Leading City figures will continue their campaign against the tax crackdown on non-domiciled people living in Britain, in spite of the partial retreat on Wednesday by the chancellor.
While welcoming concessions that draw the sting from some aspects of the proposed legislation, financial services executives believe the cut-down plans will still encourage an exodus and weaken London as a financial centre.
Michael Snyder, chairman of the City’s policy and resources committee, said it was continuing to lobby behind the scenes for further changes, with the consultation period on the proposals ending on February 28. It was essential to get clarity on the proposals, he added.
“A great fishing expedition was added by HM Revenue & Customs which was unnecessary and will have an impact if not reversed. I hope the government is listening.”
Private equity executives would not flee the UK “in droves”, said Simon Walker, chief executive of the BVCA which represents the industry. “London is a great place and has great infrastructure in support services. But when Britain has a reputation for being friendly to international business, the impact of the change is greater. It is chipping away at what has made London so attractive a place to locate for private equity houses.”
Howard Bilton, chairman of Sovereign, which advises wealthy individuals on tax, said his firm had been told by all of its several dozen UK-based non-dom clients that they intended to leave the country.
“They’re all wealthy, they’re all mobile and they have come to the UK because of the tax treatment of non-doms. They’re all planning to move to Switzerland, Monaco and places further afield.”
A high-ranking investment banker said that non-doms working for his organisation would still regard the proposals as intrusive. If they were not prepared to pay the £30,000 charge to leave their overseas income outside the UK tax net, they would have to submit details of all their income to HMRC.
“Nobody accepts that this is non-intrusive,” he said. “HMRC is reaching out to tax the worldwide income of all UK residents.”
He added that in practice it would be unenforceable, as the tax authorities would be unable to check that returns on overseas income and assets were complete.
Mr Bilton said the most important issue for his clients was the plan to bring offshore trusts into the UK tax net. “That’s going to be a killer. Many of them own their UK homes through an offshore trust and would have to pay capital gains tax when they sold it. People are making fairly rapid plans to exit before April 6.”