There are a lot of accountants and lawyers who are saying that there are people queuing up to leave the UK. I’m not so sure. I think this may have more to them drumming up business opportunities for themselves.
How do I know? Well, Withers LLP, one of the firms of lawyers with whom it is fair to say I do not see eye-to-eye on with regard to taxation issues was kind enough to send me a flyer for an event they are holding in January. I can’t find it on their web site, so I’ve posted it here since I’m sure they won’t mind if I drum up a little business for them.
What’s the event called?
Should I stay or should I go?
fair weather or foul for UK tax residents?
Now what could that be about? Here’s a sampler:
The changes to the UK taxation of resident non-domiciliaries in 2008 and the proposed introduction of a 50% rate of income tax, has increasingly caused businessmen, entrepreneurs and high net worth individuals to question whether the UK is the most appropriate jurisdiction to base themselves.
This interactive seminar will look at the recent tax changes and whether the UK can still be seen as a tax haven for non-UK domicilaries and how those who are thinking of moving here (or are already here) should structure their affairs.
We will also examine the position for those who want to leave the UK and what steps need to be taken to successfully achieve this and to escape the long arm of HMRC. For those that do want to, and can, leave the question is; which jurisdiction should they move to? Switzerland and Monaco are traditional locations for ex-pats and remain highly popular. We will also look at the USA and Italy as alternative ‘high-tax’ jurisdictions, which can still offer tax efficient residency for foreign nationals, as well as Hong Kong - examining the residency issues for those looking to move further afield and to access the emerging markets of the Far East. Finally we will look at the rules for non-domiciliaries in the UK, to see if UK residency is still the most attractive option.
As they say
We hope you will be able to join us for what we expect to be an interesting and thought-provoking afternoon.
So now we get to the nub of all those claims that people are thinking of leaving: they’re just a marketing exercise for a firm so desperate for business that it has to put on free afternoon seminars to see if anyone is even interested in the idea. let’s be honest: if the queue was really as long as they claim this would be completely unnecessary: they'd be inundated already.
So, for all those who rather hoped that people bankers are rushing to leave I’ve got sad news to impart: it really doesn't like like that’s the case.
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You have forgotten a key aspect of marketting. It is not mainly for the industry or niche as you claim, but for the actual firm.
Hence Withers LLP knows people will be leaving but wants to show them that they are the experts and so the firm they should use if they leave.
Not Linklaters, etc down the road.
This is showing that the market is there, they are just trying to increase their own share of it
@Creg
I grew a firm without ever having to artificially induce creation of a market as they are doing
Sorry, I don’t buy your argument
Richard
There is no question that big numbers of people are talking about going. However, for every 10 that are talking about it, my view is that only 2 or 3 will actually go. Reasons will be varied, but a combination of (a) not being able to find somewhere more suitable for their income-earning opportunities, (b) not being able to find the environment to live and bring up their children, or (c)simply not being willing to leave Blighty when push comes to shove.
Geneva is apparently full (no housing stock, schools full), Monaco is not what many of these people want, the Channel Islands are getting lots of enquiries but only a few takers to date, while a lot of other places are simply too far away from the UK. Mind you, I know some who are so convinced that Britain and Europe are going be bust for the next 10 years that they might as well relocate to Singapore or Hong Kong.
New York is becoming increasingly popular at the moment as they seem to be embracing hedge fund managers. Ireland is also interesting quite a few people (lots of property available there !).
But for the rest, they will be staying in London and looking to stay there as tax-efficiently as possible. In reality, it means that the majority of nondoms will stay and that those who leave will be mainly resdoms who have no get-outs.
Creg is right that Withers will be competing hard with the likes of Charles Russell, Macfarlanes and Lawrence Graham for their share of the market. There are big fees at stake and they are certainly not just drumming up interest. If each firm takes 20 or 30 departing individuals then that’s still very big business for the firm if its dealing with structuring their tax affairs in the new country (wherever that is).
Some are of course also waiting for Mr Darling’s PBR on Wednesday and/or for the outcome of the General Election to see how the land lies by them, so a January seminar is ideal timing.
Rupert
So 4 law firms might get 20 to 30 people leaving
And that’s what’s holding the UK back from imposing fair tax?
I suspect you’re right
It is 100 – 200 people
And they’ll find we get on very nicely without them
And the grass is not greener on the other side
All of which I am looking forward to, immensely
Richard
Richard
Plus a few more from the Big 4 firms, but I’d be amazed if its more than 500 tops. Although if their total wealth is £50m to £100m and many of them are resdoms and job creators, then even an average of £50m x 500 people is £25 billion of capital potentially leaving the country, plus the loss of jobs and job creation opportunities.
But maybe we are both wrong. Maybe its a lot more than 500, although if it was then the average wealth per capita would drop considerably from £50m. Maybe its £50 billion or more that will leave the country.
The reality is that simply nobody knows and we can only speculate.
Rupert
Wealth would not leave – do not be silly. Investments stay where they can earn
And as for those who quit being job creators – please provide the evidence
Bankers are not job creators.
Richard
If you move along with your team from a bank in London to a bank in Zurich, you can work in the same market as before, and London has lost jobs to Zurich. Without experienced people, you cannot be easily replaced in London.
This may not happen obviously, or in the short term, but when recruiting, it will make it harder for London to compete.
If you argue that there is a multiplier effect on public expenditure, you would also have to argue that it is the case too for private individuals’ income.
I don’t have numbers like Rupert, but when you change your home base, it would be sensible to reallocate your assets to hedge the currency risk; i.e. from a GBP perspective to a different currency baskets. Maybe you can still do this in London, but you will have other options too.
And what is wrong with Switzerland anyway? – it is a great place to live!
Richard
Apologies for the confusion. I wasn’t referring to bankers. I was talking about nondom business owners generally. Some are in financial services but many own very large non-financial services businesses. Just take a look at the last Sunday Times Rich List and you will see exactly what I mean.
Archie
The very wealthy nondoms that I am referring to won’t go to Zurich because Zurich has voted against the forfait arrangement. Bankers will go there, but not those who won’t be looking to work in Switzerland.
“I grew a firm without ever having to artificially induce creation of a market as they are doing”
I repeat again that they are not, they are after increasing their market share of the market that exists already, even you report on those threatening to leave in your blog.
Whether many will actually leave or not time will tell, but an indicator has to be how many nondoms were attracted to the UK, when they were given an advantageous tax status, it is a clear sign that people are willing to locate for tax reasons.
From personal experience those clients who have queried leaving the UK in the past for tax reasons, only 10% do it.
Is saving money really worth moving away from family, friends, clubs and home?