The FT has headline this morning that says:
Tax reprieve for non-doms
It continues:
The tax authority is being toasted in some of the most expensive houses in London after it abandoned a retrospective crackdown on loans secured on foreign assets.
The reversal has softened the impact of a rule change that was expected to force some wealthy “non-doms” – foreign residents who can exempt offshore income from UK tax – to sell their homes.
The technical change is significant: HMRC has decided that it will not now retrospectively deem that assets used as security for the UK loans of non-doms are assets that have for tax purposes been remitted to the UK, with tax potentially therefore being due on them.To put it another way: HMRC have decided a loophole for the rich that it had been announced would be reversed can continue.
Three thoughts follow.
First, Jolyon Maugham and I worked hard with Labour before the election to suggest the non-dom rule had to end, and that policy initiative provided it with the most successful day of its campaign. I remain convinced it is the right thing to do. There is no justice in a tax system that discriminates between people on the basis of the accident of a person's place of birth. There should be no more loopholes because there should be no non-dom rule since it offends all the most basic tenants of social justice.
Second, the idea that there can be a U-turn on this issue but not on benefits is just sickening. The wealthiest can have their stress relieved: the less well off can have their stress increased. There can be few more obvious indications of moral bankruptcy.
Third, was it chance that this was announced when the Chinese were in town? They hold more of the wealth related visas now available in the UK than any other nationality. The political cynicism on view is quite extraordinary.
A tax system that can do this is in need of the most thorough overhaul, from top to bottom. Labour must deliver on the promise to start addressing how that could be done, and soon.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
“basic tenants” – you mean “tenets”? Typo…
Your second point should be publicised widely to MP and Lords over the coming days, and in particular to so called ‘compassionate’ Tories.
The evidence that as far as the Tory government is concerned, there’s one rule for the rich and another for the rest of us, already compelling, is now beyond doubt.
And yes, your third point is bang on. Of course it’s no accident. It was almost certainly agreed when Osborne was in China recently.
Retro-active changes in legal position or tax treatment is never good. I would hope our good courts would probably have overturned that at some stage… I assume that the loophole is closed going forward, which is what you wanted and is a good thing. Clear rules for anyone going into structuring assets / deals / business…
It is sickening that non-doms and corporations can weasel out of paying taxes due. However, I as a resident who has always paid my taxes and on time,but for personal reasons am late with my self certificate, I am being asked to pay over a thousand pounds to HMRC.
Where is the justice? Where is the parity?
There is none
Richard,
In all modest honesty, I would like to know your opinion on retro-active changes of legislation/ruling. It is perfectly fair to argue that a situation is “not right” and that you want to change it. Some people will argue non-doms have added a lot of value to the UK and others will argue the opposite. Fair debate. If there is a majority/consensus to change the rules/definition/status of said non-doms, OK let’s do it. But not with retro-active effect.
More than admittedly, changes in benefits should be covered the same way. I very possible agree that the benefit system is not good and has to change, BUT I am also opposed to the changes in benefits for the people who have build their lives, willingly or not, within this system. Going forward, everything should be open to discussion and change, but not retro-actively.
Courts rule retrospectively
If an obvious abuse is discovered I do not see why it should not be retrospective
I would only consider this appropriate for high value tax avoidance
This clearly yet another incentive to the international rentier in its most egregious form.
The social impact is divisive, destructive, kelptocratic and oligarchal-yet where is the outrage amongst the public-do they still believe that empty mansions in London create trickle-down wealth?
(Simon Q)
The government changes its mind on tax credits so that the poorest are worse off. Then changes its mind on a key area of non-dom policy so that the wealthiest are better off. I now understand what they mean by hard choices and difficult decisions.