Table of Contents
- 1.01 Introduction
- The nature of domicile
- 1.03 The two roles of domicile
- 1.04 The five principles of domicile
- Domicile of origin
- 1.06 Displacement and revival
- Domicile of dependence
- 1.08 Children
- 1.09 Persons suffering from mental disorder
- Domicile of choice
- 1.11 Residence
- 1.12 Intention
- 1.13 Motive as evidence of intention
- 1.14 Proof of intention
- 1.15 Change of domicile of choice
- 1.16 Deemed domicile
- 1.17 Domicile for tax treaty purposes
1.01
Introduction
The purpose of this chapter is to
explore the concept of domicile as a determinant of liability to inheritance
tax and as a modifying factor in relation to other taxes, and to explain how a
person's domicile may be identified.
Since publication of the decisions
of the Special Commissioners started in 1995, several cases have been reported
concerning the domicile of individuals.[1] Only one[2] has been appealed (unsuccessfully)
to the High Court, and none have grappled with the essential elements of the
law of domicile which has shown much stability. In Gaines-Cooper it was argued
that the Special Commissioners made an error of law if their conclusion was not
the only true and reasonable conclusion on the basis of the facts found and the
unchallenged evidence. This was not found to be the case. Arguments on the law
of domicile advanced by the taxpayer were likewise rejected. All have turned on
the facts and surrounding circumstances examined in great detail by the
Commissioners. They all make interesting reading, but a comparison of the facts
of one domicile case with the facts of another domicile case is of limited
assistance in deciding the domicile of any particular person.[3]
The concept of domicile (or domicil,
as some prefer to call it) originated in the Roman Empire when, following the
downfall of the Republic, Italy was divided into a number of individual
townships known as municipia and the Empire was fragmented into numerous
provinces. Each province and municipium possessed its own jurisdiction and, to
a large extent, its own divergent internal law which was administered and
enforced by magistrates. Most inhabitants of the Empire were connected by
citizenship with one or more of these provincial or municipal communities
and/or with Rome itself.
The link of citizenship could arise
in various ways – by origo (the place within the Empire to which a person's
father or, if he was illegitimate, his mother belonged), by adoption, by
election or by manumission – and that presented three possibilities. A person
might be a citizen of one place, a citizen of more than one place[4] or a citizen of none. This,
inevitably, created difficulties. Given that, as stated, each province or
municipium had its own system of law, to which system should a man in each of
those situations be subject? The answer supplied by Rome was, in the first
situation, the law of the man's place of citizenship, and, in the second
situation, the law of his origo. In the third situation, however, a different
determinant was needed and the determinant created was 'domicile' – the place
in which a person had made his permanent home.
That concept of domicile was one of
the concepts of Roman law, which, in the thirteenth century, was enthusiastically
revived by the 'post-glossators' jurists who were attached to the Italian
universities and who were engaged in developing the Roman law to meet the
nation's changing needs.[5] Italy had by then emerged from
the barbarism and feudalism into which the civilised world had been plunged
following the fall of the Roman Empire in the fifth century and had become a
land of independent, cosmopolitan cities – Bologna, Florence, Genoa, Milan,
Padua, Pisa, etc – all of which were subject generally to Roman law, but each
of which had diverse laws of its own which gave rise to conflict as commercial
intercourse between the cities increased. As a basis for the resolution of such
conflicts, the post-glossators developed a set of principles, known to legal
historians as 'statute theory', and it was into these that the revived concept
of domicile was introduced.
A 'statute' in the terminology of
the post-glossators was any legislative or customary local law which was found
to be contrary to Roman law in general; and the statute theory proceeded from
the premise that all such laws were either 'real', 'personal' or 'mixed'. A law
which concerned things other than moveables was 'real',[6] a law which concerned persons
and moveables was 'personal', and a law which concerned acts (such as the
making of a contract) was 'mixed' as it generally concerned both persons and
things. Real statutes were seen as essentially territorial and as having no
application beyond the territorial bounds of the locality in which they were
found. Mixed statutes were seen as partially territorial in that they applied
to all acts done within the territorial bounds of the locality in which they
were found but could give rise to litigation elsewhere. Personal statutes, on
the other hand, were seen as non-territorial and as applicable to any person
domiciled within the locality in which the laws were found, wherever that
person might be. Thus a Bologna-born merchant whose permanent home was in
Florence would remain subject to Florentine personal laws while visiting, say,
Padua, and neither Bolognan nor Paduan personal laws would apply to him.
The statute theory – the basis of
today's 'private international law' or 'conflict of laws' as it is often called
– was neither as simple nor as effective as it might appear and it was much
refined by French jurists in the sixteenth century and Dutch jurists in the
seventeenth century. Its subsequent development is beyond the scope of this
work and it is sufficient to say that, despite all the changes which have taken
place and despite the English and Scottish developments of the conflict of laws
in the nineteenth century, the concept of domicile, and its use as the
determinant of the system of personal law to which a person should be subject
wherever he might be, has remained intact to the present day in the common law
jurisdictions of the UK, the Commonwealth and the United States of America. To
such nations, possessing as they do within their territorial boundaries a
number of diverse legal systems, domicile still presents, as it once presented
to Italy, the best determinant of the relevant personal law. Ironically, in the
nineteenth century, Italy itself and most other countries in Europe rejected
the test of domicile in favour of the test of nationality, and Japan and many
South American states followed suit.
The brief picture of domicile's
origins given at 1.02 above should have sufficed to show that domicile is
essentially a conflict of laws concept employed in determining the system of
personal law which should be applied where a person has connections with more
than one jurisdiction. Personal law is that part of law which, to some degree,
governs the validity of marriage, the effect of marriage on the proprietory
rights of husband and wife, divorce and nullity of marriage, legitimacy,
legitimation and adoption, wills of moveables and intestate succession to
moveables. It follows, therefore, that, whenever a question arises in the
English courts concerning any of these matters, it must be determined according
to the law of the domicile of the person concerned and not (unless English law
happens to be the law of his domicile) according to English law, the law of the
territory in which he happens to be, or the law of the nation of which he is a
citizen.
Alan, a citizen of Eriador (where
wills require the attestation of three witnesses), dies on holiday in Mordor
(where wills require the attestation of four witnesses) but, at the time of his
death, is domiciled in Gondor under whose laws he has made a will attested by
only one witness as is permitted under Gondorian law. His will is contested in
the English courts on the grounds that two witnesses are required under English
law or, alternatively, that three are required under Eriadorian law or,
alternatively, that four are required under Mordorian law. The suit fails.[7]
The rationale for this lies in the
fact that (conceptually, at any rate) domicile, at any given moment in a
person's life or at the moment of his death, singles out, from among all the
territories in the world, the one territory in which – irrespective of where he
happens to be or where he happens to reside or ordinarily reside – that person
has his real home; and, once that person's real home has been identified, the
law of that territory, and of no other, is the law which should be applied in
all matters which relate to him as a person.
One of those matters is the transfer
of capital to another – dispositions which reduce the value of a person's
estate upon his death or, in certain circumstances, during his lifetime – and
it is upon such transfers of value that, under UK revenue law, inheritance tax
is charged. It is entirely appropriate, therefore, that – except as regards any
part of a person's estate which is situated in the UK – the determinant of
liability to tax on capital transfers should be the same as the determinant of
the personal law governing those transfers, ie domicile.
There is, however, a second and more
cogent reason why a person's domicile is a more appropriate determinant of
liability to inheritance tax than residence. Inheritance tax is a cumulative
charge on transfers of value made by a person upon his death and during the
previous seven years, and there is also a seven-year cumulation period in
respect of chargeable transfers during his lifetime.[8] The effectiveness of the
inheritance tax system depends, therefore, on a link of the greatest possible
strength being used to attach a person to the UK, and domicile is just such a
link. Residence may easily be snapped, ordinary residence is only a little
stronger, but the bonds of domicile are very difficult to break – and, as is
explained later,[9] even if a person should succeed
in breaking those bonds, he may nonetheless find himself attributed with a
deemed domicile under rules which Parliament has enacted to cover just such a
contingency.
The confinement of UK taxation of
income and capital gains to the taxation of remittances in the case of income
and gains generated overseas by a person who is not domiciled in the UK is
further parliamentary recognition of the strength of the link between person
and territory which domicile represents.
Domicile, being a common law
concept, is not defined in the Taxes Acts. In 1858, however, Lord Cranworth
said: 'By domicile we mean home, the permanent home,'[10] and, ever since, that has been
regarded as a basic (if deceptively simple) definition of the term. Although
the idea of a permanent home is indeed central to the concept of domicile, the
meaning of 'permanent home' in this context is not necessarily the meaning
which the man on the Clapham omnibus would give to the term. There are, as will
be shown, instances in which the courts will decide that a person's permanent
home is in some faraway territory in which he has never set foot and with
which, so far as he is aware, he has never had any connection. This is because
domicile, though founded on fact, is not merely a finding of fact but a
conclusion of law which is reached by application of a set of legal principles.
The principles referred to are five
in number, and the first is that no one shall, at any time, be without a
domicile.[11] The necessity for this becomes
apparent once we remind ourselves that domicile is, in English law, the sole
determinant of the personal law to which a person is to be subject. Indeed, it
is one of the weaknesses of legal systems which have opted for nationality as a
determinant of the personal law that a person may be stateless and may thus not
possess the required connecting link. This is not to say, of course, that
assigning a domicile to every person never presents difficulties: it frequently
does, but the courts have developed additional principles to overcome these
problems.
The second principle is that no one
can simultaneously have more than one operative domicile.[12] The justification for this is
that domicile, being the sole determinant of the personal law, must, by its
very nature, be exclusive, otherwise a further determinant will be needed. This
exposes another weakness in systems which have taken nationality as the
determinant of the personal law, for many persons have dual nationality. The
adjective 'operative' has been introduced into the above statement of principle
because, as will be explained,[13] there are three kinds of
domicile and one of these, domicile of origin, will, if displaced by either of
the others, become dormant but will, in the event of either of the others being
lost, instantly revive. It should be noted that, in English law, domicile is
regarded as a purely objective concept which remains unaffected by the subject
matter of the point at issue.[14] In theory, therefore, there
should be no question, in English law, of a person having one domicile for
taxation purposes and another for, say, the purposes of divorce. As explained
below, however, there are certain situations in which that may be possible –
though not through any abandonment of the objective approach.
