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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

Written by Nicholas Neveling

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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