The consultation into reforms to the taxation of non-domiciled residents only closes at the end of February, but advisers are already growing tetchy that time is running out for meaningful responses.

The government was supposed to have issued draft legislation on plans to levy a £30,000 charge on non-doms who don’t pay tax on foreign earnings before Christmas.
The draft legislation has since been delayed, with no date for its release set. Experts believe that complexity and unintended consequences of the reforms announced in the 2007 pre-Budget report are to blame.

‘There is a deep well of issues that have only started to come to the surface and I think the Treasury has realised how complicated the issue is. I would like to see the consultation postponed. We live in hope,’ says KPMG tax partner David Kilshaw.
The issues Kilshaw refers to are numerous and other advisers have also warned about the unexpected fall-out of the proposed non-dom reform.

Deloitte tax partner Bill Dodwell has said that a situation could arise where secondees from overseas to City banks, lawyers and accountants could find themselves in a situation where spouses and family members could find themselves charged with a £30,000 levy.

He also warns that there is great concern among employers that they may have to foot the £30,000 non-dom charge, a possibility that will remain up in the air until draft legislation is finally realised.

Mike Warburton at Grant Thornton, meanwhile, has said the many Americans working in the UK could also find themselves in an awkward position.

‘US citizens are taxed on worldwide income. It is unclear how a levy will affect them. If it is income tax then it should be in proportion to income, but it is not, it is a flat fee. There is a great deal of uncertainty,’ Warburton says.

With less than two months to go before the consultation, the Treasury has plenty to do if the new non-dom legislation is to avoid all these pitfalls.