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December 10, 2020
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Letter in the Mail: HMRC "Nudge" Letters for Residence and Domicile

HMRC has issued "nudge" letters targeting wealthy taxpayers who:

  • have become deemed UK domiciled for tax purposes in the UK (see below); and
  • received a Notice to File a tax return for the 2017/18 tax year, but did not file it despite having submitted returns for 2016/17 and 2018/19.

These letters prompt the taxpayer to review their tax position and respond to HMRC either confirming that their tax affairs are in order, or to commence the disclosure process.

Over the last couple of years, we have seen "nudge" letters from HMRC asking taxpayers to review their income from rental properties, their offshore assets, income or gains, and the sale of a second home and/or rental property.

Deemed Domicile

These letters target long-term residents of the UK who have a domicile elsewhere. For tax purposes, an individual will be deemed to be domiciled in the UK where either Condition A or Condition B is met.

Condition A

To be deemed domicile under Condition A, you must

  • Have been born in the UK
  • Have the UK as your domicile of origin; and
  • Be UK resident in the relevant year (i.e. from 2017/18 onward).

Condition B

A taxpayer will be deemed to be domiciled in the UK where you have been UK resident for at least 15 of the 20 tax years immediately before the relevant year.

Next Steps

If you have received a letter from HMRC asking you to review your position, it is important that you reply promptly and accurately. If you require assistance with preparing a response and/or bringing your affairs up to date, please contact a member of our team.

Related Articles

HMRC "Nudge" Letters on Sale of Property

HMRC Letter to Taxpayers with Offshore Assets

Letter from HMRC - Reporting Rental Income

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