The third principle is said to be
that domicile must relate to a territory subject to a single system of law,
whether or not the limits of that territory coincide with national boundaries.
This, so far as the UK is concerned, would mean that a domicile could arise
only in Northern Ireland, Scotland or England and Wales.
However, the Taxes Acts speak not of
domicile in Northern Ireland or Scotland or England and Wales but of domicile
'in the United Kingdom'.[15]
The fourth principle is that a
change of domicile may never be presumed.[16] As Jenkins LJ has said:
'Change of domicile, particularly
where the change is from the domicile of origin to a domicile of choice (as
distinct from a change from one domicile of choice to another) has always been
regarded as a serious step which is only to be imputed to a person upon clear
and unequivocal evidence.'[17]
In other words, a change of domicile
will always have to be proved and, as Lord Chelmsford has said:
'… the burden of proof
unquestionably lies upon the party who asserts the change.'[18]
The question of the degree of proof
required is considered at 7.15 below.
The fifth principle is that domicile
must be determined according to the English concept of domicile. As Lindley MR
said in Re Martin:[19]
'The domicil ... must be determined
by the English Court ... according to those legal principles applicable to
domicil which are recognised in this country and are part of its law.'[20]
The significance of this rule lies
in the fact that 'domicile' does not have a precise and universally accepted
meaning. Not all jurisdictions accept the objective approach to domicile,
others (such as Australia, New Zealand and the United States) do not accept
English doctrines such as that of the revival of the domicile of origin,[21] and under some international
conventions domicile is equated with habitual residence.[22]
English law recognises three kinds
of domicile: domicile of origin, domicile of dependence and domicile of choice.
Every person will possess the first of these, and may, at different times,
possess either of the others.
The domicile of origin is the form
of domicile which is imposed on every person at the moment of his birth. It is
a link, forged by the law, which attaches a person to a particular system of
law and which retains its hold on him throughout his life. Should he acquire a
domicile of dependence or a domicile of choice, the link will be removed, but
not destroyed; rather it will be held at readiness to reattach him instantly to
the original system of law should his domicile of dependence cease or his
domicile of choice be abandoned.
Except in the case of a foundling
(when the domicile of origin imposed is that of the place where the child is
found), the basis of imposition of a domicile of origin is parentage. If a
child is born legitimate and during his father's lifetime, the domicile of
origin imposed on him is that of his father at the time of the child's birth.[23]If a child is born illegitimate,[24] or born legitimate but after his
father's death,[25] the domicile of origin imposed
on him is that of his mother.
One problem which could arise in
this connection springs from the fact that the question of legitimacy is itself
a matter of personal law. As the determinant of the appropriate person law is
the child's domicile and as the child's domicile cannot be determined until the
question of its legitimacy has been settled, it can be seen that, unless both
parents are of the same domicile, an endless legal loop is created. Various
solutions to the problem have been proposed[26] but there is no authority on the
question in English law.
It seems clear that in the event of
an illegitimate child being legitimated the child's domicile of origin will
remain unaffected since, under the Legitimacy Acts, legitimation does not
operate retrospectively.[27] In the event of a child becoming
adopted, however, it would appear that a new domicile of origin will be
acquired since adoption involves the complete severance of the legal
relationship between parent and child and the establishment of a new one
between child and the adoptive parent.[28]
The Law Commission and the Scottish
Law Commission have recommended that the domicile of origin be abolished and
that, in future, a child's domicile should be determined from the outset under
revised domicile of dependence rules.[29]
A domicile of origin, being a
domicile imposed by operation of law independently of a person's will, can
never be extinguished by an act of will or by mere abandonment. It will
continue to be operative, whether its possessor wishes it to be operative or
not, until it is displaced by the acquisition of either a domicile of
dependency or a domicile of choice. This is well illustrated by the leading
case of Bell v Kennedy.[30]
Mr Bell was born in 1802 of Scottish
parents who were domiciled by choice in the island of Jamaica. Accordingly, he
possessed a Jamaican domicile of origin. Following the death of his mother,
Bell, at the age of two, was sent to Scotland to be cared for and educated.
When he was 10 years old his father died and left him his Jamaican estate. Mr
Bell completed his education in Scotland, travelled for a while in Europe,
then, shortly after reaching his majority, returned to Jamaica to cultivate the
estate that had been left to him. The estate prospered and Mr Bell became a
wealthy and important personage, attaining membership of the island's
Legislative Assembly. He married and fathered three children. In 1834, however,
the law was changed with regard to slavery and the change was to culminate in
the complete emancipation of slaves in 1831. Mr Bell strongly disapproved of
the change and that, coupled with his failing health, decided him upon a
permanent return to the UK. Accordingly, in 1837, he sold the estate and left
the island for good. Initially, he and his immediate family resided with his
mother-in-law in Edinburgh and Mr Bell set about finding a suitable estate,
preferably in Scotland but possibly across the border, in England, which he
could purchase and in which he and his family could settle down. Before he had
succeeded in this, however, his wife died. At that time, a woman acquired the
domicile of her husband upon marriage and, accordingly, in order to resolve a
dispute which had arisen concerning Mr and Mrs Bell's daughter's succession to
Mrs Bell's share in goods held in common between Mr and Mrs Bell at the date of
Mrs Bell's death, it became necessary to determine Mr Bell's domicile at the
date of his wife's death. The court held that his domicile was his domicile of
origin, ie Jamaica. Lord Cairns said:
'The birth-domicile of [Bell] in
Jamaica continued, at all events till 1837, and the onus lies upon those who
desire to shew that there was a change in this domicile ... to prove that that
change took place. The law is, beyond all doubt, clear with regard to the
domicile of birth, that the personal status indicated by that term clings and
adheres to the subject of it until an actual change is made by which the
personal status of another domicile is acquired ... It appears to me ... that
so far from [Mr and Mrs Bell's daughter and her husband] having discharged the
onus which lies upon them to prove the adoption of a Scottish domicile, they
have entirely failed in discharging that burden of proof, and that the evidence
leads quite in the opposite direction. There is nothing in it to shew that
[Bell's] personal status of domicile as a native and inhabitant of Jamaica has
been changed on coming here by that which alone could change it, his assumption
of domicile in another country.'[31]
Lord Colonsay had this to say:
'I think it is very clear that Mr
Bell left Jamaica with the intention of never returning ... But I do not think
that his having sailed from Jamaica with that intent extinguished his Jamaica
domicile ... He could not so displace the effect which law gives to the
domicile of origin, and which continues to attach until a new domicile is
acquired animo et facto.'[32]
Once a person has, however, animo et
facto or through the act of the person on whom he is dependent, acquired a new
domicile, his domicile of origin, though displaced, still does not die. It
lives on within him, dormant but ready to awake and come back into operation in
the instant any other domicile is voluntarily abandoned. As Lord Westbury has
said in Udny v Udny:[33]
'When another domicile is put on,
the domicile of origin is for that purpose relinquished, and remains in
abeyance during the continuance of the domicile of choice; but as the domicile
of origin is the creature of law, and independent of the will of the party, it
would be inconsistent with the principles on which it is by law created and
ascribed to suppose that it is capable of being by the act of the party
entirely obliterated and extinguished.'[34]
Colonel Udny acquired a domicile of
origin in Scotland when he was born there of Scottish parents in 1779. His childhood
was spent in Scotland but, after serving as an officer in the Guards, in 1812,
he married and settled in London. There he resided for the next 32 years. In
1844, however, the Colonel 'having been involved for some time in pecuniary
difficulties (owing chiefly to his connection with the turf) was compelled to
leave England in order to avoid his creditors'.[35] He first went to Scotland and
from there he arranged for the sale of the lease of the London house and
'everything that was in the house, including what had belonged to his mother,
his sister, and his ... wife';[36] he then fled to Boulogne. It was
in Boulogne that he formed the illicit attachment that resulted in the birth of
a child whose legitimation was in question.
Some doubt was expressed by the
court whether Colonel Udny had ever, in fact, acquired an English domicile of
choice. Nevertheless, the Lord Chancellor was of the opinion that:
'… the English domicil of Colonel
Udny, if it were ever acquired, was formally and completely abandoned in 1844
when he sold his house and broke up his English establishment with the
intention never to return. And, indeed, his return to that country was barred
against him by the continued threat of process by his creditors. I think that
on such abandonment his domicil of origin revived. It is clear that by our law
a man must have some domicil, and must have a single domicil. It is clear, on
the evidence, that the Colonel did not contemplate residing in France ... Why
should not the domicil of origin cast on him by no choice of his own, and
changed for a time, be the state to which he naturally falls back when his
first choice has been abandoned animo et facto, and whilst he is deliberating
before he makes a second choice.'[37]
Both the Private International Law
Committee[38] and now the Law Commission and
the Scottish Law Commission[39] have recommended that the
principle of revival be discarded and that an existing domicile should continue
until a new domicile is acquired. This is the rule in the United States,[40] New Zealand[41] and Australia.[42]
The question of the precise point at
which the domicile of origin will revive upon a domicile of choice being
abandoned is fully discussed at 1.15 below.
Until 1 January 1974 there were
three classes of persons who could or would acquire a domicile of dependence:
children, mentally disordered persons and married women. Now, only the first
two classes remain, for, by the Domicile and Matrimonial Proceedings Act 1973 s
1, the rule at common law that every woman acquired from her husband his
domicile immediately upon her marriage was swept away.[43]The Act provides that the
domicile of a married woman as at any time on or after 1 January 1974:
'… shall, instead of being the same
as her husband's by virtue only of marriage, be ascertained by reference to the
same factors as in the case of any other individual capable of having an
independent domicile.'[44]
So far as any woman who married on,
or has married since, 1 January 1974 is concerned, the position is quite
straightforward. As the subsection quoted makes plain, the woman has the same
capacity as her husband or any other non-dependent person for acquiring a
domicile of choice. It will, of course, usually be the case that the domicile
of a husband and his wife will be the same, but this will now merely be because
of their independent choice to live together permanently in the same place.
Such a choice is not always made at the time of the marriage, or if made then,
may not be implemented by residence until later. In that event, each may, under
the Act, retain different domiciles.
