HMRC have recently purchased advertising pointing out that offshore income and gains may be taxable in the UK. This is true. In general, for UK domiciled residents, all worldwide income and gains are taxable (even where you reinvested the proceeds and did not remit them to the UK). For non-residents, UK source income may be taxable.

This is where it gets complicated (as if it was not before!). Like many other matters in the international tax world, circumstances can alter cases . Domicile, double tax treaties and all the new statutory residence test may all have an impact.

If you have offshore assets, review them now, before HMRC really clamp down next tax year. If in doubt, seek tax expert advice.

In an interesting twist to the European Question, the EU authorities have just issued a decision on the advance tax ruling given to Starbucks by the Dutch Revenue, helping Starbucks avoid tax in other jurisdictions. This was done by Starbucks having higher tax deductible costs with a lower tax rate in the Netherlands, thus meaning there was only immaterial profit in countries such as the UK, so minimal UK corporation tax. The EU Authorities feel this amounted to illegal State Aid, such that Starbucks should be enforced to repay it in full.

The political question is whether this is:

a) A good example to tax abuse by multinational corporations?

b) An unacceptable interference in Dutch sovereignty because tax is not supposed to be controlled at EU level?

Is that the smell of coffee or the protagonists’ lawyer preparing their morning shot of napalm?

In the High Court case of Perdoni & Anor v Curati, Mr and Ms Perdoni claimed that their Uncle’s English will (they were sole beneficiaries) was not fully revoked by his subsequent Italian will.

It was agreed that the key point was whether Mr Curati was UK domiciled in 1994, when his Italian will was drawnup.

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If he was, his English will would be partly effective and Mr and Ms Perdoni would be entitled to the deceased’s English estate.

The deceased, Pierlugi Curati, resided in Italy until he was 28, at which point he moved to London, with his wife (a British citizen) where he owned a restaurant and later purchased a portfolio of properties in England and in Italy. However the centre of his business activities always remained in the UK along with the marital home.

It was contended that the deceased always had an intention to move back to Italy before his death and therefore had not acquired England as a domicile of choice.

The key point was whether he had established an intention to return to Italy “upon clearly foreseen and reasonably anticipated contingency” in 1994.

This flag is the Union Flag in the 3:5 ratio e...
(Photo credit: Wikipedia)

In 1992 Mrs Curati was diagnosed with cancer and she was cared for by the NHS in England. As the deceased was inseparable from his wife, from that time on there was no prospect that he would change his established pattern of life and decide to return to Italy until his wife had either recovered or died.

Mrs Curati never fully recovered from her cancer which meant that there could not have been a clear intention to return to Italy in 1994.

Therefore Mr Curati was held to have being UK domiciled at the time the Italian will was drawn and therefore the English will was partially effective.