There's a good piece in last week's Taxation on the non-dom policies of both major political parties. The proposed charge on non-doms is a bit of a fudge, designed not to scare the donors horses. Mike Truman summons up the requisite and appropriate outrage:

there is no legitimate argument to be made for a policy which says that non-doms should be allowed to bung the taxman thirty grand in order to make him go away. It is a squalid, disreputable, grubby idea that has no place in the tax system of a major enterprise-driven, wealth-creating country.

October 29, 2007 | Permalink | Comments (2) | TrackBack (0)

One of the great issues in tax policy over the last few years was: how on earth did Dawn Primarolo keep her job as the minister responsible for HM Revenue & Customs?

She wasn't regarded as up to the intellectual complexity of the job, and those who worked with her have been less than flattering about her approach.

The latest book on Blair has at last solved the mystery. Well, we always suspected that Brown was protecting her, but now we know for sure.

October 29, 2007 | Permalink | Comments (0) | TrackBack (0)

There is an excellent article on Alistair Darling's CGT changes in the FT today by Martin Wolf. Wolf defends the changes and makes many good and original points in defence of the chancellor. About time too.

I have been a little surprised by the reaction to the moves, I have to say. They are certainly wide-ranging, but suggestions that officials hadn't thought them out properly are just offensive - the Treasury and HMRC do get some things wrong, but I think they understand how CGT works and who pays it. Had they realised that second home owners might not pay as much tax, people ask? Of course they had.

Equally, when all you hear (and have to write about) week in, week out, is such and such a business organization/institute/newspaper calling for simpler taxes and flatter taxes and less complexity blah blah blah, it's amusing to see the same organisations reject it when they're offered it.

The Tories plan to oppose the moves. How they will square that with their plans to do away with the series of reliefs in place for corporation tax I don't know.

The CGT moves might, in fact, prove to be Darling's best and cleverest theft of Tory policies, in that he has now exposed some inconsistency in their position on tax.

October 19, 2007 | Permalink | Comments (0) | TrackBack (0)

To move on to a completely different subject, the goings-on at the National Audit Office really are too funny not to mention. Well, funny might be one word. Perhaps serious might be better.

Sir John Bourn's expenses have been scrutinised for several months now, with revelation following revelation.

Not only has the nation's guardian of the public purse looked rather profligate with it himself, it now appears he went out with the likes of BAE, a year after refusing to release the report on Al Yamamah.

The body has published an astonishing set of revelations about the hospitality its senior managers received on its website. The NAO is facing its BBC mea culpa moment. Except of course it is more thoroughly deserved and far more serious, and nobody has resigned yet, amazingly.

Private Eye's Richard Brooks, who also freelances for us, I'm pleased to say, has led the way on this, but perhaps more to the point, it must be nearing the time where Sir John says enough is enough. My colleague David Jetuah argued his time was up a few months ago, and the sentiments are even more pertinent today.

October 11, 2007 | Permalink | Comments (0) | TrackBack (0)

Unless you're thoroughly bored of the non-dom row by now (and I'm getting increasingly convinced that reasers of this blog would rather I changed the record), you'll find this interesting.

It turns out Richard Murphy is the tax expert who told The Observer about the surge in non-dom claimants. He explains his reasoning here, and I won't add my thoughts to it except to say that I think there are more questions for the government on this issue than there are for the Tories.

October 11, 2007 | Permalink | Comments (0) | TrackBack (0)

The fallout from George Osborne's first PBR continues. Oh, sorry, I meant Alistair Darling's PBR (How could I have made that mistake?)

After slagging off the Tories yesterday for using our figures The Observer's figures an unnamed tax expert's figures for the number of non-domiciliaries there might be in the UK, Gordon Brown followed up today with another dig at PMQs.

But the assault came after another Labour MP asked the Prime Minister to assure us that all those non-doms on low incomes might not be hit by the new £30,000 charge.

All those non-doms on low incomes? Give. Me. Strength.