Marie-Louise is domiciled in
Belgium. While attending art college in Manchester in 1985 she marries a fellow
student, Henri, who is domiciled in France. Upon the completion of their
respective courses they are resolved to settle permanently in Monaco. Until
that decision is implemented by residence in Monaco, Marie-Louise will retain
her Belgian domicile and Henri will retain his French domicile. Thereafter they
will each acquire a Monagesque domicile of choice. Had they married before 1
January 1974, Marie-Louise would, upon her marriage, have acquired a French
domicile of dependence and then, when they settled in Monaco, a Monagesque domicile
of dependence.
The position of a woman who married
before 1 January 1974 is set out in subsection (2) of the Act:
'Where immediately before [1 January
1974] a woman was married and then had her husband's domicile by dependence,
she is to be treated as retaining that domicile (as a domicile of choice, if it
is not also her domicile of origin) unless and until it is changed by
acquisition or revival of another domicile on or after [1 January 1974].'[45]
The principal difficulty to which
this provision gives rise was dealt with in IRC v Duchess of Portland.[46] In 1948, the taxpayer, a
Canadian citizen with a domicile of origin in Quebec, married Lord William
Cavendish-Bentinck (subsequently the Duke of Portland) in England and became
Lady William Cavendish-Bentinck (subsequently the Duchess of Portland).
Thereupon she acquired from her husband an English domicile of dependence which
displaced her Quebec domicile of origin, but she was resolved to return to live
in Canada should her husband predecease her and she hoped to persuade him to
live in Canada on his retirement. Throughout her marriage, the Duchess of
Portland maintained her links with Canada, returning there to visit friends and
relatives for between 10 and 12 weeks each year and (since about 1964) owning
and maintaining there at her own expense her family home in Metis Beach,
Quebec. The Duchess of Portland's first visit to Canada following the enactment
of the Domicile and Matrimonial Proceedings Act 1973 was in July 1974, and
following that visit she claimed that, under s 1(2) of the Act, her domicile of
dependence had been changed by the revival of her Quebec domicile of origin.
Had her claim succeeded she would have become exempt under ICTA 1970 s
122(2)(a) from liability to tax on income accruing to her in Canada but not
remitted to the UK.
The basis of the Duchess of
Portland's claim was that the domicile of choice which, under DMPA 1973 s 1(2),
she acquired on 1 January 1974 was merely a deemed domicile of choice and that
the strict test applicable to the abandonment of a true domicile of choice
should not be applied in deciding whether or not her deemed domicile of choice
had been abandoned. Instead, she claimed, the more lenient test applicable to
the abandonment of a domicile of dependency was appropriate. Nourse J agreed
that DMPA 1973 s 1(2) was a deeming provision but said:
'… that which is deemed in a case
where the domicile of dependency is not the same as the domicile of origin is
the retention of the domicile of dependency as a domicile of choice. I think
that that must mean that the effect of the subsection is to reimpose the
domicile of dependency as a domicile of choice. The concept of an imposed
domicile of choice is not one which it is very easy to grasp, but the force of
the subsection requires me to do the best I can. It requires me to treat the taxpayer
as if she had acquired an English domicile of choice, even though the facts
found by the commissioners tell me that that would have been an impossibility
in the real world. In my judgment it necessarily follows that the question
whether, after 1 January 1974, the taxpayer abandoned her deemed English
domicile of choice must be determined by reference to the test appropriate to
the abandonment of a domicile of choice and not by reference to the more
lenient test appropriate to the abandonment of one of dependency.'[47]
It was pointed out in IRC v Duchess
of Portland that, if the Duke and Duchess had married on or after 1 January
1974 the effect of DMPA 1973 s 1(1) would have been to preserve the Duchess's
domicile of origin. Nourse J admitted that it was so and said:
'It seems clear that a woman living
in England with her husband who was married before 1 January 1974 can only free
herself from the shackles of dependency by choosing to leave her husband for
permanent residence in another country. That is a very limited freedom and it
is less than that available under s 1(1) to those who marry on or after 1
January 1974. Be that as it may, Parliament did not, as it might have done,
provide that a woman who was married before 1 January 1974 was to be treated as
if she had never acquired her domicile of dependency. Section 1(2) having taken
the form which it has, by treating the married woman as retaining her domicile
of dependency as a domicile of choice, I regret that I have no choice but to
attach to it all the consequences which the law has long recognised the latter
domicile to have.'[48]
A second difficulty which arises in
relation to DMPA 1973 s 1(2) concerns the position after 1 January 1974 of a
woman who, having married before that date, had left or had been abandoned by
her husband before that date and had settled permanently in some country other
than that of her domicile of dependence. In the absence of some new act on her
part on or after 1 January 1974, does the woman retain her domicile of
dependence as her domicile of choice or does she immediately acquire as her domicile
of choice the country in which she settled permanently during her domicile of
dependency? This question was also answered, albeit obiter, in IRC v Duchess of
Portland. The problem, said Nourse J, is to be resolved 'consistently with the
rule which would have applied if the husband had died before 1 January 1974'.[49] The rule he referred to was
established in Re Cooke's Trustees[50] and Re Scullard,[51] and is that where a husband and
wife have been living apart, the intent and act of the wife in permanently
making her home elsewhere creates a domicile of choice upon the death of her
husband without the need for any additional act on her part, or, if the country
in which she has settled is her domicile of origin, revives her domicile of
origin without the need for any such act. The application of the rule is
straightforward.
In 1952, Tom, who was, and continued
to be, domiciled in England, married Ingrid, who had a domicile of origin in
Germany. In 1968 Ingrid left Tom and made her permanent home in Switzerland.
Upon her marriage, Ingrid acquired an English domicile of dependence. This
endured until 1 January 1974, but, on that date, in accordance with the rule in
Re Scullard's Estate,[52] she automatically acquired a
domicile of choice in Switzerland. Had Ingrid, upon leaving Tom, made her
permanent home in Germany rather than Switzerland, her domicile of origin would
have automatically revived on 1 January 1974.
Nourse J summed up as follows the
procedure which DMPA 1973 s 1(2) requires one to adopt in determining the
domicile of a woman who was married before 1 January 1974:
'… first ... look at the state of
affairs prevailing on 1 January 1974 to see whether there has been any
automatic change on that date [as in the above example]. If there has not ...
look at events after that date in order to see whether any change has occurred
subsequently.'[53]
Until 1 January 1974, it was the
rule at common law that a minor, whether married or not, was totally incapable
of acquiring by his own act an independent domicile of choice.[54] A female child who, before then,
married before attaining her majority acquired her husband's domicile as a
domicile of dependence and, if widowed before that date, reacquired the
domicile she had immediately before her marriage.[55]
On 1 January 1974, however, the
Domicile and Matrimonial Proceedings Act 1973 came into effect and, with
application only to England and Wales and Northern Ireland,[56] confined this rule to unmarried
children under the age of 16.[57] Since then, any child reaching
the age of 16 or marrying under that age, has been capable of acquiring an
independent domicile of choice; and the same applied to any child who, at that
date, was already over the age of 16 or, if then still under the age of 16, was
then already married.[58]
The present position is, then, that
every child acquires at birth a domicile of origin[59] and cannot, so long as they
remain unmarried and below the age of 16, displace that domicile of origin by a
domicile of choice acquired by their own act of will. There is, however,
nothing to prevent their domicile of origin being displaced by an act of will
on the part of one of their parents, and if this occurs the new domicile they
acquire will be a domicile of dependence.
The primary rule is that, upon any
change in the domicile of a child's father after the child's birth, a
legitimate or adopted child will acquire their father's new domicile as a
domicile of dependence unless their parents[60] are living apart and they either
have then a home with their mother and not with their father or having had a
home with their mother have not since then had a home with their father.[61] This is because, upon a
separation, a child acquires a domicile of dependence from the parent with whom
they make their home and, should they subsequently make their home with the
other parent, they will (subject to a mother's right not to communicate her
domicile to a child who is dependent upon her – see next paragraph) acquire a
new domicile of dependence from that parent, but, should they cease to have a
home with either parent, their last-acquired domicile of dependence will
continue. A legitimate, legitimated or adopted child who shares their time
between the homes of both parents will acquire and retain throughout the
arrangement the domicile of their father.
Where a child is illegitimate or was
born after the death of their father, they will prima facie acquire as a
domicile of dependence any new domicile acquired by their mother whether they
have a home with her or not,[62] unless the mother elects, bona
fide and in the interests of the child, that the child's domicile shall not
change with her domicile.[63]
Where one or both of a child's
parents die during a child's period of dependency, the rules are as follows.
Where a legitimate or adopted
child's father dies after the child is born, the child acquires (if they have
not acquired it already[64]) the domicile of their mother as
a domicile of dependence[65] which will then change as her
domicile changes – subject, as explained above, to her right to elect that it
shall not be so. The same will be true of an illegitimate child who, before
their father's death, has been legitimated, for such a child will, upon
legitimation, have received their father's domicile as a domicile of
dependence. The death of the father of an illegitimate child who has not been
legitimated will have no effect.
Where a child's mother dies, the
death will have no effect on the child's domicile unless the child was either
born illegitimate and has never been legitimated or has (or last had) a home
with their mother following a separation of their parents. In either event, the
child will continue to have their dead mother's domicile as a domicile of
dependence unless and until, in the case of a legitimate or legitimated or
adopted child only, they make a home with their father.[66]
Where a child's parents both die,
the domicile of dependence which the child possessed at the date of their
deaths will continue; though a child's guardian has no capacity to change the
domicile of their ward.[67]
A domicile of dependence will
continue until animo et facto they abandon the country of that domicile.
Thereupon their domicile of origin will revive until it is displaced by a
domicile of choice.[68]
Susan is born of an English
domiciled father and thus acquires an English domicile of origin by operation
of law. When she is eight years old she and her parents move to Denmark and her
father acquires there a domicile of choice which is then automatically
communicated to Susan as a domicile of dependence. Susan continues to live with
her parents until she is 24 when she marries a Norwegian and moves to Oslo
where she intends to spend the rest of her life. Her Danish domicile of
dependence will endure until she leaves Danish territorial waters, whereupon
her English domicile of origin will revive. Upon arriving in Norway, however,
her domicile of origin will be displaced by her Norwegian domicile of choice.
