Claims from Chancellor’s wife over non-dom status are untrue, says tax lawyer

Akshata Murty is unlikely to have broken the law by not paying tax on her foreign earnings but has left her Chancellor husband open to conflict of interest accusations, experts say.

Rishi Sunak’s wife revealed on Wednesday that she claims non-domicile status for tax purposes in the UK.

“According to British law, Ms Murty is treated as non-domiciled for UK tax purposes” because of her Indian citizenship, a spokesman said.

But that is not the case according to two experts – spoken to by the PA news agency – who said that, while a person cannot decide if they are non-domicile, they can choose whether they are non-domiciled for tax purposes.

“It’s just not how it works. You have to tick a box on your tax return, claiming what’s called the remittance basis. An actual box. So that’s a choice that she made,” said Dan Neidle, a senior tax lawyer.

He said that while the statement may be questionable, Ms Murty’s tax status is likely to be legal.

He added: “I’m not saying it’s wrong, it’s probably a very defensible position to take.

“My question would be if it is right that the wife of the Chancellor of the Exchequer should benefit potentially to the tune of tens of millions a year from a rule which the Chancellor is responsible for potentially changing, tightening up or scrapping.”

Mr Neidle said HM Revenue and Customs should regularly review the non-dom status of the wealthy.

“You think they’d at least start polite inquiries,” when the non-dom status of those linked to prominent people is revealed in newspapers, he said.

Professor Richard Murphy, the Sheffield University academic who co-founded the Tax Justice Network, said Ms Murty was likely correctly non-domiciled for tax purposes when she first came to the UK.

But he said: “After 13 years of marriage, it does appear as though she’s here, has continually been here, married to a man who’s obviously intending on being here, has children who are being educated here, has no house in India, et cetera.

“If I was a tax inspector – and I’m not – I could ask the question ‘Are you really still non-domicile?’

“I’m not challenging anything that she’s done with regard to legality, nothing at all. What I’m saying is that there was an ethical choice that she made and she continues to make … to say I want to be considered non-dom.”

He also agreed with Mr Neidle that the spokesman’s explanation does not stack up.

Miles Dean, head of international tax at Andersen in the UK, said Ms Murty’s arrangements should not be used as a political tool.

“Singling out one woman, who happens to be the Chancellor’s wife, of whose tax affairs we know very little, for political capital is, I’m afraid, par for the course and what we have come to expect.

“Leave her alone and focus on more important things.”

He said the statement from Ms Murty’s spokesman was “clumsily worded” and that her Indian citizenship does not automatically make her non-domicile for tax purposes.