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Income Tax (Earnings and Pensions) Act 2003

Chapter 6: Disputes as to domicile or residence

168.The two sections 42 and 43 provide the means for an appeal against a decision by the Board of Inland Revenue concerning a person’s ordinary residence or domicile status in the United Kingdom. The sections derive from section 207 of ICTA.

Section 42: Board to determine dispute as to domicile or ordinary residence

169.Subsection (1) introduces the purpose of the section. The phrase “is or has been” caters for the possibility that the dispute may relate to the person’s domicile or residence status in a tax year prior to the dispute arising.

170.Subsection (2) provides the means to start the process of reconciling a disagreement about the status of the employee. Either side can ask for reference to the Board of Inland Revenue. A ruling would then be issued giving the Board’s decision on the matter.

171.Subsection (3) lists the provisions which rewrite paragraph 1 of Schedule E – and section 192 of ICTA. In rewriting Schedule E a structure has been applied which uses residence, domicile and place of performance of duties to identify the basis of chargeability and year of charge. The term “foreign emoluments” is not used, nor an equivalent to that label, as used in section 192 of ICTA. Instead a full description of the status of employer and employee is given, which leads to certain earnings being excluded from chargeability. This subsection includes a list of all those provisions which rewrite or are dependent on “foreign emoluments” as well as those which rewrite the Cases of Schedule E. Three of the provisions based on section 192(1) of ICTA also contain a reference to “ordinary residence” which is not derived from that section, nor from paragraph 1 of Schedule E.

172.Disputes relating to all these provisions will now be covered by section 42. See Change 8 in Annex 1.

Section 43: Appeal against Board’s decision on domicile or ordinary residence

173.This section provides an appeal procedure where someone is aggrieved by the ruling of the Board of Inland Revenue made under section 42. Under section 207 of ICTA an application may be made for the question to be heard and determined by the Special Commissioners in “like manner as an appeal”.

174.On the grounds that similar processes should be the same (ie they should all be appeals),subsection (1) gives the right of appeal to a person who has received notice of the Board’s decision. This allows the person in question to take the matter further. The change to a straightforward appeal procedure is intended to simplify matters. Section 48(2) of TMA 1970 provides that various provisions of that Act as regards proceedings before the Commissioners apply to “appeals other than appeals against assessments” and to “proceedings…to be heard and determined in the same way as an appeal”. There is no real difference in law or practice between provisions that refer to an appeal and those that refer to proceedings where the Special Commissioners shall “hear and determine the matter in like manner as an appeal”. See Change 9 in Annex 1.

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