It should be noted that it is
usually easier to establish the abandonment of a domicile of dependence than to
establish the abandonment of a domicile of choice.[69]
The Law Commission and the Scottish
Law Commission have proposed that the domicile of any person under the age of
16 should be determined according to where the child has their home. If their
home is with both parents, their domicile, they say, should be the same as, and
change with, that of their parents if their domiciles are the same, or with
that of their mother if their domiciles are different. If their home is with
only one parent, their domicile, they say, should be the same as, and change
with, the domicile of that parent. And in any other case, the child's domicile
should, they say, be the country with which they are, for the time being, most
closely connected.[70]
The position of a person suffering
from mental disorder is lacking in direct authority so far as the question of
their domicile is concerned. Until a child reaches the age of 16 or marries
under that age, the rules governing their domicile will be those already
discussed at 1.05 and 1.08 above. If, however, a child becomes insane and their
insanity continues beyond their sixteenth[71] birthday, the law would appear
to be that their domicile will continue to change with the parent from whom
they last acquired a domicile of dependence, but that where they become of
unsound mind after they have attained the age of 16 or married under that age,
they will permanently retain whatever domicile they then possessed and that
domicile will be incapable of change either by their own act or by that of
those who are entrusted with their care.[72] The degree of mental unsoundness
which is required before these rules will have effect is not settled, but it is
arguable that the test to be applied should be whether or not the person is
capable of forming the necessary intention to bring about a change in domicile.[73]
The Law Commission and the Scottish
Law Commission have recommended that the domicile of an adult incapax should
not be frozen at the onset of their incapacity but should be changed as
necessary so that their domicile is always that of the country with which they
are at any time most closely connected.[74]
As has been explained at 1.07 to 1.09 above, a domicile of choice can be acquired only by
a person who is not incapacitated either by age or by unsoundness of mind.
There are no formal steps to be taken for a person of full age and capacity to
acquire a domicile of choice. As the HMRC guidance puts it:
'To do so, you must broadly leave
your current country of domicile and settle in another country. You need to
provide strong evidence that you intend to live there permanently or indefinitely.'[75]
In Udny v Udny,[76] Lord Westbury described a
domicile of choice as:
'… a conclusion or inference which
the law derives from the fact of a man fixing voluntarily his sole or chief
residence in a particular place, with the intention of continuing to reside
there for an unlimited time.'[77]
Both elements must be present. As
Lord Chelmsford put it in Bell v Kennedy:[78]
'… a new domicile is not acquired
until there is not only a fixed intention of establishing a permanent residence
in some other country, but until also this intention has been carried out by
actual residence there.'[79]
These two elements are known,
respectively, as the animus manendi (the intention to remain) and the factum
(the fact of residence) and, as foregoing dicta make clear, both are essential.
Before considering each element individually, however, one point must be made.
The 'country' to which both the animus and the factum relate must, for the
purpose of determining whether a domicile of choice has been acquired under
common law, be 'a territory subject to a distinctive legal system.'[80]
This follows from the third
principle of domicile discussed at 1.04 above but, as explained there, the problem which
arises when discussing domicile in the context of UK taxation is that, under
the Taxes Acts, the question to be determined is whether a person is domiciled
'in the UK', ie a territory which is not subject to a distinctive legal system.
It is important to refer to the earlier discussion, therefore, and to bear in
mind that where a reference is made to a 'country' or 'territory' in the
following paragraphs, it is possible that, for the purposes of this work, the
country or territory referred to may be the UK collectively and not necessarily
Northern Ireland, Scotland or England and Wales individually.
The meaning of the term 'residence'
has already been explored at some depth in the earlier chapters of this work
but here a distinction must be drawn between residence as a connecting factor
in its own right for the purposes of UK taxation and residence in the context
of the acquisition of the connecting factor of domicile. In IRC v Duchess of
Portland,[81] Nourse J said:
'Residence in a country for the
purposes of the law of domicile is physical presence in that country as an
inhabitant of it ... [I]n a case where the domiciliary divides his physical
presence between two countries at a time ... it is necessary to look at all the
facts in order to decide which of the two countries is the one he inhabits.'[82]
The Duchess of Portland had claimed
that, by spending some 10 to 12 weeks each year in Quebec visiting relatives
and maintaining her links with Canada (the land of her birth and the country to
which she hoped eventually to return), she had acquired a domicile of choice in
Canada. She spent the rest of her time living with her husband in England.
Nourse J said:
'On those facts it appears clear to
me that since 1948 the taxpayer has been physically present in this country as
an inhabitant of it. Her physical presence in Quebec has been for periods of
limited duration and for the purpose of maintaining her links with the country
to which it is her intention ultimately to return. That is not enough to have
made her an inhabitant of Quebec. In my judgment it is clear that she was
resident in England on 1 January 1974 and that that residence was not displaced
when she went to Canada in July 1974 or at any other time during the material
period.'[83]
It has been shown that residence for
tax purposes, ie as a territorial connecting link per se, is a quality of the
person which – despite judicial asseverations to the contrary – may be
attributed to a person not according to its ordinary meaning in the speech of
plain men but according to a special, forensic meaning derived from case law
precedents and Revenue practice. It will be recalled, for instance, that the
celebrated Mr Lysaght, who had a settled place of residence in Ireland, was
attributed with UK residence status merely by reason of his regular monthly
business trips to the UK during the course of which he stayed with his brother
or at the Spa Hotel in Bath.[84] It has also been demonstrated
that, because residence in its taxation context is a qualitative attribute, a
person may (as in the case of Lysaght) be resident in two or more countries at
the same time.[85] It is clear from the judgment
of Nourse J, however, that neither of these possibilities is open so far as residence
in the context of the acquisition of a domicile of choice is concerned. A
person may be resident in a particular country for both taxation purposes and
domicile purposes, but he will not necessarily be so. Residence for domicile
purposes involves actual inhabitance of a country,[86] dwelling within its borders
rather than merely paying it visits, however extensive and regular those visits
might be: and where a person inhabits two different countries, the only one in
which he will be regarded as resident for domicile purposes is the one in
which, on the balance of the facts, he is shown to have his 'chief residence'.[87]
The length of a person's residence
in a particular country may be of great importance in determining whether or
not a person has acquired a domicile of choice in that country, but it is not
in itself determinative of the matter. As Lord Chelmsford said in Bell v
Kennedy:[88]
'It may be conceded that if the
intention of permanently residing in a place exists, a residence in pursuance
of that intention, however short, will establish domicile.'[89]
This principle was reiterated (with
the insertion of an interesting additional clause) by Nourse J in Re Clore (No
2):[90]
'… if the evidence [of intention] is
there, particularly perhaps where the motive is the avoidance of taxes, the necessary
intention will not be held to be missing merely because the period of actual
residence is a short one.'[91]
The fact of residence does, however,
raise a presumption of domicile in the country of residence[92] and this presumption grows with
the length of the period of residence so that, in some instances, it will be
sufficient to override declarations of contrary intention[93] and will require a person's
actual removal elsewhere if it is to be rebutted.[94] In Udny v Udny,[95] Lord Chelmsford said:
'Time is always a material element
in questions of domicil; and if there is nothing to counteract its effect, it
may be conclusive upon the subject.'[96]
Anderson v Laneuville[97] provides an interesting
illustration of the point. The case concerned Anderson, a person born in 1768
with an Irish domicile of origin who, at the age of 67 (by which time he had
acquired an English domicile of choice) traced, and thereafter until his death
some 24 years later, cohabited with, in France, a widow, Madame Laneuville,
who, some 46 years earlier, had risked her life in helping him to escape the
Terror of the revolution in France where he was then being educated. Anderson
had, it seems, expressed some intention of returning to England should Madame
Laneuville have predeceased him, but on appeal from the Prerogative Court of
Canterbury, that one fact was held to carry insufficient weight to counteract
the effect of the length of Anderson's residence in France, and that long
period of residence was held to lead inevitably to the conclusion that Anderson
had died domiciled in France.
Thus it was in the more recent case
of Re Furse, Furse v IRC.[98] William King Furse was born in
Rhode Island in 1883 and had a Rhode Island domicile of origin. At the age of
four, he was brought to England by his father but, after completing his
education here, he returned to America, married and remained in employment
there until 1916. He then left America to serve in the British army in the
1914–18 war. Upon demobilisation in 1919 he returned to New York where his wife
had purchased a house and he found employment there. In 1923 Furse and his wife
and children moved to England and bought a farm in West Hoathly. There Furse
lived until his death 40 years later. From time to time between 1923 and the
early 1950s, Furse and his wife contemplated a return to America and in the
1940s actually inspected a farm in Maryland. In the early 1950s Furse decided,
however, that he would not return to America unless he became incapable of
leading an active life on his farm in England. Fox J, declaring that Furse died
domiciled in England, said:
'… the facts ... show a man deeply
settled in England. He came to England at the age of four; he died in England
at the age of 80. Of the intervening 76 years he spent 58 in England (in the
sense that England was his normal place of abode in those years) and three or
four in the British army ... [He] was wholly integrated into the English
community in which he lived. There is no doubt at all, as I see it, that the
life which he was living in England was the life he wanted to go on living to
the end of his life ... In my view, by the time of his death, the balance of
probabilities is that he can have had no real intention of leaving; a fact
which is emphasised by the vagueness of his expressed intentions.'[99]
There was, to use Lord Chelmsford's
words, nothing (or nothing sufficiently concrete in the way of intention or
surrounding circumstances) to counteract the effect of time, and time was,
therefore, conclusive on the subject. This is not to say, however, that
residence of long duration will alone suffice to establish domicile. It will
not. As the previous HMRC guidance correctly pointed out:
'Living in another country for a
long time, although an important factor, is not enough in itself to prove you
have acquired a new domicile.'[100]
This follows from what Cottenham LC
said in Munro v Munro:[101]
'Residence alone has no effect, per
se, though it may be most important as a ground from which to infer intention.'[102]
In both Anderson v Laneuville[103] and Re Furse, Furse v IRC,[104] that was where the significance
of the long residence of Anderson and Furse lay. All the evidence suggested
that, despite their vague assertions of a possible return to their native
lands, Anderson and Furse would have remained where they were, however long
they had lived; and the courts, therefore, permitted the animus of true
intention to be inferred from the factum of residence.