Not only do we have a Labour chancellor apparently slashing the inheritance tax burden, one of the few taxes you might expect the party to support, we also have Labour MPs showing great financial concern for the fortunes of those poverty stricken non-doms.

The next time I see one asking for cash around London, I'll be sure to spare them one or two pennies to pay this new tax bill. We wouldn't want them to go hungry, now, would we?

October 10, 2007 | Permalink | Comments (0) | TrackBack (0)

OK. This just gets more and more bizarre. Brown said in his press conference today that many of the non-doms are nurses and won't pay the £25,000 levy. He added:

Only several thousand people are capable of paying the money that is being talked about and to most people in the tax industry and accountancy industry this is very well known.

Now I'm trying to stay open-minded on this one, but this is news to me, and I suppose I just about count as someone in the tax industry. Moreover, a tax adviser (who presumably does count) told me earlier: 'if there are only a few thousand, I must act for all of them.'

October 8, 2007 | Permalink | Comments (0) | TrackBack (0)

I really am struggling to believe the unbelievable delusions the Brownites are suffering under as a result of the Tory tax proposals.

Did anyone see this paragraph in Friday's Guardian?

A group of Brownites is arguing that it might be better to play [the election strategy] long, and more thorough criticism of the Tory tax plans over six to 18 months could destroy the credibility of a whole generation of Conservatives. Some strategists liken this to the long-term impact of the ERM fiasco of September 1992 on John Major and Lord Lamont, his chancellor.

So a Tory pledge to tax non-doms, which to be generous to the Brownites, may not bring in quite as much as the Tories say, is equivalent to the more than a million people who suffered negative equity on their houses in the early 1990s. And it will be as bad as the devaluation of the pound.

The Brownites' grip on reality is really slipping.

October 8, 2007 | Permalink | Comments (0) | TrackBack (0)

So you write about non-doms for years and nobody, apparently, listens. And then suddenly, after a week in politics that has witnessed the most sensational turnaround in public opinion that I can remember, you find yourself at the centre of political debate.

Since the big issue appears to be how many non-doms might pay the Tories' new levy of £25,000, let me suggest this.

The Treasury's own figures for the growth in non-doms are interesting, and could add some understanding to the debate.

Here they are:

Now what do they say to you? To me, they say that the growth in numbers took place between 1996 and 2001. Now Poland joined the EU in 2004, so I think we can probably dispense with the idea that most of these people are just Polish nurses (as both the Lib Dems and Labour are trying to rather vainly argue).

It suggests to me that the growth in the City in the late 90s can be the only explanation. In fact, I find it difficult to imagine that the bulk of the non-doms can have come from anywhere else. Premiership footballers or Russian oligarchs? There aren't enough of them. Entrepreneurs coming to the UK as a result of low corporation tax and positive economic prospects? Perhaps.

The number of non-doms may have risen since 2005 for several reasons. Further huge growth in the City, with the internationalisation in particular (as London becomes a global centre), and the influence of private equity and hedge funds, is sure to have pumped up the numbers. 150,000? Maybe.

Ultimately, we just don't really know who these people are and what their individual calculations about the Tory levy are likely to be. But I think we can say the City people are likely to be a good deal better off than the Polish plumbers and more likely to have to fork out at least a little bit of their offshore income.

I'm amazed by 'figures close to Brown' briefing that they can unpick the Tory proposals. I don't think they have a hope in hell of doing that, because of a lack of information.

Ultimately, the Tory tax plans are about £3.5bn of government revenues. That's less than 1% of current government revenues and spending.

Alistair Darling said by contrast that the plans created a 'gaping black hole' in government finances.

With that in mind, can I ask: whose credibility is really at risk here? The Tories', or the chancellor of the Exchequer's?

October 8, 2007 | Permalink | Comments (0) | TrackBack (0)

I feel I should say something by way of clarification to the discussions about non-dom statistics that are being bandied about.

We found we were famous yesterday, after the Tories quoted our figures for the number of non-doms, with David Cameron name-checking us on GMTV, the Today programme and elsewhere.

