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To be or not to be an Englishman: the perils of getting it wrong
love a place through travelling. They’ve built connections – they may already own a second home there – and established friendships.”
The Cliftons are quick to agree. Richard says: “You certainly shouldn’t move just for tax purposes. For us, lifestyle was the primary motive. The UK tax rules on non-residency are very complex and currently quite vague – although it’s expected they’ll be codified and become simpler to understand from 6th April 2013. Trying to understand the new tax regime here in Switzerland hasn’t been easy either, because each canton – an internally self-governing state with its own parliament within the Swiss Confederation – has its own tax and other rules.
“In the end, moving abroad permanently is a big commitment. You have to really want to do it and make it work.”
For the Cliftons that has meant throwing themselves into local life. Richard says: “We were advised early on that if we sat around expecting the Valaisans to come to us we would wait a long time. But when we made the effort to get out and meet them and join in local activities they were tremendously welcoming. I think it helped that we were prepared to learn their language.”
The European lifestyle has made getting out and mixing easy for the Cliftons. “Every event is celebrated with a festival,” says Rosemary. “We’ve had wine and cheese festivals, chestnut festivals. They even held a festival here recently to celebrate the opening of an underground car park!”
But there have also been challenges, says Richard. “In the first year, to show that we were serious about this move and not just looking for a better tax regime, we were advised to make a clean break and not return to the UK. This made the logistics of moving home difficult.
“We were moving from a house to a flat that was already furnished. So we had to get rid of a lifetime of accumulated possessions and make tough, often emotional decisions. That’s not easy. Talking to other English couples here, we
Some people going abroad not only want to become UK non-resident but to lose their UK domicile status too. Domicile denotes the place you regard as your permanent home and is distinct from residence or nationality. Domicile is important for inheritance tax purposes and notoriously difficult to lose – as illustrated by the Clore case.
Sir Charles Clore was the sixth of 11 children of a Jewish refugee from Czarist Lithuania. Born in poverty in 1904, he went on to become one of the most successful businessmen of the 20th century. He owned Selfridges and the British Shoe Corporation; The Clore Gallery at Tate Britain in London is named after him following a £6m donation.
Towards the end of his life Clore emigrated to Monaco in order to avoid millions of pounds in capital transfer tax (the predecessor to inheritance tax) as well as income tax (the top rate of tax on unearned income at the time was 98p in the pound).
But on his death in 1979 the Inland Revenue claimed he was still UK-domiciled. Three of Clore’s closest friends testified in court that he had told them he had never been happy in Monaco and that in his “heart of hearts” he had never truly abandoned England.
As a result the court decided in favour of the Inland Revenue – and his £80m estate was therefore liable to UK inheritance taxes.
weren’t alone in finding that a cause of disagreement!”
Rosemary says the year break was useful, however, in sending a message about more than just tax and residency matters. “I think it helped reassure our friends and family in Britain that we were happy and not hankering after the UK. We had lots of visitors in the first year, which was lovely, and they got to see how good our life is here.
“We still get to see the family when they come here for holidays, and now we visit the UK for birthdays and Glyndebourne! We don’t even miss Covent Garden, because our local opera house is La Scala. We certainly don’t see ourselves returning to Britain to live.”
The UK Treasury acknowledges that the current rules to determine tax residence for individuals are “complicated and unclear”. In the 2011 Budget plans were announced to introduce a new statutory definition of residence that would create clear rules and provide greater certainty for taxpayers.
After drawing up draft legislation and inviting responses, the government is now proposing to introduce the new statutory residence test in the Finance Bill 2013. It will take effect from April next year.
Selfridges owner Sir Charles Clore
26 | Informed — Winter 2012
Image: Anthony Wallace/Associated Newspapers/Rex Features
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