Grant Thornton – indifferent, as usual

Posted on

Mike Warburton, a partner at Grant Thornton in the UK, wrote a piece for Accoutancy Age last week called "Non-doms are good for the UK". It included not a shred of evidence that this is true. He said:

In recent years, London has become the financial capital of the world. This is partly due to over-reaction by the US to the Enron scandal, but due, at least in part, to the welcome we have given in the UK to those who wish to bring their enterprise, talent and money to the UK.

City regulation has nothing to do with the non-dom rules, so Sarbox 404 is not an issue here. And there is no evidence that anyone comes to the UK to set up a business because of the domicile rules. If they did they'd pay tax here on their earnings and as such would lose the benefit of the rule. Entrepreneurs who come here for the non-dom rule do so precisely because they do not want to generate income here, which is also exactly why their cash does not follow them. These arguments are, therefore completely wrong. The domicile rule harms the economy for these reasons.

He goes on to say:

International businessmen and women do not have to come here there are plenty of other countries that would welcome their contribution. Whether or not they pay tax in the UK, the impact they make on business and employment is vast. We meddle with this at our peril.

That, to put it another way, is to say that Mike Warburton thinks that all these people are so much more clever than us Brits. Sorry, but I simply don't believe you Mike. They're not. They're just cheap to employ because their employers get state aid to lower their payroll cost through the domicile rule. It's as simple as that.

And then Mike turns to the issue of justice:

It's easy to make the argument that the tax treatment of non-domiciled UK residents is unfair. Why should two people living next door to each other in similar circumstances pay different amounts of tax, simply through an accident of birth? In my view, this fairness argument is simplistic. In truth, life is unfair, in that an accident of birth can help or hinder each one of us.

Fascinating. Gender is also an accident of birth, So is race. Disability can be. To discriminate on the basis of them is wrong. And is illegal. It's also illegal to discriminate on national origin, which is what domicile is. But Mike would like to ignore that. Perhaps he'd eliminate all other discrimination law as well? Or is it that as a white, Anglo Saxon male partner in Grant Thornton he's just never faced the disability issue? Whatever it is the argument is very unattractive.

And Mike also knows his arguments make no economic sense. Take this:

Even if we were to change the rules, I do not accept that it would raise any appreciable amounts of additional tax.

Note he never suggests that the tax take might go down. In other words, the good of the whole will go up is the domicile rules go as tax will rise and that's because (as he notes) people will not leave - because as he notes anyone affected probably has their money safely tucked away already. No doubt by Mike, because as he said in a Radio 4 programme we were both on recently, dealing with this issue is "great fun". For which read it generates lots of fees in his case.

Of course it's true that Mike:

would be aghast if the government was rash enough to make a change. If it ain't broke, don't fix it.

He'd lose a lot of cash as a result. But let's read his argument in that light. He says:

As a Brit I cannot benefit directly from these rules

That's complete tosh You make money hand over first advising on these rules Mike. Your argument is pure self interest. And ignores both natural justice and the law. On both counts this system is broke, and needs remedy, fast.

PS Grant Thornton partners are good at ignoring issues of justice. Others share the trait. It might also be worth noting that Grant Thornton are currently advising the Conservatives on tax simplification. Abolishing the domicile rule is an obvious simplification. Strange how they don't seem to want to go there.