A blog by Jaimie Kaffash, Accountancy Age’s tax reporter
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21 Feb 2008
It's getting to the stage where I'm so fed up of non-dom whinging, I might leave the country myself.
Mike Truman has, as ever, an excellent piece on the subject in Taxation this week. In it he talks about the constant moaning of the super-rich about their tax rates, and concludes with the memorable line:
Some non-domiciles have expressed the fear that this may just be the start of a process which will lead to a removal of all their tax privileges; all I can say is that I hope their fears are realised.
Hear, hear.
I wanted to talk about something slightly different. Another survey saying how many are going to go. And before anyone says anything, I know that we've been as responsible for reporting 'fears' about non-doms leaving as anyone: the questions raised apply to all of us.
CFA UK, a group of city investment professionals, are saying that 37% of non-domiciles plan to leave the UK under the planned changes.
Which sounds a lot. But you get to the first par of the press release and find out this includes both people who will leave immediately and those who will leave 'before they achieve seven years residency'.
The second group is such a worthless sample: we know many non-doms will leave before seven years residency. The whole point of being a non-dom is your home is elsewhere and you plan to return to it in due course, mostly before seven years are up.
So we're reduced to a figure of just 18% who say they will leave within a year (and I had to ask for this breakdown - it didn't appear to be in the original release).
So how big is the survey? Well - the e-mailed survey was sent to 5,000 people! Great!
But, erm, only 600 replied. Not too bad, but a bit weak.
Oh, and only half of those claim non-dom status.
So we're left with a survey telling us, effectively, that 18% of 300 people might leave within a year. That's, erm, 54 people.
This isn't the first survey to use dubious statistics to present a distorted picture, but it does raise some fairly fundamental questions about the lobbying currently going on.
Tax campaigners and others arguing against corporate or personal tax avoidance are frequently vilified, udually in whispered tones, about the lack of rigour to their figures, or for their lack of understanding of the issues behind the numbers.
Can someone explain why this is different, and why it is acceptable to try and influence public debate with dodgy statistics about the number of non-doms about to leave the country? I haven't got a good answer myself.
Of course, the real answer to the question 'how many non-doms will leave?' is, in fact, all of them. The whole point is that their home is elsewhere and they will at some point leave.
For the time being they're still over here and making overly large amounts of noise. They could go to Monaco, Switzerland or countless other places.
Can anyone suggest a good place that I could go to to escape the tax whinging of the super rich?
Visitor comments
I'm an American who has lived and worked in England for eleven years. Actually I work two jobs, full time in banking and part time as a University lecturer, tutoring finance Masters degree students.
I pay higher rate taxes on both paycheques, full NHS (in spite of having private insurance) and my Indefinite Leave to Remain is clearly stamped "no recourse to public funds", which means I can't go on the dole or ask for council accommodation.
And that's ok. After I - and many like me - didn't come here then DEMAND a flat with full benefits like the economic refugees we're all familiar with.
From my back of the envelope calculation, I fully support - via taxes paid on money earned here in England - at least an maybe as many as three economic refugees.
But now I shift that burden to you folks. I've quit my banking job effective March 31st, University will take until end of term to wind down and then I'm outta here.
So buckle up and pay up. Someone else will now pay to support what previously were MY economic refugees.
And what's even scarier? I'm effectively a middle wage earner, and there are LOTS more like me - many far, far more affluent - who either have already left or are in the process of leaving.
This poorly planned, ineptly and hastily executed move will achieve nothing except markedly raise taxes for those of you who still reside - and work - in England.
Posted by: DA , 23 Feb 2008
Lets make this really simple for some of you people :
in 2000, you live in country x and go your accountant because you have been offered a post in the UK. You ask what the tax laws of the country are. He tells you the whole story including the non dom rules set by the UK.
You come to the UK. Pay your taxes in entirety, contribute to society, etc.
Then one day in 2007, the UK kind of changes its mind on its non dom rules. Fine, you think. Lets see what they say. To your horror, the rules are unclear and worse still, there could be a potential liability backdated which may result in serious financial problems for you let alone the hassle and the stress.
The point is, if the UK wishes to change its mind on rules such as non dom. Surely, its not unreasonable to do the following:
1 Give CLEAR notice of intent and plans
2 Give CLEAR amnesty from previous years
3 Give a REASONABLE period of time for people to look at their affairs and make a new decision.
Who in their right mind would risk ( in light of the crazy decisions re Lichtenstein ) the wrath of hmrc and stay here with liabilities which they can't even quantify.
So lets stop pretending that there is some great big conspiracy going on here with non doms. Its simple, of course they will leave because it is too risky to stay because Alastair Darling is incapable of a bit of admin.
Would you stay in a country where all of a sudden the govt is threatening your livelihood?
Thats why people will leave not because they want to go and scam some other country.
You lot made the rules. Now stick by the spirit of them or watch everyone go. If you don't care about them leaving, just say so but don't pretend that you are whiter than white.
Consistency and credibility is everything.
Posted by: bigal1 , 27 Feb 2008
Let's,indeed, make this perfectly clear. Scrap the personal allowance change (which IS unfair), scrap the £30,000 charge. And scrap the remittance basis for anyone who has been resident here more than seven years out of the last nine.
Even under the current proposals, most non-doms just have to pay tax like the rest of us and they have no problems at all... I'm not denying that there are some issues over trusts etc, and there's a case for delaying the introduction of some changes for one year. But if the Liechtenstein disclosures are the sort of things that are worrying you, Bigal, I'll help you pack.
Posted by: Mike Truman , 29 Feb 2008
There are two different issues here.
1 I couldn't give a monkeys about Lichtenstein. I just don't agree with buying stolen goods. The police have to virtually beg a judge to just monitor a known terrorist whereas hmrc just decide amongst themselves who is suitable to buy information from. If this man turns out to be not only a fraudster but a child molester, would it have been worth it? Would you trust a bunch if civil servants to have even done any background work to find this out ? Tax evasion in Lichtenstein is wrong but this is a dangerous precedent which is why the lovely Germans want to share the information round. To share their risk and share their guilt and their potentially future liability. Funny old world. Privacy laws, human rights laws etc were really only cemented in the 20th century thanks to the Germans and their actions but thats all the past now. Thats just my view but it doesn't mean I agree with tax evasion in Lichtenstein or Switzerland. Actually, in other countries, the non dom rules kind of put the UK in the same bracket!
2 If the UK wishes to change its tax laws, it has every right to do so. The MOST important aspect of the non dom tax laws are that they may have a very significant potential retrospective liability. Although that moron Darling has backtracked on this, the precedent of the UK Govt doing sudden, crazy changes has been set and the tone of mistrust firmly in place.
3 Change the tax laws. Give people time to sort out their tax affairs. The scheming foreigners will all leave. Then all those English people well known for their hard work can become suitcase packers like you Mike.
4 There is of course another way. Far simpler and cleaner. Just behave NORMALLY. Be clear of the change of intent, change of law and everyone who doesn't like it then can pack their own bags.
Posted by: BigAl , 01 Mar 2008
BigAl, DA - I'm sure we can resolve your issues (if you haven't left the country already). I'm sure there are some helpful tax advisers who read this blog who can help structure your affairs - just let us know how much tax you pay and what assets you have globally and we'll sort it out for you...
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