Deloitte is calling on the Chancellor to urgently review new regulation on the tax treatment of foreign employees on short term secondments in the UK to avoid creating a costly administrative nightmare for the employees and their employers.

It warns that, under the Finance Bill proposals, new residence and domicile rules targeted at wealthy non-doms will have a dramatic impact on thousands of middle income, internationally mobile employees working in the UK for limited periods. This will increase the costs to their employer and reduce the attractiveness of the UK to foreign multinationals.

The proposed legislation would require foreign employees temporarily assigned to the UK to provide a detailed analysis of their overseas bank account and perhaps their spouse if they make any direct or indirect fund transfers to the UK. ‘This intrusive, costly, and sometimes quite pointless exercise will hit an estimated 29,000 individuals, based on 2005-06 figures.’ a Deloitte statement said.

Andrew Hodge, Deloitte head of employer and personal taxes, said: ‘How can anyone believe that such a complex regime is suitable for individuals other than the very wealthy? To avoid a compliance nightmare from 2009 onwards, the government urgently needs to understand the impact of the changes, and if sense prevails, will restore the historic basis of calculating remittances of overseas earnings.'

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