Inland Revenue Conducts 'Domesday Survey' Of Foreign Workers

by Jason Gorringe, Tax-News.com, London

20 January 2004

The UK government has dropped a strong hint that current tax rules allowing non-domiciled residents to escape UK income taxes is to be scrapped with the news that the Inland Revenue is building a new database of expatriate workers living in the country.

National reports indicate that the Revenue has set up five regional offices to collect personal details of non-domiciled workers, including names and national insurance numbers. It has also begun to send out letters to around 6,500 employees asking for information on “inward expatriate employees who are non-domiciled”, according to The Times.

The tax authorities have no accurate way of assessing how many expatriate workers are resident in the United Kingdom under current rules. A Treasury paper published in the April 2003 budget revealed that the Inland Revenue has 16,000 individuals on its database who declared a total income of £800 million which stayed out of the Revenue’s clutches by being remitted overseas. However, the accounting profession believes the figure is in reality much higher.

Some estimates have put the annual tax loss to the Treasury from the current tax rules at £5 billion, though others have argued the exodus of foreign workers and businesspeople resulting from a change in the rules would deprive the government of double this amount.

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