as BB says, we will be hobnobbing with the angels by the time any of this happens, it will be too late to be involved in that debate and it is the evidence held by others which will be the determing factor.
A good way to demonstrate an intention to stay indefinitely would be to pre-purchase a funeral plan.

I believe that when a UK citizen dies in another country the authorities must notify the British Embassy who will soon let HMRC know and if HMRC have a sniff of some tax to recover they can investigate and pose questions about your intentions to those you leave behind.

Whether you are hobnobbing with the Angels or the Devil, all you can do is try to ensure that the evidence points to your intent to live indefinitely in your chosen country of residence.
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Old Sep 14th 2016, 1:05 pm   #34
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Default Re: Pensions - escaping UK taxation

Dunno if anyone else still pays UK tax but I had a tax rebate today, through a P800 form, totally unasked for.

I knew I had overpaid but was willing to forgo the dosh, which was over £200, because I dislike contacting HMRC and want to stay off the radar as much as possible,
Seems Big Brother is not just a TV programme.
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Old Sep 15th 2016, 2:21 am   #35
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Default Re: Pensions - escaping UK taxation

Quote:
I note that form STM1 asks a few things like:
Type of Income received
Period of Payment
Amount of Payment received
Foreign Payer

and I presume, as MM2Hers not receiving income here, we should leave these blank?
My understanding is that the reason the Malaysian authorities give you a Certificate of residence is help you claim tax treaty benefits for things like reduced tax withholding rates in another country where you're getting income that is subject to withholding tax.

If, for example, you got a pension from Canada, rather than the standard 25% nonresident tax withheld on that Canadian sourced income, the tax treaty between Malaysia & Canada states that 15% will be withheld instead.

But the person getting the pension from Canada has to get their Canadian (ie 'foreign') payer of their pension to withhold the correct amount based on treaty. So the Malaysian authorities will kindly give you a document confirming that you're resident in Malaysia which you could then give to the foreign payer so that they'll withhold the correct 15%.

I'm not sure if you can get the Malaysian Certificate of Residence for any reason other than to claim treaty benefits so I dunno what would happen if you left the info about the foreign payer and payments fields blank.

I would like to know though - has anyone left those fields blank on the STM1 as per the quote above from BB's post (i.e, perhaps you aren't getting any payments from a foreign payer) and still got the Certificate of Residence?
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Old Sep 15th 2016, 5:30 am   #36
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Default Re: Pensions - escaping UK taxation

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My understanding is that the reason the Malaysian authorities give you a Certificate of residence is help you claim tax treaty benefits for things like reduced tax withholding rates in another country where you're getting income that is subject to withholding tax.

If, for example, you got a pension from Canada, rather than the standard 25% nonresident tax withheld on that Canadian sourced income, the tax treaty between Malaysia & Canada states that 15% will be withheld instead.

But the person getting the pension from Canada has to get their Canadian (ie 'foreign') payer of their pension to withhold the correct amount based on treaty. So the Malaysian authorities will kindly give you a document confirming that you're resident in Malaysia which you could then give to the foreign payer so that they'll withhold the correct 15%.

I'm not sure if you can get the Malaysian Certificate of Residence for any reason other than to claim treaty benefits so I dunno what would happen if you left the info about the foreign payer and payments fields blank.

I would like to know though - has anyone left those fields blank on the STM1 as per the quote above from BB's post (i.e, perhaps you aren't getting any payments from a foreign payer) and still got the Certificate of Residence?
Hi Montukute,
Back in August my wife and I applied for a CoR in my case this is needed now as I am in receipt of my pension but my wife will not be getting her pension for a few more years. In her case we simply answered 'nil' for her income. She was still given a COR.

So to answer your question, do not leave the field blank, just answer nil and you will get a CoR.
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Old Sep 15th 2016, 5:48 am   #37
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Default Re: Pensions - escaping UK taxation

Hi everyone! This is great research. Thanks to NeonHippy for posting this information.
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Old Sep 15th 2016, 6:33 am   #38
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Default Re: Pensions - escaping UK taxation

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Originally Posted by NeonHippy View Post
A good way to demonstrate an intention to stay indefinitely would be to pre-purchase a funeral plan.

I believe that when a UK citizen dies in another country the authorities must notify the British Embassy who will soon let HMRC know and if HMRC have a sniff of some tax to recover they can investigate and pose questions about your intentions to those you leave behind.
Oh I like that about the funeral planning hahaha....nice

Apparently not so about informing. At least that is what I was told by the Honorary consulate here in Penang when dear Mr BB passed over. There is no need. He (name escapes me at the moment) did say however that, in my own time, would be a good idea to bring Mr BB's passport over to get it officially cancelled. I did do that and he ceremoniously punched holes in each page. I could've done that! But was nice having a little chat and he was a very pleasant guy.
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Old Sep 15th 2016, 7:04 am   #39
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Oh I like that about the funeral planning hahaha....nice

Apparently not so about informing. At least that is what I was told by the Honorary consulate here in Penang when dear Mr BB passed over. There is no need. He (name escapes me at the moment) did say however that, in my own time, would be a good idea to bring Mr BB's passport over to get it officially cancelled. I did do that and he ceremoniously punched holes in each page. I could've done that! But was nice having a little chat and he was a very pleasant guy.
Robert (Rob) Hawkins MBE, the Honorary British Consul for Penang and Langkawi.

