Wed. Jul 6th, 2022

Tax experts have criticized the “disingenuous” explanation given by the wife of Chancellor Rishi Sunak for claiming non-dom status.

Akshata Murty, who married Sunak in 2009, owns a stake in Indian technology company Infosys, founded by her father, that is thought to be worth more than £ 500mn.

Her spokesperson confirmed on Thursday that she holds non-domiciled status in the UK, which allows her to earn money abroad without paying tax in Britain for a period of up to 15 years.

The dispute comes after Sunak’s political standing tumbled following the Spring Statement. According to ConservativeHome, a grassroots party website, the chancellor has become one of the least popular members of the cabinet.

Arun Advani, an assistant professor at the University of Warwick, who recently published research on the UK’s non-dom population, said Murty’s reported statement seemed “disingenuous”.

He said on Twitter: “Citizenship has nothing to do with whether you choose to / not to claim remittance basis in the UK. Most non-citizens are not claiming it, and some citizens are claiming it (and, to be clear, this is allowed). ”

Murty’s spokesperson said that, as a citizen of India, she was unable to hold citizenship of another country, after the story about her tax status was first reported in the Independent.

“Under British law, Ms Murty is treated as non-domiciled for UK tax purposes. She has always and will continue to pay UK taxes on all her UK income, ”they said.

The statement suggested that Murty did not have a choice in her non-dom status, which is incorrect, according to tax experts. Under the UK tax rules, even if she is considered to be non-domiciled based on her connections to India, she would have actively had to claim the status by ticking a box on her tax return and paying a fee.

“It implied she was forced to be non-domiciled. That is a total nonsense, ”said a partner in an accounting firm and non-dom status specialist.

As well as allowing Murty to legitimately not pay tax on income earned overseas, her non-dom status also exempted her from paying UK inheritance tax on any assets held in India, the adviser said.

This would remain the case even after Murty had been deemed to be domiciled in the UK after 15 years of residency. The tax benefit arises due to a quirk of Britain’s inheritance tax treaty with India.

Jolyon Maugham, a tax lawyer who runs the Good Law Project campaign group, branded the statement “misleading”. “UK tax law (there is no such thing as ‘British’ law) does not treat Ms Murty as non-domiciled,” he said in a tweet. “She has to choose to claim non-dom status and agree to pay a modest fee for doing so.”

One friend of Murty said she had been “quite clear” on her tax status, adding she pays international tax on her international income and UK tax on her UK income, that’s her right. All legal and transparent and declared. ”

The person added that Murty was a “private citizen” and said it was harsh [that] she should be the collateral for politically inspired attacks on her husband ”.

Kwasi Kwarteng, business secretary, defended the chancellor and his wife on Thursday, saying that Sunak had been clear that he “comes from a very affluent family” but added it was “completely wrong” to suggest there had been any wrongdoing.

He told Sky News: “I’m not an expert on her financial arrangements but I think absolutely people have a right to pursue their own business arrangements. . . her tax affairs are a matter for her. ”

Treasury insiders said that Sunak had declared his wife’s tax status to the Cabinet Office when he was first appointed as a government minister in 2018. The Treasury was also aware of her tax status.

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