Treasury in row over £35k non-dom bill


The Treasury arranged to pay £35,000 for a legal opinion suggesting
non-domiciles could claim the new tax charge they face against their US tax

The revelation of the fee agreed with
Skadden, Arps, Slate, Meagher
and Flom
­ disclosed in a Freedom of Information Act request by
Accountancy Age ­ was criticised by the opposition this week, with the
Tories saying that it would be better to simply have agreement from the US
government on the issue.

US non-doms have been angered by the government’s new £30,000 annual fee,
amid fears that they would have to pay it in the UK and not be able to claim the
payment back against their US tax bills, as they can with other taxes.

The Treasury commissioned Skadden’s 15-page opinion on whether the charge
could be claimed against US tax after failing to get an agreement from US
officials, and issued it with this year’s Budget.

‘The contract between Skadden Arps and HM Treasury was valued at $70,000
(£35,000) at the time it was let,’ the FOI response says.

The contract was not tendered, the Treasury added. ‘As the work was urgent
only Skadden Arps were approached. In these circumstances, a full tender
exercise would have caused significant delay.’
An official ‘took soundings’ in Washington on who to hire.

‘A Skadden Arps partner was put forward as distinctly the best bet,’ the
unnamed official wrote, before securing the agreement of the Treasury’s
permanent secretary.

Tory MP and shadow financial secretary to the Treasury Mark Hoban said: ‘It
would be better if we had agreement from the IRS that the charge would be

Given Skadden’s opinion suggested that an authoritative IRS opinion would
follow in due course, Hoban said: ‘[We’re] not much further forward despite
having spent £35,000 of taxpayers’ money.’

Hoban also criticised the tender process: ‘The issue has been bubbling on
since October. I would have thought the Treasury had plenty of time to put it
out to tender.’

Tax lawyers said that most contracts were put out for tender to at least two
or three law firms. Skadden declined to comment.

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