ICAEW Tax Faculty has commented on clauses affecting non-doms in Finance Bill 2017-19 and draft clauses on offshore trusts which will be in Finance (No 2) Bill 2017-19.
Changes in Finance Bill 2017-19
The Finance Bill 2017-19 clauses 15, 29, 30, 31, 33 and schedules 8-10 contain the provisions making non-doms deemed domiciled in the UK if they have been resident in 15 out of the previous 20 years, plus modifications to the business investment relief provisions.
The main changes, which will be effective from 6 April 2017, are as follows:
Also effective from 6 April 2017, a limited number of relaxations to Business Investment Relief (BIR) are introduced to encourage greater take up of the relief. The opportunity is also taken to legislate for HMRC’s view that for BIR purposes corporate partners are not treated as carrying on a trade by virtue of the partnership carrying on a trade. HMRC has always interpreted the legislation in that way but until this change its view was not shared generally.
The changes were first proposed in the 2015 Summer Budget and there has been a long journey through consultations and draft legislation to arrive at the clauses in Finance Bill 2017-19. We provided a briefing, ICAEW REP 109/17, to aid MPs as the Bill passed through the committee stages outlining our concerns about where the draft clauses did not achieve the policy objectives or did not operate in the manner intended.
Draft legislation on offshore trusts
Some provisions on offshore trusts anti-avoidance measures were held over from Finance Bill 2017-19 to be included in the next Finance Bill; draft legislation was published on 13 September and we submitted our comments on the draft in ICAEW REP 120/17.
The draft legislation is very complex and will be supplemented by guidance. We have expressed concern about this approach given that the courts have recently stated that guidance cannot be relied upon (see the Court of Appeal decisions in Revenue and Customs v Hutchinson  EWCA Civ 1075 (26 July 2017) and Samarkand Film Partnership No 3 & Ors v Customs EWCA Civ 77 (24 February 2017).
The representation picks up on the interaction issues with the provisions already included in Finance Bill 2017-19 as well as problems with offshore income gains, close family member legislation, anti-recycling provisions and the interaction with existing settlements legislation.