We look at the recent case of Barlow Clowes International Ltd & Ors v Henwood  EWCA Civ 577 which considers when a domicile of origin can be revived.
Generally, a person resident and domiciled in the UK is taxed on their worldwide income. A person resident in the UK but not domiciled will be subject to tax on UK sourced income and overseas income but only to the extent it is remitted to the UK. Changes introduced by the Finance Act 2008 (which received Royal Assent on 21 July 2008) mean non-doms who have been resident in the UK for at least 7 out of the previous 9 years now have to pay a fee of £30,000 to benefit from the remittance basis (subject to certain exceptions).
The concept of domicile is not only important for tax purposes, it is also relevant for marriage, insolvency and property law.
"Domicile" is not defined in legislation. It is generally accepted to mean an individual's "permanent home". It is not necessarily the same as nationality or country of residence. For example, a person could be a British citizen who has been resident in the UK for many years but yet domiciled abroad.
Everyone has a domicile starting with the domicile of origin (at birth). This domicile can never be extinguished but it can be replaced by acquiring a domicile of dependency (being the domicile that the dependent (children and mentally disordered persons) is dependent on) or choice (acquired by actually taking up residence in another country with the intention of residing there permanently and indefinitely).
The Barlow Decision
The recent decision in Barlow Clowes International Ltd & Ors v Henwood  EWCA Civ 577 considers when a domicile of origin can be revived.
Peter Henwood was originally UK domiciled, he spent many years living in the UK then moved to the Isle of Man then moved again sharing time between Mauritius and France operating various businesses. On 19 December 2005, as a result of an unpaid judgment debt issued against him, a bankruptcy petition was presented to the court which could only be heard if he was domiciled in the UK.
Henwood argued that, at the time of the petition, he had acquired a domicile of choice in Mauritius so that he was not domiciled in the UK (his domicile of origin). He argued that, as a result of his travels, he had formed a liking for “island life”. This was accepted by the High Court but Henwood’s creditors appealed.
The Court of Appeal was not satisfied that Henwood had shown (on the balance of probabilities) that, on 19 December 2005, it was his intention to reside in Mauritius permanently or indefinitely.
The Court unanimously held that in leaving the Isle of Man in 1992, he abandoned his domicile of choice in that country and when he went to Mauritius for employment, he did so merely on an experimental basis. It was also relevant that he could not live in Mauritius permanently, he and his wife rented a fully furnished Mauritian villa on a yearly tenancy and he and his wife spent relatively more time in their French property (where they kept their personal possessions and papers) where he enjoyed French wine and culture. Therefore, once he left the Isle of Man, his domicile of origin in the UK was revived. Accordingly, the bankruptcy petition could be heard.
This case shows that the burden of proof to establish a change of domicile is quite high which is not really surprising since “as a general proposition the acquisition of any new domicile should in general always be treated as a serious allegation because of its serious consequences”.