Tax experts slam non-dom mess
Bewildering proposals lead to dismay among tax advisers, who hoped the government might withdraw some of its non-dom proposals
The Government’s draft legislation on tax hikes for non-domiciles, released
last Friday, has dismayed tax advisers who fear economic and charitable
contributions made by non-doms may disappear abroad along with fine art
masterpieces.
Mike Warburton,
Grant
Thornton senior tax partner, described the arrangements for non-doms as a
‘dog’s dinner’. He warned US bankers, said to form a large proportion of those
who claim non-dom status on their tax returns, would face double tax under the
rules, because the charge was unlikely to be ‘creditable’ under US rules taxing
worldwide income.
Warburton suggested that as the charge would not be a percentage of income or
a gain, it would not count as a tax under US rules.
Chris Sanger,
Ernst
& Young head of tax policy, said many non-doms might decide to move
their homes to Monaco, Switzerland or the Channel Islands.
As many as 3,000 wealthy non-doms are expected to leave the country as a
result of the plans, according to Treasury figures. The numbers are disputed,
however, with tax advisers saying that nobody really knows how many will leave.
Ernst & Young said the crackdown on the ‘remittance’ rules is forecast to
cause havoc with non-doms’ holdings of jewellery and fine art. Sanger suggested
that some would need to work out whether the antique watches they wore had been
bought with offshore cash. ‘Tracing back the history will be a nightmare,’ he
said.
Some artworks on loan at British museums might fall into the same category,
and have to be pulled out and stashed offshore, he indicated.
John Whiting, tax partner at PricewaterhouseCoopers, said that the latest
draft legislation has confirmed that non-doms will not get personal allowances
as soon as they claim the status. The £30,000 charge applies only after seven
years of claiming the status.
Whiting said the allowance rules could well face a challenge under rules
against non-discrimination.
Further reading:
Non-dom draft legislation finally ready
Resources & Whitepapers
Accounting Software The power of customisation in accounting systems
PwC warns: act now on non-dom tax rules
