Tax experts slam non-dom mess
21 Jan 2008, AccountancyAge.com, AccountancyAge
http://www.accountancyage.com/aa/news/1757487/tax-experts-slam-dom-mess
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.
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Visitor comments
Don't let the tax tail wag the lifestyle dog
I can't see why a multi-millionaire/billionaire would be that bothered about a capped £30k charge and the loss of a few tax allowances, to be honest. That's probably an expensive lunch for these guys.
No-one's going to be running scared - this is just a fluff-tax for those of us who aren't multi-millionaires.
It's not really intended to scare or offend anyone. It's more expensive to use the private jet to fly from Monaco to London to watch Chelsea every fortnight, than pay this charge!
Posted by: GJC , 21 Jan 2008 | 00:00
Don't let the tax tail wag the lifestyle dog.
I can't see why a multi-millionaire/billionaire would be that bothered about a capped £30k charge and the loss of a few tax allowances, to be honest. That's probably an expensive lunch for these guys. No-one's going to be running scared - this is just a fluff-tax for those of us who aren't multi-millionaires. It's not really intended to scare or offend anyone. It's more expensive to use the private jet to fly from Monaco to London to watch Chelsea every fortnight, than pay this charge !
Posted by: GJC , 21 Jan 2008 | 00:00
Lack of understanding of benefits of non-dom regime
I'm surprised by the apparent lack of understanding that the Treasury has shown to benefits of the non-dom regime. There are many professionals that do not fall into the Ultra High Net Worth category that provide expertise to the UK, particularly the city of London. I hope that the potential drain of expertise does not have an adverse affect on the City as the primary captial market in the world. This would have a potential impact on the whole UK economy.
Posted by: P Mills , 21 Jan 2008 | 00:00
The Golden Geese are looking for the Exits
As a lawyer who specializes in international residence/domicile and citizenship planning for HNW clients, I can tell you that many of my current and future UK non-dom clients are seeing these changes as the thin edge of the wedge and are putting contingency plans in place. It is only $30,000 or $50,000 today, but how much in the future? I have already seen a chilling effect as 2 new UK bound clients have switched to other destinations.
My clients live internationally and chose the UK as a place to spend more time than other places. They contribute significant economic benefit through payment of VAT; employment, investment and spending in the economy.
If the UK decides to increase their direct taxation, they will simply change their principal residence. In their minds "fair taxation" discussions are similar to the conversation of nine wolves and a sheep voting over what's for dinner. The difference is that these sheep have options. Net result, the wolves go hungry!
Posted by: David S. Lesperance , 24 Jan 2008 | 00:00