Where, however, there is evidence to
the contrary – something sufficiently concrete to counteract the effect of the
duration of residence – the duration of residence will not be conclusive upon
the subject as Ramsay v Liverpool Royal Infirmary[105] illustrates. George Bowie (the
validity of whose will was in question) was born in Glasgow in 1845 and
acquired from his father a Scottish domicile of origin. Upon reaching the age
of 37 he gave up his employment as a commercial traveller and steadfastly
refused to work again throughout the remainder of his life. For 10 years he
'lived on the bounty' of his mother and sisters in Glasgow, then, in 1892, he
moved to lodgings in Liverpool and for the next 21 years sponged instead on his
brother. Upon his brother's death, Bowie moved into his brother's house and for
the next eight years sponged on his sister until she died in 1920. He remained
at his brother's house and died in Liverpool (where he had arranged to be
buried) seven years later. Bowie boasted of being a Glasgow man but during the
36 years he lived in England he refused to return to Scotland, even for his
mother's funeral. He left England only twice, once to visit America and once to
holiday in the Isle of Man. On those facts, the House of Lords held unanimously
that Bowie had not acquired a domicile of choice in England but that his
Scottish domicile of origin was still operative at the date of his death. Their
lordships were convinced that declarations by Bowie to the effect that he would
never return to Scotland were mere posturing and that, had Bowie's source of
funds dried up, he would, in fact, have gone back there. That, plus the fact
that there was no evidence to show that Bowie had made his permanent home in
England was, in their view, sufficient to quash the inference of intention to
which Bowie's 36 years of residence in England would otherwise have given rise.
Lord Macmillan said:
'Prolonged actual residence is an
important item of evidence of ... volition, but it must be supplemented by
other facts and circumstances indicative of intention. The residence must
answer a qualitative as well as a quantitative test.'[106]
IRC v Bullock[107] provides a modern (and much
more convincing) illustration of the application of this principle. Group
Captain Bullock had a domicile of origin in Nova Scotia but came to England in
1932 and joined the Royal Air Force. He intended to return to Canada on
completing his service but, in 1946, he married an Englishwoman some three
years his junior. Between then and 1960, Bullock and his wife made several
trips to Canada and, upon leaving the RAF in 1959, Bullock would have liked
them to move there permanently. His wife did not wish to do so, however, so
Bullock took up civilian employment in England until 1961 when an inheritance
enabled him to retire completely. Until 1966, Bullock continued to try to
persuade his wife to move with him to Canada, but thereafter resigned himself
to the fact that she would never do so. In that year, however, he made a will
under Nova Scotia law in which he declared that his domicile was and would
continue to be the Province of Nova Scotia and that he would return and remain
there upon his wife's death. Bullock retained his Canadian nationality and
passport, never acquired British nationality or a British passport, refused to
vote in local or parliamentary elections, maintained close contact with
Canadian relatives and friends, and was a regular reader of a Toronto
newspaper. On these facts the Commissioners found that Bullock was not
domiciled in England and the Court of Appeal (reversing Brightman J's judgment
in the High Court) upheld the Commissioners' finding. Bullock's residence in
England, though over 40 years in duration, was accompanied at all times by a
clear and definite intention to return to Canada upon the substantial
possibility of his wife predeceasing him, and that was sufficient to counteract
the effect of the element of time.
The acquisition of a domicile of
choice requires not only residence (in the sense of actual habitation of the
chosen territory) but also an intention to make that territory 'the permanent
home'.[108] The problem of what is meant by
'permanent' has lain at the root of many a case concerning domicile. Lord
Chelmsford took a strict view of the matter. In Moorhouse v Lord[109] he said:
'The present intention of making a
place a person's permanent home can exist only where he has no other idea than
to continue there without looking forward to any event, certain or uncertain,
which might induce him to change his residence. If he has in contemplation some
event upon the happening of which residence will cease, it is not correct to
call this even a present intention of making it a permanent home. It is rather
a present intention of making it a temporary home, though for a period
indefinite and contingent.'[110]
But others thought that far too
strict. In A-G v Pottinger,[111] Bramwell B said:
'There is not a man who has not
contingent intentions to do something that would be very much to his benefit if
the occasion arises. But if every such intention or expression of intention
prevented a man having a fixed domicil, no man would ever have a domicil at
all, except his domicil of origin.'[112]
The less absolute view of the nature
of the necessary intention may be discerned in Lord Westbury's statement in
Udny v Udny[113] that the residence which is the
other necessary element in the acquisition of a domicile of choice:
'… must be a residence not for a
limited period or particular purpose, but general and indefinite in its future
contemplation.'[114]
It emerged even more openly when, in
Gulbenkian v Gulbenkian,[115] Langton J said:
'The intention must be a present
intention to reside permanently, but it does not mean that such intention must
be irrevocable. It must be an intention unlimited in period, but not
irrevocable in character.'[116]
And it is clearly discernible in the
two widely-approved propositions concerning the acquisition of a domicile of
choice made by Scarman J in Re Fuld's Estate (No 3):[117]
'… a domicile of choice is acquired
when a man fixes voluntarily his sole or chief residence in a particular place
with an intention of continuing to reside there for an unlimited time.'[118]
'A domicile of choice is acquired
only if it be affirmatively shown that the propositus is resident within a
territory subject to a distinctive legal system with the intention, formed
independently of external pressures, of residing there indefinitely.'[119]
'Permanent', it will be noted, has
become 'indefinite' or 'unlimited' and the difference that brings about may
clearly be seen by comparing the dictum of Lord Cairns in Bell v Kennedy[120] and that of Buckley LJ in IRC v
Bullock.[121] Lord Cairns said:
'The question ... is ... Whether
[Bell] ... had determined to make, and had made, Scotland his home, with the
intention of establishing himself and his family there, and ending his days in
that country.'[122]
Buckley LJ said:
'I do not think that it is necessary
to show that the intention to make a home in the new country is irrevocable or
that the person whose intention is under consideration believes that for
reasons of health or otherwise he will have no opportunity to change his mind.
In my judgment, the true test is whether he intends to make his home in the new
country until the end of his days unless and until something happens to make
him change his mind.'[123]
Buckley LJ had not only the
authority of Bramwell B to rely on in adding those final 11 words. In Aikman v
Aikman,[124] Campbell LC (another
nineteenth-century judge) had said that a mere intention to return to a man's
native country on a doubtful contingency would not prevent residence in a
foreign country putting an end to his domicile of origin.
Given that Scarman J and Buckley J
have accurately stated the current judicial view of intention for domicile of
choice purposes, however, the question then arises: what constitutes a
'doubtful contingency'; what is the 'something' which a person might have in
contemplation without the necessary intention of indefinite or unlimited
residence being found lacking? Scarman J has answered the question thus:
'If a man intends to return to the
land of his birth upon a clearly foreseen and reasonably anticipated contingency,
eg the end of his job, the intention required by law is lacking: but if he has
in mind only a vague possibility, such as making a fortune (a modern example
might be winning a football pool) or some sentiment about dying in the land of
his fathers, such a state of mind is consistent with the intention required by
law. But no clear line can be drawn; the ultimate decision in each case is one
of fact.'[125]
And Buckley LJ has answered it in a
similar manner:
'No doubt, if a man who has made his
home in a country other than his domicile of origin has expressed an intention
to return to his domicile of origin or to remove to some third country on an
event or condition of an indefinite kind (for example 'if I make a fortune' or
'when I've had enough of it'), it might be hard, if not impossible, to conclude
that he retained any real intention of so returning or removing. Such a man, in
the graphic language of James LJ in Doucet v Geoghegan,[126] is like a man who expects to
reach the horizon; he finds it at last no nearer than it was at the beginning
of his journey.'[127]
In both these passages, however, the
contingency contemplated is of a 'pipe dream' character. What if the
contingency contemplated is something more specific? In the event, said Buckley
LJ, the question to be asked is:
'… is there a sufficiently
substantial possibility of the contingency happening to justify regarding the
intention to return as a real determination to do so on the contingency
occurring rather than a vague hope or aspiration?'[128]
The facts of the case of IRC v
Bullock[129] in which that test was
propounded, have already been set out at 1.11 above and it is clear from those facts that the
single contingency upon which Group Captain Bullock intended to return to
Canada was the death of his wife. It was only his wife's refusal to live in
Canada which was keeping the Group Captain here, and, as his wife was only two
or three years his junior, there was a substantial possibility that she would
predecease him. Accordingly, Buckley LJ held that his test question could be
answered affirmatively: Group Captain Bullock did not have the necessary
intention to make England his domicile of choice. When applied to the facts in
Re Furse, Furse v IRC[130] (also set out at 1.11 above), however, Buckley LJ's test produced the
opposite answer. William Furse was happy and content in England and the only
contingency upon which he intended to return to America was his becoming
physically incapable of taking an active interest in his farm. Fox J said:
'It seems to me that the intention
of [Furse] was indeed to continue to reside in England for an unlimited period.
His intention was to continue to live here for the rest of his life, save on
the contingency which he expressed. That contingency is so vague that I do not
think it can be regarded as imposing any clear limitation on the period of his
residence. I do not believe that he was ever prepared to face up to such a
limitation. The contingency is of the sort which Simon P in Qureshi v Qureshi[131] described as 'open-ended' ... I
think that, when [Furse] died in his 81st year, still in England and still with
no arrangements made for leaving England, one could not realistically regard
his permanent home as other than in England. He intended to live out his days
here, save on a contingency so vaguely expressed that I do not think, against
the history of his life, it could be regarded for practical purposes as limiting
that intention.'[132]
It will have been noted that in many
of the extracts from judgments given in this section the words 'present
intention' are used. The force of the adjective 'present' emphasises that what
must be considered is the state of a person's mind at the time when the
acquisition of a domicile of choice is alleged to have taken place. Subsequent
variations in that intention are irrelevant[133] unless accompanied or followed
by appropriate action.[134]
It should not be overlooked,
however, that evidence of a subsequent change of mind might, in some instances,
lead the court to infer that the original intention to remain indefinitely in
the country of choice was not as settled as the evidence of that original intention
indicated.
Although actual residence and the
intention to reside indefinitely must concur before a domicile of choice can be
created, the intention may precede or succeed the commencement of residence.
The person who decides to emigrate to Quebec will possess the intention which
is one element in the creation of a Quebec domicile of choice before he
establishes the residence which is the other essential element. The refugee
escaping persecution may, on the other hand, establish residence before he acquires
the intention to remain indefinitely in the land in which he resides.
