Accountants Call For Delay On Introduction Of UK Non-Dom Proposals

by Amanda Banks, for LawAndTax-News.com, London

13 February 2008

The Government must delay the introduction of its non-domicile tax legislation for at least twelve months to avoid total chaos, tax experts at accounting firm PKF warned this week.

Following 'clarification' by HMRC to points raised by the Society of Trust and Estate Practitioners (STEP), it appears that pre-6 April 2008 capital gains of non-resident trusts formed by non-UK domiciled individuals are not intended to be caught by the new legislation.

If this is the case, it is welcome, PKF announced. However, PKF National Director of Tax, Lisa Macpherson - also a member of STEP - stated that more detail is needed, so that individuals and the tax profession can be clear on the implications.

Ms Macpherson stated that: "We welcome the clarifications announced today but the way this legislation is being introduced is causing confusion and chaos. We are facing a situation today where clients are liquidating off-shore companies and trusts which they may not have needed to do. It currently isn't clear what taxpayers should be doing. Should they be staying or leaving?"

"The position for non-domiciled taxpayers is anything but clear and the lack of consultation is proving disastrous to the UK's reputation for stability. If the proposals are to be rushed through for political reasons the uncertainty is hurting."

She concluded: "There is only one course of action open to the Government; they should delay introduction of the legislation for at least a year so that everyone, including the Treasury and HMRC, can fully understand what the impact will be."

Also commenting on the clarification offered by HMRC this week, John Riches, STEP Deputy Chairman, observed that:

"The Government has been listening and agreed there is a need for reassurance. Nevertheless because of the technical complexities it is highly likely not all issues will be fully resolved before the new rules take effect on 6 April."

"The only way to achieve the certainty which the Revenue and taxpayers are both seeking is to postpone the introduction of the new rules so that they take effect from April 2009."

"In the absence of such a postponement, we are still fearful that the flight of individuals and capital will continue. We thank HMRC for their constructive approach to consultation and STEP stands ready to provide all assistance and feedback to HMRC to ensure that clarity can be achieved."

Recommended