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Old Sep 15th 2016, 7:58 am   #40
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Apparently not so about informing. At least that is what I was told by the Honorary consulate here in Penang when dear Mr BB passed over. There is no need.
Agreed, there is no automatic process for informing the British Embassy or HMRC if you die outside the UK. As I said earlier, this is down to your executors and, possibly, the trustees of any investments you hold. It is for this reason that it makes sense for one's investments to be domiciled outside the UK. I guess it would be better for the executors to be non-UK domiciled as well.

On another point there is no legal defintion of living in a country. Residence and domicile rules are established by each country and the rules are not identical. Consequently, it is possible to be resident in more than one country since not all have the 180-day rule. It is also possible for some nationalties to not be resident in any country (for Brits it would always revert to the UK).

Domicile and UK inheritance are very complex and the rules may well change before the rendez-vous with the angels. It pays to take professional advice as everyone's circumstances differ, there is no one-size-fits-all and consequently not all advice is good advice.
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Old Sep 16th 2016, 8:34 am   #41
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Default Re: Pensions - escaping UK taxation

Thanks for the updates about your situation NeonHippy - it is all very helpful.
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Old Sep 27th 2016, 2:48 am   #42
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Originally Posted by NeonHippy View Post
A very interesting article JC3. I wonder how HMRC will react when I inform them that I do not reside in the UK and have no desire to pay any income tax but I would quite like to pay national insurance contributions to boost my state pension?

I could use my tax relief to pay for the added contributions. Now that would be a sound investment.
Unfortunately, tax relief on the way in means no tax relief on the way out! The easiest way to pay the most efficient tax possible (nothing is ever 'tax free' although we can strive to be a 'zero rate tax payer') is to move things to a third location. There is a saying, if you come from country A and live in country B, you should bank in country C. All very easy to set up and will achieve the best of both worlds.

Quote:
Originally Posted by InVinoVeritas View Post
Agreed, there is no automatic process for informing the British Embassy or HMRC if you die outside the UK. As I said earlier, this is down to your executors and, possibly, the trustees of any investments you hold. It is for this reason that it makes sense for one's investments to be domiciled outside the UK. I guess it would be better for the executors to be non-UK domiciled as well.

On another point there is no legal defintion of living in a country. Residence and domicile rules are established by each country and the rules are not identical. Consequently, it is possible to be resident in more than one country since not all have the 180-day rule. It is also possible for some nationalties to not be resident in any country (for Brits it would always revert to the UK).

Domicile and UK inheritance are very complex and the rules may well change before the rendez-vous with the angels. It pays to take professional advice as everyone's circumstances differ, there is no one-size-fits-all and consequently not all advice is good advice.

I completely agree and it is important to deal with a practitioner who not only understands the complexities of the jurisdiction in which you live, but also those of the UK. For these types of questions a UK qualified adviser is recommended.

Last edited by christmasoompa; Sep 27th 2016 at 10:07 am. Reason: Posts merged - there's an edit button if you think of something you wish to add just after posting.
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Old Sep 27th 2016, 4:39 am   #43
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Default Re: Pensions - escaping UK taxation

I remain Uk domiciled and non resident

IHT is on world wide assets for Uk domicile and will not be taxed twice if country of residence deducts death duties held in the country you die in

I am tax resident but not tax citizen of Philippines, Domiciled UK

Why? because probate in the Philippines takes for ever and by the time its done the local legal vultures and tax authorities will have made damn sure that nothing is left

Assets are held outside of the Philippines to ensure that there is minimal issue. My assets will also be below IHT threshold and anything over is passed direct to the spouse with mirror wills, so no IHT there


This is based on current understanding of UK IHT law
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Old Sep 27th 2016, 10:02 am   #44
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I completely agree and it is important to deal with a practitioner who not only understands the complexities of the jurisdiction in which you live, but also those of the UK. For these types of questions a UK qualified adviser is recommended.
And where would one find such a person in Penang?
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Old Sep 27th 2016, 10:08 am   #45
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Why? because probate in the Philippines takes for ever and by the time its done the local legal vultures and tax authorities will have made damn sure that nothing is left
FWIW, and since this topic is within the Malaysia retired section, probate here seems to be quite swift....at least if you are dealing with a Trust rather than a Will. (I don't know if that makes a difference....maybe.) But the Probate for Mr bakedbean's estate came through within two months. Of course, the whole legal process takes considerably longer than this (big sigh).
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