The only remaining point to be made
concerning intention is that it is only the intention to remain indefinitely in
a country which is relevant to the acquisition of a domicile of choice. If a
person has that intention and there comes a time when the intention coincides
with actual residence, a domicile of choice is acquired whether it was also the
person's intention to acquire a domicile of choice or not. Thus, in Re Steer,[135] Mr Steer, an Englishman who
established his permanent home in Hamburg and died there 50 years later, was
held to have died domiciled in Germany even though, on one of his temporary
visits to England, he had made a will in which he declared that although he was
returning to Hamburg he had no intention of renouncing his English domicile of
origin. The principle governing this matter was succinctly stated over a century
ago:
'If the intention [to reside
indefinitely in a particular country] exists and if it is sufficiently carried
into effect certain legal consequences follow from it, whether such
consequences are intended or not and perhaps even though the person in question
may have intended the exact opposite.'[136]
It will have been noted that the
first of Scarman J's two propositions concerning the acquisition of a domicile
of choice, quoted at 1.12 above contains the words 'fixes voluntarily his sole
or chief residence', and that the second contains the words 'with the
intention, formed independently of external pressures, of residing'. Those
words draw attention to the fact that the acquisition of a domicile of choice
presupposes a freedom of choice. As Lord Westbury put it in Udny v Udny:[137]
'There must be a residence freely
chosen, and not prescribed or dictated by any external necessity... .'[138]
If it can be shown that a person
resides where he does, not by choice but by constraint, the necessary intention
will be lacking and no change of domicile will be imputed to the involuntary
exile.
The most obvious example of
residence by constraint rather than through choice is imprisonment in some
country other than that of the existing domicile. No prisoner, during the term
of his imprisonment, will acquire a new domicile in the country of his
imprisonment, even if the imprisonment is for a very long term, for his
residence is not a matter of choice.[139]
Another example of constraint is the
persecution which may impel a person to flee his existing country of domicile
for some other country. Although the residence in the country of refuge will be
a matter of free choice, the inference at law will be that the refugee will
return to his homeland upon it being safe for him to do so and he will,
therefore, prima facie lack the intention to reside permanently in the country
of refuge which would be necessary in order to attribute him with a domicile of
choice in that country. It might be, of course, that a refugee will acquire
such an intention during the course of his exile.[140]
A fugitive from justice is in much
the same position as the refugee except that, if his crime is such that he will
always (or for a very long time) be liable to proceedings in the country from
which he has fled, there will be a presumption at law that he has selected his
country of refuge with the intention of residing there indefinitely.[141] His departure will have been a
matter of constraint but his establishment of residence elsewhere will have
been a matter of free choice.
'The demands of creditors' was one of
Lord Westbury's examples of an external necessity which might result in a
person residing where he would not otherwise reside.[142] So it was with Colonel Udny and
his residence in France. But the fact that a person has fled the country to
escape his creditors will not necessarily mean that he cannot acquire a
domicile of choice in the country to which he has fled. It will depend on
circumstances: the size of the debts, the likelihood of them ultimately being
met, how long their discharge is likely to take, and the imminence of recovery
proceedings.
The invalid who, although in no
immediate danger of untimely death, settles for the sake of his health in a
country other than the country of his existing domicile is regarded at law as
doing so out of choice rather than out of constraint. In the case of Hoskins v
Matthews,[143] for example, Turner LJ said
that Mr Matthews, an Englishman who, at the age of 60, had gone to Florence
suffering from a spinal injury and had died there 12 years later, was not, when
he first took up residence in Florence,
'… in any immediate danger or apprehension.
He was, no doubt, out of health, and he went abroad for the purpose of trying
the effect of other remedies and other climates. That he would have preferred
settling in England I have little doubt, but I think he was not driven to
settle in Italy by any cogent necessity. I think that in settling there he was
exercising a preference, and not acting upon a necessity, and I cannot venture
to hold that in such a case the domicil cannot be changed.'[144]
If, however, the change of
environment is a matter of life or death, or if, death being imminent and
inevitable, the change of climate will alleviate suffering, there will, it
seems, be no presumption of a change in domicile.[145]
The 'tax exile' who, in order to
escape the incidence of taxation in the country of his existing domicile,
settles in a country with a less harsh tax regime, will, it seems, be presumed
to intend to remain in the new country permanently. In Re Clore (No 2),[146] Nourse J said that even a short
period of residence would be sufficient to establish a domicile of choice 'if
the evidence is there, particularly perhaps where the motive is the avoidance
of taxes.'[147]
In the Clore case, there were,
according to Nourse J, three areas where the evidence supported Sir Charles
Clore's acquisition of a domicile of choice in Monaco. One was the severance of
the more important of his connections with England where Sir Charles had his
domicile of origin. Another was the establishment of connections with Monaco
including residence there. But the most important, in Nourse J's eyes, was
that:
'… the professional advice which Sir
Charles received was given not solely with the immediate object of his
acquiring a non-resident status for income and capital gains tax purposes, but
with the long-term objective of his acquiring a foreign domicile. Further,
unless the operation was to be at least partially counter-productive, it was essential
that the new country should be one where no tax was payable. Monaco was chosen
because it was the only tax haven with which Sir Charles was familiar and the
only one which could have been acceptable to him.'[148]
Against the evidence in those three
areas, however, was the evidence of four of his close friends who were
unanimous in their testimony that Sir Charles was unhappy in Monaco and had
never, in his heart of hearts, abandoned England. All his actions from mid-1978
until his death in London on 26 July 1979 were tentative and, right up to the
time of his death, he was showing an interest in acquiring residential
properties in France and Israel. Accordingly, Nourse J held that Sir Charles
died domiciled in England. That decision must not, however, be allowed to
obscure the fact that, because Sir Charles had resided in Monaco and his motive
for residing there was tax avoidance, Nourse J accepted that there was a
presumption at law that a domicile of choice had been acquired in Monaco. As
with any presumption at law, however, the presumption to which a tax avoidance
motive will give rise may be rebutted by other evidence, and in the Clore case
it was rebutted by the evidence of parol declarations made by Sir Charles in
his final years and testified to by his four friends.
It must finally be pointed out that
the residence of a person in a country other than the country of his existing
domicile will give rise to no presumption that a domicile of choice has been
acquired in the new country if the person is there in pursuit of what Lord
Westbury called 'the duties of office'.[149] These have been held to include
the duties of a consul,[150] chief justice,[151] embassy attaché,[152] naval officer,[153] and army officer.[154] Such a negative presumption
may, of course, be rebutted by evidence to the contrary.[155]
As Scarman J said in Re Fuld's
Estate (No 3):[156]
'It is beyond doubt that the burden
of proving the abandonment of a domicile of origin and the acquisition of a
domicile of choice is upon the party asserting the change. But it is not so
clear what is the standard of proof: is it to be proved beyond reasonable doubt
or upon the balance of probabilities, or does the standard vary according to
whether one seeks to establish abandonment of domicile of origin or merely a
switch from one domicile of choice to another? Or is there some other standard?
... The formula of proof beyond reasonable doubt is not frequently used in
probate cases and I do not propose to give it currency. It is enough that the
authorities emphasise that the conscience of the court ... must be satisfied by
the evidence. The weight to be attached to evidence, the inferences to be drawn,
the facts justifying the exclusion of doubt and the expression of satisfaction
will vary according to the nature of the case. Two things are clear – first,
that unless the judicial conscience is satisfied by evidence of change, the
domicile of origin persists: and secondly, that the acquisition of a domicile
of choice is a serious matter not to be lightly inferred from slight
indications or casual words.'[157]
Those statements were later endorsed
by Orr LJ who, in Buswell v IRC,[158] said:
'I ... accept the statements as
accurate and would only add that in referring to the judicial conscience I am
satisfied that Scarman J was not recognising the existence of some general
standard of proof intermediate between the criminal and civil standards but was
merely emphasising that in the application of the civil standard the degree of
proof required will vary with the subject-matter of the case.'[159]
The approach to assessing evidence
of intention was neatly expressed by Mummery LJ in Agulian & Anor v
Cyganik:[160]
- '(1) Although it is helpful to trace … life events chronologically and to halt on the journey from time to time to take stock, this question cannot be decided in stages. [T]he court must look back at the whole of the deceased's life, at what he had done with his life, at what life had done to him and at what were his inferred intentions in order to decide whether he had acquired a domicile of choice in England by the date of his death. Soren Kierkegaard's aphorism that 'Life must be lived forwards, but can only be understood backwards' resonates in the biographical data of domicile disputes.
- (2) Secondly, special care must be taken in the analysis of the evidence about isolating individual factors from all the other factors present over time and treating a particular factor as decisive.'
