Current situation: Italy, France, India and Pakistan have special treaty agreement regarding Inheritance tax ( death estate). If the individual is resident in the UK, but domiciled in one of these four countries, deemed domicile rules do not apply, therefor their foreign assets will not be subject to UK on death.
Will the new residence-based rules apply to the individuals from these four countries? For example, if the individual is in the UK for 20 years, but domiciled in Italy, will this person’s foreign assets subject to UK IHT on death?
The continuing status of the treaties is confirmed by a new s.267ZF to be inserted by the Finance Bill. The question of whether an individual is domiciled in the UK under the treaty is now to be interpreted as referring to long-term residence.
The question of whether they are domiciled in, say, India, will continue to bear the meaning under Indian law.
As you point out, if the Treaty was ratified before 1975, and the SI in place then the old concept of domicile is still relevant as the factor of interpretation and tax allocation under 267ZF ss.(4).
s. 267ZF (4) “Nothing in this section affects the interpretation of any such arrangements as are mentioned in section 158(6) (certain pre-1975 arrangements).”
So the statute itself renders certain pre-1975 Treaties unaffected by the “domestic” change from domicile to LTR. As you have pointed out the Indian Treaty is pre-1975.
This list of pre-1975 arrangements may assist:
France
India
Italy
Pakistan
The following appear to fall outside ss(4)
Ireland
Netherlands
South Africa
Sweden
Switzerland
USA
Whether other arguments can be adduced to restrict the application of LTR in those Treaties is another question. For example, timing and non-retrospective interpretation.
I think the concept of UK domicile for pre-1975 treaties purposes must remain as pure domicile; the long-term resident test is to be ignored when considering treaty protections.
Each Treaty may give a different answer and outcome. HMRC will challenge assertions of a non U.K. legal domicile when there is a prolonged period of residence indicative of a U.K. domicile of choice as at present.