Valesca Valentina Yvette Louwman v The Commissioners for HMRC
Decision date: 7 March 2025
Neutral citation: [2025] UKFTT 295 (TC)
Overall AI summary confidence: high
Short overview
This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.
AI confidence in this short overview: high
This Tribunal considered whether offshore income gains (OIGs) and accrued income profits (AIPs) arising in offshore trusts/companies were "protected foreign source income" (PFSI) under s721A ITA for a settlor who became deemed UK‑domiciled from 6 April 2018, and whether the statutory definition should be rectified. It held that the OIGs and AIPs were not "relevant foreign income" for a UK‑domiciled individual and therefore were not PFSI, and refused the appellant's plea for rectification of s721A. The appeals against the three closure notices were dismissed.
Ratio decidendi
This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.
AI confidence in this ratio decidendi summary: high
The decisive legal ratio is that, for income to be PFSI under s721A, it must be income that would have been "relevant foreign income" of the individual if received by them; because OIGs and AIPs historically fall outside the statutory definition of "relevant foreign income" for UK domiciles, they do not satisfy s721A(3)(a)/(4)(a) and are not PFSI.
Obiter dicta
This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.
AI confidence in this obiter dicta summary: medium
The Tribunal observed hypothetically that, if OIGs were to be treated as having a deemed source, the likely location of any deemed source would be outside the UK (rights enforceable offshore). It also commented that, were rectification appropriate, a narrow amendment to s721A extending protection to income that would have been relevant foreign income but for the deemed‑domicile change would be the straightforward remedy.