Climbdowns do little to soothe non-dom fury

HMRC building

Alistair Darling may have climbed down on his original reforms to the
taxation of non-domiciled taxpayers, but wealthy individuals and big business
have already mounted a second assault on the changes.

Last week HM Revenue & Customs acting chairman Dave Hartnett wrote a
letter ‘clarifying’ the taxman’s position towards non-doms. The letter provided
assurances that HMRC would not wade into the overseas tax arrangements of
non-doms and that gains already accrued in offshore trusts would not be taxed
when paid into the UK.

Hartnett confirmed that money brought into the UK for the £30,000 levy
non-doms will have to pay to keep foreign income tax free will not be taxed. Art
work brought in for museums and galleries would not be taxed either.

The concessions by the government did address the most serious concerns of
the City, which emerged when draft legislation was first released in January,
but business remains unsatisfied.

‘Wealthy resident non-domiciliaries will continue to review their affairs and
will still keep their options open, potentially resulting in a decision to
depart the UK, and they and their advisers still face a mammoth task to
reorganise their affairs by that date if they decide to stay,’ Ernst &
Young tax partner Andrew Tailby-Faulkes said.

Darling and the Treasury have already had to fend off attempts to delay the
final implementation of the regime, set to kick in from 5 April.

But government is almost certain to continue facing fierce lobbying to make
further concessions, with the City expected to pay particular attention to the
new rules for taxing gains realised by non-doms in off-shore trusts, which will
now be caught in HMRC’s net.

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