Non-dom rules are ‘unjust’
The non-domicile rules allowing wealthy individuals with foreign connections to avoid tax on offshore income are unjust and should be dropped, a poll of Accountancy Age readers has concluded
When asked for their views on the controversial rules, which chancellor
Alistair Darling last week implied he was keen on retaining, 56% of readers
opted for the rule to be dropped, saying that it was unjust and that inequality
was ‘spiralling out of control’.
A further 10% said that, at the very least, a formal review should take
place. The remainder said either ‘these people are good for the economy’ or
‘it’s a hyped-up row and there are so few of them it doesn’t matter’. Almost 300
readers responded to the online survey.
The poll’s results will feed the debate on the rules, after renewed criticism
of them in recent weeks.
Darling said: ‘I am very aware… that there are a number of people who are
doing business here, and are contributing to business here, and could go
somewhere else.’
Figures showed, however, that in the wake of the offshore disclosure
crackdown, which saw the taxman force tens of thousands to disclose unpaid tax
liabilities, the number of individuals claiming the status had soared. There are
now 112,000 applications, a 74% increase on 2002.
The rules are commonly used by City bankers and many argue that the UK’s
prosperity, particularly in financial services, depends upon them and other
generous regulatory and tax breaks.
City figures defended the rules again this week. A senior source in
investment banking said changing the rules would be ‘tiresome’. A spokesman for
the Baltic Exchange, the London-based freight association, said there was a
‘strong possibility’ that the £1bn maritime industry would relocate if the rules
were scrapped.
The Treasury has repeated a claim that the rules are ‘under review’, with
insiders implying the issue has been kicked into the long grass. Fears about
huge hedge fund and private equity fortunes being made in London have reopened
debates about inequality and the tax avoidance activities of the super-rich.
A Treasury spokesman said: ‘We are not saying anything either way. The
non-domiciled rules are under review and that review is ongoing.’
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