If the judicial conscience is to be
satisfied that a change in domicile has taken place, the courts must subject
every department of a person's life to the most searching scrutiny. The length
and nature of his residence in the country in which it is asserted that he has
acquired a domicile will, of course, be a factor of particular interest since,
as has been explained,[161] residence gives rise at law to
a presumption of domicile, and intention may be inferred from residence if the
residence is of sufficient length and there is other evidence to support such
an inference. His motives too must be examined for, as has been explained at 1.13 above, a person's motive in taking up residence in a
country other than that of his existing domicile may give rise to a presumption
of, or against, a change in domicile. But the court's concern is never confined
merely to residence and the motive for residence. As Lord Atkinson said of
Winans v A-G[162] in Casdagli v Casdagli:[163]
'… the tastes, habits, conduct,
actions, ambitions, health, hopes, and projects of Mr Winans deceased were all
considered as keys to his intention to make a home in England.'[164]
It is often said that if a person
wishes to ensure that his change of domicile will withstand the scrutiny of the
courts he must not only take up residence in the country of choice but should
purchase a property there and dispose of any property he has in the country he
has abandoned, that he should apply for citizenship of the new country, obtain
a passport in the new country and relinquish his existing passport, close all
bank accounts in the abandoned country and open new accounts in the country of choice,
relinquish credit cards and obtain new ones in the country of choice, resign
any directorships in the country he has abandoned and acquire business
interests in the country of choice, sever membership of clubs, societies,
religious organisations etc in the abandoned country and join clubs etc in the
country of choice, vote in the new country's elections,[165] become involved in its politics
and socially integrated into its life, educate his children in its schools,
have his will drawn up under its laws and make arrangements to be buried or
cremated there. Such a checklist has a certain value, being a list of factors
to which particular significance has been attached in cases which have come
before the courts at different times. But the approach is wrong. A person who
has genuinely made his 'permanent home' in a new country will, in those and
many other ways, manifest the reality of his intention to live out his days as
an inhabitant of the land to which he has gone; but the person who is engaged
in nothing more than a cosmetic exercise designed to conceal the fact that 'in
spite of all temptations to belong to other nations, he remains an Englishman'[166] is likely to betray his lack of
genuine intention no matter how scrupulously he adheres to a list of 'dos and
don'ts'. No one factor will, in itself, be decisive, and even a factor which
seems of supreme significance when viewed in isolation may carry little weight
when set against all other factors. Thus, for example, in Wahl v A-G,[167] the fact that a person with a
German domicile of origin and German nationality had become a naturalised
British subject was not regarded as being at all conclusive:
'I am far from saying that an
application for naturalisation is not a matter to be carefully considered as
part of the evidence in a case of domicile, but it must be regarded as one of
the totality of facts and it cannot assume the dominant importance attached to
it in the judgment of the trial judge ... It is not the law either that a
change of domicile is a condition of naturalisation, or that naturalisation
involves necessarily a change of domicile.'[168]
In making his application for naturalisation,
Wahl had made a statutory declaration to the effect that he intended to
continue to reside permanently within the UK. That too formed part of the
evidence of his intention and, since such declarations are frequently made by
persons changing their domicile, their value must now be considered. In F v IRC[169] the executor of F, a former
Iranian national who had died in 1993, appealed against the determination of
the Revenue that he had been domiciled in the UK for the years of assessment
1986–87 to 1992–93 inclusive. F had operated an accountancy business in Iran.
He had bought land with a view to developing it, owned three houses and had
constructed a large family home. At the time of the Iranian revolution he had
sent his wife and children to live in the UK while remaining himself in Iran.
At the time of the US hostage crisis F had decided to remain outside Iran at
the same time he had been placed on an exit barred list due to alleged
outstanding tax liabilities. In 1980 he had been granted indefinite leave to
remain in the UK. He had subsequently applied for naturalisation, falsely
claiming that he had left Iran to escape religious persecution. Up until the
time of his death, F had made efforts at getting the exit bar removed. He had
continued to consider Iran as his home. The Court in allowing the appeal held
that the Revenue had not discharged the burden of proof to demonstrate that F
had not abandoned his Iranian domicile. Having regard to the evidence, it had
always been F's intention to return to Iran permanently during the relevant
years for assessment. His acquisition of British citizenship and a British
passport had not affected his domicile of origin in Iran, and so Wahl v A-G
applied. He had been keen to gain the necessary documentation that would enable
him to continue to travel freely in the furtherance of his business interests
and had been willing to lie in order to gain such documentation. His return to
Iran had been precluded by the exit bar. Such external pressures had prevented
F from forming a free intention to acquire another domicile.
An example of the difficulties to
which a written declaration might give rise is found in Buswell v IRC.[170] Leslie Buswell had a Transvaal
domicile of origin acquired from his father who had a Transvaal domicile of
choice. In 1928, when Buswell was seven years old, he and his parents moved to
England so that Buswell could be educated here. Following his education and a
brief period which Buswell spent as a teacher in Tenbury Wells, he was
called-up in 1941 and served in the Royal Indian Navy. Upon demobilisation in 1945,
he took employment in India and remained there until 1952 when he returned to
England where his father was living in a poor state of health. Once in England,
he took employment with a publishing firm for six months, then obtained a
position with British Olivetti Ltd which he held until 1963. In 1955, Buswell
obtained a South African passport and elected for South African nationality
when South Africa left the Commonwealth, and, in 1958, wrote to a cousin in
South Africa saying he intended to return there one day. In 1961, he married an
Englishwoman of means who was agreeable to settling eventually in South Africa,
and, by her, had children who were educated in England but were registered as
South African nationals. In 1968, Buswell and his wife visited South Africa
(Buswell's first visit there for 40 years) and bought a property in which they
thereafter spent some three months of each year. Buswell claimed that, for the
years 1961–62 to 1967–68, he was 'not domiciled in the UK' for the purposes of
ITA 1952 s 132 (now ITTOIA s 832)). That claim was resisted by the Inland
Revenue on the grounds that, on 11 November 1952, Buswell had completed a
Revenue questionnaire (Form P86) by answering 'Yes' to the question 'Do you
propose to remain permanently in the UK?' and inserting a dash in answer to the
next question: 'If not, how long do you expect to remain in this country?' The
Commissioners attached great weight to those replies and accordingly found that
Buswell had acquired an English domicile of choice. The High Court upheld the
Commissioners' finding on appeal, but the Court of Appeal reversed it. Orr LJ
said.
'The crucial question ... is ...
whether the Commissioners, in coming to their conclusion, attributed to the
answers on Form P86 a weight which in all the circumstances they could not
reasonably bear. For this purpose it is necessary to consider both the terms of
the questions asked on the form and the circumstances in which it may
reasonably be supposed that [Buswell] answered them ... [T]he form was not
intended by the Revenue to ascertain domicile and it nowhere used that word ...
A person faced with ... mutually exclusive questions, would, I think, be very
likely to consider that he was not expected to say "I do not know" in
answer to the second question, an answer which would have to be given if he
said "No" to the first ... I find ... that, in attributing a decisive
importance to [Buswell's] answers on the Form P86, given at a time when he had
been back in this country for less than five months after an absence of ten
years, and against the background to which I have referred, the Commissioners
acted "upon a view of the facts which could not reasonably be
entertained".'[171]
Often a written declaration of
intention will appear in a person's will, taking a form similar to that
appearing in the will of Frank Lawton in Re Lawton:[172]
'Inasmuch as I am a British subject
having my original domicile in England (which domicile I have never
relinquished or abandoned) it is my wish and intention that this my will ...
shall be construed and operate so far as the case admits as if I were now and
remained until my death domiciled in England.'[173]
The value of such a declaration was
assessed by Romer LJ in A-G v Yule and Mercantile Bank of India[174] as follows:
'For myself, I am not prepared to
attach any importance to a declaration by a man as to his domicile unless there
is some evidence to show that the man knew what 'domicile' means. A declaration
by a man made orally or in writing that he intends to remain in a certain
country will, if not inconsistent with the facts, be of assistance in
determining the question whether he has become domiciled there. Domicile is,
however, a legal conception on which the views of a layman are not of much
assistance.'[175]
Lawton had, in fact, left England
before he had attained the age of 21 and, having lived and worked in Argentina
and Spain, retired to France where he died some 63 years later. Upjohn J held
that, despite the declaration in his will, Lawton died domiciled in France.
Where the assertion of intention as
to residence has been made orally, the testimony of the person to whom it was
made is admissible as evidence of intention but, if made long after the
assertion itself was made, will be treated with caution:
'To entitle such declarations to any
weight, the court must be satisfied not only of the veracity of the witnesses
who depose to such declarations, but of the accuracy of their memory, and that
the declarations contain a real expression of the intention of the deceased.'[176]
Where the assertion is actually made
by the person whose domicile is being determined during the court proceedings
at which the determination of his domicile is to be made, the assertion will,
of course, carry very little weight indeed. In Bell v Kennedy[177] the Lord Chancellor said of
Bell's own testimony:
'… it is to be accepted with very
considerable reserve. An Appellant has naturally, on an issue like the present,
a very strong bias calculated to influence his mind, and he is, moreover,
speaking of what was his intention some twenty-five years ago.'[178]
It should by now have become clear
that the courts will not easily be satisfied that a domicile of origin has been
replaced by a domicile of choice. The presumption of a domicile of origin's
continuance is of the utmost strength and, compared with a domicile of choice:
'… its character is more enduring,
its hold stronger and less easily shaken off.'[179]
This is because a domicile of origin
is conferred on a person by operation of law whereas, as has been explained,[180] a domicile of choice is
acquired merely animo et facto. Once acquired, however, a domicile of choice
may be extinguished animo et facto also, ie, by an intention and an act. The
act is the leaving of the country of the domicile of choice and the intention
is the intention not to resume permanent residence there. This last is
technically referred to as an animus non revertendi. Such an animus does not,
it should be noted, include within it a decision to reside permanently
elsewhere. In Udny v Udny,[181] the Lord Chancellor summed up
the whole matter as follows:
'… if the choice of a new abode and
actual settlement there constitute a change of the original domicil, then the
exact converse of such a procedure, viz the intention to abandon the new
domicil, and an actual abandonment of it, ought to be equally effective to
destroy the new domicil. That which may be acquired may surely be abandoned,
and though a man cannot, for civil reasons, be left without a domicil, no such
difficulty arises if it be simply held that the original domicil revives. That
original domicil depended not on choice but attached itself to its subject on
his birth, and it seems to be consonant both to convenience and to the currency
of the whole law of domicil to hold that the man born with a domicil may shift
and vary it as often as he pleases, indicating each change by intention and
act, whether in its acquisition or abandonment; and, further, to hold that every
acquired domicil is capable of simple abandonment animo et facto the process by
which it was acquired, without its being necessary that a new one should be at
the same time chosen, otherwise one is driven to the absurdity of asserting a
person to be domiciled in a country which he has resolutely forsaken and cast
off, simply because he may (perhaps for years) be deliberating before he
settles himself elsewhere.'[182]
Just as a domicile of choice cannot
be acquired animo solo, however, a domicile of choice cannot be abandoned
unless the intention to leave the territory of the existing domicile of choice
for good is accompanied by an actual departure from that territory. As Cotton
LJ said in Re Marrett:[183]
'… in order to lose the domicil of
choice once acquired, it is not only necessary that a man should be
dissatisfied with his domicil of choice, and form an intention to leave it, but
he must have left it, with the intention of leaving it permanently.'[184]
The application of this principle is
to be found in Zanelli v Zanelli.[185] The case concerned an Italian
who, having married an Englishwoman and lived with her in England, deserted her
and returned to Italy. The wife petitioned for divorce in England claiming that
the English courts had jurisdiction because immediately before deserting her,
her husband was domiciled in England within the terms of the Matrimonial Causes
Act 1973 s 13. The question before the court was whether that was so. It was
accepted that, following the marriage, the woman's husband had acquired a
domicile of choice in England and it was accepted also that, by the time of his
desertion, he had formed the intention to return permanently to Italy. But did
that bring about a loss of domicile of choice? Lord du Parcq decided that no,
it did not:
'… although the husband may have
given up an intention to reside here, he certainly had not given up residence
here. The factum had not occurred.'[186]
Accordingly, the woman's petition
was granted and her divorce (which would not have been permitted under Italian
law) was granted under English law.
