| CIOT critical of non-dom proposals |
|
|
| Friday, 29 February 2008 | |
|
The Chartered Institute of Taxation (CIOT) has said that proposals for changing the laws of residence and domicile are unclear and offer no certainty.
The CIOT added that it believes that the Government has a golden opportunity to introduce a comprehensive, statutory residence test based on objective criteria, such as day-counting. This would afford much needed certainty in what is currently a very grey area. Furthermore, in common with many other professional bodies and organisations, the CIOT advocates a one-year delay in implementing the proposed legislation affecting foreign domiciliaries. Draft legislation deficient Rob Ellerby, CIOT President, said that the current proposals governing foreign domiciliaries were causing much confusion both for those who are affected and for those who are providing advice to such people. He added that HM Revenue and Customs (HMRC) now accepted that the draft legislation which was published in January was deficient. In a series of meetings in the last few weeks, HMRC officials have been promising changes to these proposals. These unpublished announcements have created confusion, however, as no-one is clear which proposals are to be proceeded with and which are to be dropped. Ellerby explained that because people affected by the proposed legislation were faced with making life-changing decisions, the CIOT considered that the only sensible approach was to defer the implementation of these measures, in particular those in respect of non-UK trusts and non-resident companies, for a year. He said that this would allow proper consultation to take place with a view to producing workable legislation. Blue-skies thinking The CIOT believes that, starting with these provisions, significant changes in tax law should be consulted upon in advance, with the Government being prepared to expose its blue-skies thinking, then its broad proposed direction of change, then the draft legislation - all in advance of the changes coming into force. “The more people understand what the Government's thinking is and the more opportunity the Government has to reflect on views and representations, the greater the likelihood of producing better quality law reflecting the difficult choices involving fairness, efficiency and simplicity,” Ellerby concluded. The British Bankers' Association pointed out that foreign workers in the UK contribute hugely to the economy and already pay income tax on their UK earnings. In the BBA’s response to the Government's consultation on non-domiciled workers, Chief Executive Angela Knight said it was vital for the continued success of UK financial services that the UK remained open for business. She added that the industry - already contributing more than £100 billion to UK economic growth - was concerned that hitting workers with extra taxes would reduce the UK's ability to attract and retain top calibre people and investment in our economy. Considerable annual levy The BBA claimed that the Treasury’s proposed package of plans to increase tax revenues from non-doms could end up costing the UK considerably more than the small amount it would raise. It argued that current plans should be deferred until a full impact assessment could be carried out on the likely cost to the UK. Mrs Knight said that the non-doms already pay income tax to the Exchequer on their UK earnings. She warned that if they additionally had to pay a considerable annual levy on top, they would see this as a clear message that their presence was no longer valued by the UK, especially when considered alongside other measures the Treasury is proposing. Knight said that the international view of the UK was that it is becoming by degrees less welcoming to business. "If we put at risk our position as the centre of international finance, there will be countless other financial centres shaking out the welcome mats for those talented and industrious individuals who are currently contributing so much to our economic growth," she noted. “These proposals would deal a devastating blow to the City, but would also affect those visitors from overseas who work in the arts, in research, in teaching, in medicine and many other roles. It could bring about a seismic change to our society yet the Exchequer’s benefit would be comparatively modest. We need more time for consultation with affected stakeholders and a full cost-benefit analysis to be carried out before these proposals go any further,” Knight concluded. The BBA paper also stresses the City’s loss of confidence in the Treasury’s consultation process, which of itself has been damaging to the perception of the UK by the international community. Related articles
Related links |
Subscribe to our weekly newsletter for top jobs, news and more 
Digg it! 
del.icio.us 
Newsvine 
Reddit 
Stumble It! 
With financial market volatility in mind, the Director of Finance Online team present alternative options on which you stand to make a healthy return your investments.