The Tories said we had published a figure of 200,000 for the likely number of non-doms. Which is true, but we can't claim the credit for it. We were following up a story in The Observer, which said:

The Inland Revenue revealed this year that 112,000 people filled in a 19-question, self-assessed non-dom form for the tax year 2004/05. But it is thought the figure for 2006/07 could be 200,000 or more. (I can't find the link for the exact story at the moment - sorry)

I suppose in some sense our name was being used to add credibility, which is fine by me: quite flattering, really. The Independent rang up yesterday and we were quoted adding that we had simply got the number out of the papers (perhaps I wasn't clear enough when explaining it to The Indie: we thought the number was credible) and that it was probably a 'back-of-the-envelope' calculation.

It's all getting a bit muddled, as far as I can tell. What's the reality of the situation?

Firstly, I would stand by the 200,000 number. We just, disappointingly, didn't get there first (and The Observer deserves credit for having consistently followed the non-dom issue where their rivals haven't).

The number for 2005/6 is 114,000. The suggestion is it has probably gone up since then because of the Offshore Disclosure Scheme, which in targetting several hundred thousand people with offshore tax liabilities must certainly have encouraged a few 'non-doms' out of the woodwork. It would be a neat way of getting out of a tax bill overnight (it might not work, I might add).

Whether I would use 200,000, or even 150,000, as the basis for a calculation of a tax policy on non-doms I don't know. I think it would be a prudent accounting view to use the latest published figure, 114,000, at least.

Of course, even that would have landed the Tories in a row of sorts, because the Treasury then, amazingly, came out and said only 15,000 people would have enough offshore income to make it worth their while to pay this.

I'm not sure that was a terribly sensible thing for the Treasury to do.

It, after all, has no more idea than you or I what non-doms have in their offshore bank accounts. Many of them don't even tell their accountants how many millions there are stashed away. The only question their tax advisers ask them is 'are you a non-dom?' If the answer is yes, that's the end of the conversation.

Besides all of that, is it a good policy? I think it's politically clever but not the right solution objectively. Ultimately, I think the tax exemptions should go. They don't really have any place in a modern tax system and represent a bizarre subsidy to a even more bizarre sub-section of the population (investment bankers and many premiership footballers, among others).

It's politically clever because it could be dynamite in an election campaign.

I re-acquainted myself with Gordon Brown's lines on the subject in 1994 yesterday. He said:

Those who are non-domiciled are able to live in the UK free of tax. It is easy for the well-advised to bring in money from overseas without becoming liabile to tax. In 1988 the Inland Revenue recommended a radical new approach to residence and domicile. The government rejected the proposals. When Labour tried to introduce the proposals in the Finance Bill, the then Financial Secretary Mr Dorrell spoke of 'substantial representations' - presumably from those like Asil Nadir who fund the Tory party and remain outside the tax net.

The shoe is now on the other foot. The Tories want to tax the non-doms, Labour doesn't.

And in an election campaign, if I remember rightly, political parties must disclose donations on a weekly basis. Every week the campaign goes on and this issue is discussed, won't it be difficult for Mr Brown to defend his policy in the light of those whom we expect to fund his bid for power?

October 3, 2007 | Permalink | Comments (4) | TrackBack (0)

The Tories have some ideas out on tax today, and lo and behold, there's a pledge to tax non-doms! Heaven be praised! They will have to pay £25,000 to get the privilege of being a non-dom under the Tories. (I think Richard Murphy suggests this might be instead of the tax they already pay; I understood it to apply on top of that, but the detail may well be interesting).

More importantly, the Tories have a tax game you can play on the internet, called Taxman Gordon. It's Pacman, but a Tory version. You can play on the internet, and at the Tory conference, they apparently have an arcade machine to play it on.

If you work in tax, you can play away to your heart's content, and tell the boss you're busy avoiding Gordon's stealth taxes.

October 1, 2007 | Permalink | Comments (0) | TrackBack (0)