Tax advisers are warning that legislation unveiled with the Budget means that
fees paid to UK advisers for the non-doms’ wealth management would now be
treated as a remittance of offshore income.
Such fees would then be taxed, and UK wealth managers would lose a
competitive advantage to offshore advisers, severely damaging a lucrative line
of business in managing the cash of the super-rich.
‘This does seem to be an odd rule and it will have unexpected consequences.
There is an obvious sidestep for taxpayers who can choose a non-UK adviser. All
it seems to do is discriminate against UK fund managers,’ PricewaterhouseCoopers
tax partner John Whiting said.
It is believed that several City investment banks and private client banks
are extremely worried about the implications of the draft legislation, with some
indicating that they may have to move as much as one-third of their business
outside the UK to keep their non-dom clients.
Richard Turner, from law firm Allen & Overy, said policing the regime
could also prove a nightmare for HM Revenue & Customs.
‘In a global economy it is very difficult to break down which services are
delivered in the UK and which aren’t.
‘If you are a global investment bank, it is hard to say which office provides
a service. A client could be buying a US equity, but the work could be done in
Experts are set to closely scrutinise the finance bill published today to
establish whether there is any way around the problem.
UK fund managers who work for non-residents are allowed an exemption from
charges, which could be extended to non-doms.
The crackdown on non-doms is to go ahead with only modest changes, with
lawyers and members of the profession warning of an exodus of non-dom talent as
HMRC declined to comment.
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