Regulation  

IFAs must warn clients about non-dom liability

IFAs must warn clients about non-dom liability

Advisers helping non-doms with their tax affairs could find themselves facing liability issues if they do not work with their clients’ advisers in other countries, Marilyn McKeever has said.

The associate director at Berwin Leighton Paisner made the comments while speaking at FTAdviser’s Tax Efficient Investing event in London on 20 January about changes to non-dom taxation.

In his Summer Budget, chancellor George Osborne announced a series of reforms to the tax rules for people who are not domiciled in the UK.

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Ms McKeever said advisers should warn clients who come to the UK and expect advisers to help minimise their tax bill, that any recommendations they make could have repercussions in the client’s country of origin.

She said: “You can give advice, but you need to say to them ‘do you have an adviser in your home country because we need to talk to them’. If they do, then what you tell them is that without talking to their adviser then ‘on your head be it’.

“I think it is very important to talk to their adviser because let us say you have got someone coming from France.

“From a UK perspective, you might say ‘let’s realise income out of your assets and get some clean capital’, but the French adviser could say ‘do you know how much that’s going to cost in France?’.”

Ms McKeever said most clients were sensible and would put a UK IFA in touch with any adviser they might have in their home country.

In the Budget it was stated that from April 2017 anyone who has been resident in the UK for more than 15 of the past 20 tax years will be deemed UK-domiciled for tax purposes.

It will no longer be possible for someone who is born in the UK, to parents who are UK- domiciled, to claim non-domicile status if they leave, but then return and take up residency in the UK.

She added: “The government has said they will protect trusts set up by non-doms before they are deemed domiciled, so trusts may well have a role to play, but we don’t know what it is yet.”

A consultation on the changes ended in November, but the rules are yet to be finalised.