Non-Dom Investment Banker Loses Appeal Over £675,000 Tax Bill
Benoît d’Angelin, a non-domiciled investment banker originally from France and currently residing in Italy, has lost his appeal against a £675,000 tax bill in the UK. Despite legal advice that his £1.5 million investment in his UK company, d’Angelin & Co, would qualify for business investment relief, HMRC deemed his use of director loans for personal expenses as a breach of tax provisions.
Case Background:
– In 2016, d’Angelin, a UK resident but not domiciled, invested £1.5 million of his foreign income into his UK company, intending to benefit from business investment relief.
– He used a director’s loan account for £75,000 in personal expenses, including private jet hire, a 79p iTunes subscription, and gifts for his wife.
HMRC’s Position:
– HMRC argued that these personal expenses violated the “remittance basis” provisions of the Income Tax Act 2007.
– Consequently, the entire £1.5 million investment was deemed taxable, leading to a £675,000 tax bill.
Legal Proceedings:
– A closure notice was issued in June 2022, and d’Angelin appealed in November 2022.
– A penalty assessment of £101,295 for late payment of 2018/19 taxes was issued but later cancelled by HMRC due to an error.
Arguments and Judgment:
– d’Angelin’s representative, Michael Firth KC, contended that the extraction of value rule should refer to net value, and that the director’s loan was a standard business practice.
– HMRC maintained that any personal expense covered by the company constitutes a breach.
– Tribunal judge Christopher McNall agreed with HMRC, emphasizing that the purpose of the rule is to restrict foreign income usage strictly.
Conclusion:
– The tribunal concluded that d’Angelin’s actions were exactly what the extraction of value rule aims to prevent, leading to the loss of relief.
– The appeal was dismissed, leaving d’Angelin liable for the full £675,000 tax bill.
d’Angelin’s belief that his method was standard within his industry was acknowledged but ultimately insufficient to overturn the decision. Despite being advised of potential risks by his legal advisors, the tribunal found no grounds to exempt him from the tax liability.