Analysis
The executor of the estate of the deceased appealed against a notice of determination under s221 Inheritance Tax Act 1984 that the deceased was domiciled in England and Wales at the time of his death.
The deceased was born in Karachi in what was then British India in 1929. He attended school and university in Karachi in the 1940s. Following partition, in 1947 he moved from Karachi, Pakistan to Gujarat, India to complete his university course. On completion, he moved to Tanzania. In 1954 he moved to the UK to undertake a further degree, returning to Tanzania on completion in 1957. The deceased married in 1960 in India. His wife was born in what was then British India which became modern India on independence. When Tanzania became independent in 1961 the deceased was offered and acquired British citizenship. The deceased’s wife retained her Indian citizenship until she obtained British citizenship in the 1980s. In 1972, the deceased and his family moved from Tanzania to Mumbai. He moved to the UK again in 1973, followed by his family shortly afterwards. He worked as a pharmacist, running a pharmacy business from 1975 to 1994 before becoming a locum and eventually retiring in around 1997. The deceased’s daughter lived with him but fell ill in 2005 and died in 2009. The deceased’s wife died in 2010 and the deceased sold the family home shortly afterwards and moved into a rented flat in London close to his son. In 2012, the deceased invested into a non-UK company making investments into UK commercial property. In 2014 the deceased made a UK will for UK assets and an Indian will for non-UK assets. He also registered as an overseas citizen of India.
The deceased died in 2016. He had made two short trips to India since moving to the UK in the 1970s. A DOM1 had been completed by the deceased in 2011 to support a contention that he had a domicile of origin in India but this was not provided to HMRC. The court did not consider the DOM1 to contain reliable facts about the deceased’s trips outside the UK, his alleged retained accommodation in India, his reasons for coming to the UK, and his intentions to leave the UK.
The appellant argued that the deceased had not acquired a domicile of choice in England and Wales as:
- (1) he always intended to return to India originally at the end of his working life, but he continued to work as a locum in order to place the family in a good financial position before intending to return to India;
- (2) he did not want to sell the family home while his daughter was living there, and her illness and death and the death of his wife delayed his plans to return to India;
- (3) he intended to return to India when he was well enough to; and
- (4) his intention was declared in his DOM1.
HMRC contended that the deceased had acquired a domicile of choice in England and Wales at some point after 1973 and this had not been abandoned by the date of his death. Any connections with India were weak, and there were several points in the deceased’s life when he could have undertaken a permanent move to India but chose not to.
Held:
Appeal dismissed:
The deceased had settled and intended to remain in England and Wales permanently such that he had acquired a domicile of choice in England and Wales and had not abandoned that domicile of choice before his death. A domicile of choice was acquired by the combination of residence in a territory and an intention to remain there permanently. An intention to remain did not have to be a Damascene moment, and could develop over a relatively long period of time. Length of residence was not of itself determinative of an intention to reside in the UK indefinitely, but was the starting point. The deceased had lived in the UK for 43 years and had rarely left the UK in that time. There was little evidence to support that close ties were maintained with India or that there was any connection with India. There was no clear reason for the deceased not going back to India when he retired from locum work. There was no detailed evidence about his wife’s health until after their daughter had died, and no evidence why the healthcare provision in India, which was good, would have formed a barrier to a move. There was no clear evidence of not wanting to sell the family home to provide security for his daughter, and this seemed unlikely as the evidence was that she was doing well before she fell ill in 2005, and her estate was valued at £1.6m. There was no explanation as to why the deceased would choose to leave the UK after his grandsons left for college but not before, and this was not mentioned in the DOM1 which was completed when they were at secondary school.
Taking all of the evidence, the deceased had only a vague, floating idea to move to India at some point. The evidence showed that what was important over the course of the deceased’s life was his close family. He returned to Tanzania after school and university. There was no effort to gain Indian citizenship or open a bank account there, but he had continued to make investments and retain assets in the UK. There was no clear evidence of an intention to move to Bangalore. It was not likely given his age and health that he would move from a flat, close to his son where he was visited frequently by his family who also organised care for him, to a place he had never visited and had no family members.
JUDGMENT GILL HUNTER: Decision [1] The hearing was held in hybrid form, with one witness (Mr Nirmal Shah) attending remotely from the United States of America (USA) via the Tribunal video hearing system. Introduction [2] This is an appeal against a notice of determination issued under s221 Inheritance Tax Act 1984 (IHTA 1984) on 6 …Continue reading "Shah v Commissioners for HMRC [2024] WTLR 265"