ALLISON PLAGER reports some recent decisions.
An American in England
A United States citizen had a United States passport and citizenship, and a domicile of origin in Missouri. He came to England to live in 1991, where he continued to live until his death in 1997. The issue, for the purposes of inheritance tax, was whether or not the deceased had acquired a domicile of choice in England, as claimed by the Inland Revenue.
ALLISON PLAGER reports some recent decisions.
An American in England
A United States citizen had a United States passport and citizenship, and a domicile of origin in Missouri. He came to England to live in 1991, where he continued to live until his death in 1997. The issue, for the purposes of inheritance tax, was whether or not the deceased had acquired a domicile of choice in England, as claimed by the Inland Revenue.
After looking at the evidence, the Special Commissioner said that he had the impression that the deceased had been a cultured person who was perfectly at home in Europe, and used England as a base for travel to Europe. He did not, however, adopt a particularly British lifestyle, and was regarded by his acquaintances as an American. He did not wear British clothes or eat British food. He enjoyed a nomadic lifestyle, and ultimately lived solely in England as much a result of poor health than a desire to make England his permanent home. He had not given up all his New York connections; for instance he maintained an apartment there, and had his investments managed from there.
There was insufficient evidence to show that the deceased had intended to acquire a domicile of choice in England, and therefore he died not domiciled in England.
The appeal was allowed.
(The Executors of Robert Moore deceased (SpC 335).)
Disclaimed by conduct
Family dispute and lack of communication confused the issue of whether or not the widower of Mrs Watkins had acquired an interest in possession in a property belonging to the deceased. In her will, the deceased had left her property in trust, giving her husband the right to live in the house for as long as he wished. After her death, the husband stayed with his daughter, fell ill and died without actually moving back to live in the property. The matter was further complicated since the property was divided into two flats, one of which was let. The Inland Revenue issued a determination to the executors that the husband did not acquire an interest in possession in the property, against which the executors appealed.
After examining the facts, the Special Commissioner said that there was nothing to show that the husband had never intended to occupy the property. His daughter had written to the executors' solicitors shortly before his death to say that although he had a life interest in the property, he would not be returning there to live, but the Special
Commissioner said that this was not written in terms of a disclaimer.
He concluded that the disclaimer by conduct had not taken place, and allowed the appeal in respect of the first floor flat, but not the let flat.
(Brian Maxwell Cook and Elaine Margaret Dawn as executors of Joyce Elizabeth Watkins deceased (SpC 319).)
Signing-on bonus
The appellant agreed to take a job with a company, and was paid an £18,000 signing-on bonus, repayable if she left within one year. The employer taxed the bonus, but the appellant claimed back the tax under section 200B, Taxes Act 1988 (work related training provided by employers). She argued that the bonus was paid to reimburse her for the cost of an MBA course which she had completed shortly before taking the new job. This has nowhere been stated in writing, although the employer wrote to the Revenue to confirm that this was the purpose of the payment.
It was agreed that if section 200B did not exempt the reimbursement of the fees, they were taxable under section 19 as emoluments.
The Inspector argued that the bonus paid to the taxpayer was not a reimbursement of training costs, rather it was an inducement for her to join the employer. Further, section 200B(1) required that the recipient be employed at the time the training was provided. Alternatively, section 200C(1) disallowed the expenditure on the ground that it provided the employee with an employment inducement unrelated to training.
The Special Commissioner said that the payment was described as a signing on bonus, but the amount equated to the cost of the appellant's course. Further evidence supplied by the employer showed that such payments were usually only paid to employees joining the company who had recently finished some form of training. Concluding that the payment was a reimbursement of training costs, the Commissioner noted that it would have been helpful at least to its employees, if the company had described the payment as such rather than a signing-on bonus.
As to the Inspector's contention that section 200B applied only to current employees undertaking training, the Commissioner said that there was an overlap between the course and the employment, as the employer committed itself to reimburse fees in June 2001, while the course ended in July 2002. Section 200B therefore did apply.
Finally, the Commissioner considered the Inspector's argument that section 200C prevented the exemption from applying. After studying the legislation, he said that section 200C related to training courses which had an entertainment or recreational aspect. A serious MBA course did not really therefore relate to section 200C. Thus the exemption still applied.
The appeal was allowed.
(Clementina Silva (SpC 332).)