The question when the factum of
departure does occur is not always an easy question to answer as Re Raffenel's
Goods[187] illustrates. Madame Raffenel had
a domicile of origin in England but, upon marrying a French naval officer, had
acquired a French domicile of dependence. Following her husband's death, she
decided to return permanently to England. She boarded ship at Calais with her
children and baggage, having closed down her establishment in Dunkirk, but,
before the ship left the harbour, became so ill that she had to disembark. She
returned to Dunkirk where she later died. Sir Cresswell Cresswell said:
'I cannot think that the French
domicil was abandoned so long as the deceased remained in the territory of
France. It must be admitted that she never left France, and that intention
alone is not sufficient.'[188]
Although that case was concerned
with abandonment of a domicile of dependence, Lord du Parcq, in the case of
Zanelli v Zanelli[189] which (as explained above) concerned
the abandonment of a domicile of choice, expressly approved the decision in Re
Raffenel's Goods[190] and drew no distinction between
the two types of domicile in this connection. Speaking of Zanelli's desertion
of his wife he said:
'… he cannot be said to have lost
his domicile of choice even at the moment when he stepped into the train with
his ticket in his pocket. Having regard to what was decided ... in Re
Raffenel's Goods ... I do not think that, even when he stepped on board the
ship which was to carry him to the Continent, he had yet lost his domicile of
choice.'[191]
It should be noted, however, that in
that case, Asquith LJ went even further:
'To change an English domicile of
choice there must be both animus and factum, the animus being the formation of
the intention, and the factum consisting in some outward and visible act
evincing it such as leaving this country or, perhaps more accurately, arriving
in another.'[192]
And on the strength of that dictum,
Baker J held, in Leon v Leon,[193] that a person who had displaced
his domicile of origin in British Guiana (now Guyana) by a domicile of choice
in England but had then left England for good and returned to British Guiana,
had:
'… kept his English domicile until
he reverted to his domicile of origin on his arrival in British Guiana in
August 1964.'[194]
This, it is suggested, was
stretching Sir Cresswell Cresswell's dicta in Re Raffenel's Goods[195] too far. Surely, the domicile
of origin of both Zanelli and Leon revived as soon as their respective ships
left the territorial waters of the UK, not when they docked on the shores of
their respective homelands.
It was said at the outset of this
section that the animus required to effect the abandonment of a domicile of
choice is an animus non revertendi, ie an intention not to return. It must now
be emphasised that (despite recent indications of some relaxation in this view)[196] such an animus does not cover a
case of mere irresolution (sine animo revertendi). A person who leaves the
country of his existing domicile of choice in a state of indecision as to
whether or not he will return there retains his existing domicile of choice
until such time as his indecision hardens into a decision never to return. This
is illustrated by Fielden v IRC.[197] Fielden had an English domicile
of origin but, in or about 1935, this was displaced by a Michigan domicile of
choice when he married a Michigan resident and settled in that state of America
with the intention of remaining there permanently. In 1943, Fielden and his
wife moved to Burnley in Lancashire with the intention of helping in his
father's ailing business, and they bought a house there. In 1947, Fielden
became a director of his father's company and later became chairman and
managing director. It seems that he then decided that he owed it to his father
to remain in England until he was satisfied the business could continue
successfully without him, but he asserted that, upon his retirement, he would
return to America, though not necessarily to Michigan. At the time the case was
heard, however, he was still living in Burnley, 22 years after leaving America.
The Commissioners decided that, by 1954–55, the first of the years for which
his domicile was in question, Fielden's English domicile of origin had revived,
but they also found that his Michigan domicile of choice had been retained for
some years after his return to England, probably until 1947. This was, it is
suggested, because for those years he was merely sine animo revertendi to
Michigan, not animo non revertendi to Michigan. Later, however, his intention
to return to America in general became too vague to prevent him being regarded
as animo non revertendi and thereupon his domicile of origin revived. The
Commissioners' findings were upheld by Cross J who said:
'… it is not necessary, in order to
retain a domicile of choice after a change of residence, to have an unwavering
intention of returning to live in the place of domicile in all circumstances
... When [Fielden] came to England in 1943, he came under the stress of
circumstances. He wanted to help his country and his father in the war; and the
Commissioners have found – I think quite rightly found – that he did not there
and then lose his Michigan domicile of choice. It would not, I think, matter
for this purpose whether he then had an intention to go back as soon as
possible to Michigan after the war, or simply to go back to some place in the
United States after the war. But then one finds that after the war he buys a
house here, that when he goes to the United States it is only for a short stay,
and that he remains here continuously until the present time ... [H]e
re-acquired his English domicile of origin about 1947 ... because ... such
intention as he may thereafter have had of going to live somewhere in the United
States after his retirement was really too vague and uncertain to prevent the
re-acquisition of his English domicile of origin.'[198]
If a person leaves his domicile of
choice animo revertendi but subsequently abandons his intention to return, his
domicile of origin will, of course, thereupon revive.[199]
Finally, it should be noted that
where a person animo et facto abandons one domicile of choice and animo et
facto acquires another, his domicile of origin will revive for the duration of
the interval, however brief, between the abandonment and the acquisition.[200]
In introducing the capital transfer
tax (which has now been renamed 'inheritance tax'), the Finance Act 1975 s 45
provided that, under any of three sets of circumstances a person who was not
domiciled in the UK under the common law rules described in this chapter was
nevertheless to be treated as domiciled in the UK for most purposes of the tax.
The provision relating to one of those three sets of circumstances was repealed
by Finance (No 2) Act 1983 s 12 and the provisions describing the remaining two
sets of circumstances have now been substantially re-enacted as the Inheritance
Tax Act 1984 s 267(1)(a) and (b).
Section 267(1)(a) and (3) provides
that a person not domiciled in the UK at the time of a transfer of value etc
('the relevant time') is to be treated as domiciled in the UK at that time if
he was domiciled in the UK on or after 10 December 1974 and within the three
years immediately preceding the relevant time.
In the absence of statutory
definition to the contrary, 'year' means a period of 12 calendar months
consisting of 365 days or 366 days in a leap year.[201]
The effect of this provision is to
postpone (for inheritance tax purposes only) a person's acquisition of a
domicile in some country outside the UK to a date three years after the date on
which, according to common law rules, the acquisition of the new domicile
actually took place. Thus, any transfer of value made by the person within the
three years immediately following his acquisition of an overseas domicile will
remain potentially subject to inheritance tax regardless of the situs of the
asset.
This rule has no rational basis and
is a transparently directed at keeping within the inheritance tax net for a
period of time anyone who leaves the UK permanently. Superficially, it
parallels a Revenue practice regarding the residence status of a person who
leaves the UK for permanent residence abroad, ie that a decision on that
person's claim to have become non-resident and not ordinarily resident in the
UK will be postponed for three years and that during those three years the
person's tax liabilities will be calculated on the basis that he remains a UK
resident; but, in the case of residence, a decision at the end of three years
that the person had become non-resident on his departure is then applied
retrospectively to the date of departure and all assessments are revised
accordingly. There is, however, nothing similarly provisional about the three
year postponement of non-domiciled status.
Unlike s 267(1)(a), s 267(1)(b) is a
rational piece of legislation which is designed to place a non-domiciled person
who has lived in the UK for a long number of years on an equal footing with the
UK domiciled taxpayer.[202] It (and s 267(3)) provides that
a person not domiciled in the UK at the time a transfer of value etc takes
place ('the relevant time') is to be treated as domiciled in the UK at that
time if he was resident in the UK on or after 10 December 1974 and in not less
than 17 of the 20 years of assessment ending with the year of assessment in
which the relevant time falls. It should be noted, however, that, for the
purposes of this provision:
'… the question of whether a person
was resident in the UK in any year of assessment shall be determined as for the
purposes of income tax.'[203]
Chapters 2 and 4 should, therefore,
be studied in this context, in particular sections 2.08 to 2.09 and 4.06 and 4.07 above. A person will thus be likely to acquire
residence status if his presence in the UK is of sufficiently long duration
during a tax year for a territorial link to be established (183 days or more in
the opinion of HMRC) or if the pattern of his visits to the UK in years prior
to and subsequent to the tax year in question, though not in themselves of
significant length, nevertheless establish a similar territorial link (an
average of three or more months a year over a period of four or more tax years
in the Revenue's view) or if visits to the UK which would otherwise be
insignificant are given by ties such as nationality, family and business a
significance sufficient to establish the kind of territorial link which
residence status connotes.
The provision itself has two
effects. The first is to bring persons who have never been domiciled in the UK
into the inheritance tax net. The second (and often overlooked) effect is,
unless the change of domicile takes place on 6 April, to keep a person who has
been, but is no longer, domiciled in the UK within the inheritance tax net for
up to almost a year longer than s 267(1)(a) will keep him there.
Members of the House of Commons
(Members of Parliament) and House of Lords (Peers) are deemed resident,
ordinarily resident and domiciled in the UK for the purposes of income tax,
inheritance tax and capital gains tax.[204]
It should be noted that where
(whether under these deemed domicile rules or not) a person is regarded under
UK law as domiciled in the UK but is regarded under the law of a foreign state
with which the UK has a double tax treaty covering estate and inheritance taxes
as domiciled in that foreign state, the provisions of the treaty will apply so
as to ensure that the person is treated by both the UK and the foreign state as
being domiciled in one of the territories only for the purpose of that treaty.[205] Article 4(2) of the OECD 1982
draft double taxation convention on estates and inheritances provides for this
to be achieved by a series of tests identical with those applied to determine
fiscal residence as described at 2.22 above. A number of these treaties are, however, old
and contain a variety of provisions addressing fiscal domicile quite
differently from the OECD Model.
PUBLISHED BY
Merceline Akinyi with adaptations from uk.practicallaw.com
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