For those interested in the issue of the media's coverage of the non-dom issue, Lionel Barber's letter to the Guardian defending the FT's coverage is interesting.

Separately, Taxation has a poll on what its readers make of the national newspapers' coverage of tax in general.

February 21, 2008 | Permalink | Comments (0) | TrackBack (0)

It's getting to the stage where I'm so fed up of non-dom whinging, I might leave the country myself.

Mike Truman has, as ever, an excellent piece on the subject in Taxation this week. In it he talks about the constant moaning of the super-rich about their tax rates, and concludes with the memorable line:

Some non-domiciles have expressed the fear that this may just be the start of a process which will lead to a removal of all their tax privileges; all I can say is that I hope their fears are realised.

Hear, hear.

I wanted to talk about something slightly different. Another survey saying how many are going to go. And before anyone says anything, I know that we've been as responsible for reporting 'fears' about non-doms leaving as anyone: the questions raised apply to all of us.

CFA UK, a group of city investment professionals, are saying that 37% of non-domiciles plan to leave the UK under the planned changes.

Which sounds a lot. But you get to the first par of the press release and find out this includes both people who will leave immediately and those who will leave 'before they achieve seven years residency'.

The second group is such a worthless sample: we know many non-doms will leave before seven years residency. The whole point of being a non-dom is your home is elsewhere and you plan to return to it in due course, mostly before seven years are up.

So we're reduced to a figure of just 18% who say they will leave within a year (and I had to ask for this breakdown - it didn't appear to be in the original release).

So how big is the survey? Well - the e-mailed survey was sent to 5,000 people! Great!

But, erm, only 600 replied. Not too bad, but a bit weak.

Oh, and only half of those claim non-dom status.

So we're left with a survey telling us, effectively, that 18% of 300 people might leave within a year. That's, erm, 54 people.

This isn't the first survey to use dubious statistics to present a distorted picture, but it does raise some fairly fundamental questions about the lobbying currently going on.

Tax campaigners and others arguing against corporate or personal tax avoidance are frequently vilified, udually in whispered tones, about the lack of rigour to their figures, or for their lack of understanding of the issues behind the numbers.

Can someone explain why this is different, and why it is acceptable to try and influence public debate with dodgy statistics about the number of non-doms about to leave the country? I haven't got a good answer myself.

Of course, the real answer to the question 'how many non-doms will leave?' is, in fact, all of them. The whole point is that their home is elsewhere and they will at some point leave.

For the time being they're still over here and making overly large amounts of noise. They could go to Monaco, Switzerland or countless other places.

Can anyone suggest a good place that I could go to to escape the tax whinging of the super rich?

February 21, 2008 | Permalink | Comments (5) | TrackBack (0)

In the ongoing row about the non-doms, and all of them threatening to leave, one small consolatory thought.

Is there any chance that Chelsea Football Club, that home of non-doms, whether on the pitch, in the stands or in the boardroom, will itself leave the country?

February 12, 2008 | Permalink | Comments (2) | TrackBack (0)

The tax adviser to Philippa D'Arcy has spoken! Philip Shirley, who advised the City headhunter on a plan that entitled her to claim a £1.5m tax loss as a result of a complex 'accrued income scheme' arrangement, has defended the structures in an article in Taxation.

You wouldn't have to know me very well to realise that I probably don't have a great deal of time for his arguments.

Litigation has ended, he says. Which is new to me, in a sense - that HMRC is appealing the matter no further than the High Court, where it lost.

Mike Truman, the editor of Taxation, took a particular interest in the case, raising it as an example of an 'artificial' scheme.

That's exactly how I would have described it too. It involved a £1.5m tax loss but no economic loss. So her tax bill disappeared.

In his piece, and all credit to him for coming out and expressing his views, Shirley says that the scheme does not 'exploit a loophole' in the legislation. He then goes into an abstruse argument as to why, before saying: 'the real issue thrown up by the D'Arcy case is why such defective legislation was introduced in the first place.'

Which rather begs the question: which is it? Either the legislation is defective (there's a loophole) or it isn't.

Nor were D'Arcy's actions artificial, he says. Which I think we can take with a pinch of salt. She just enters into gilt transactions worth £30m every day, does she?

Shirley's argument is that there was a market risk involved. Really? Would he have advised her to take part, and would she have taken part, if there was a serious risk of losing any money? I don't think so.

Shirley pins the blame on legislators. The law is flawed (you've heard this one before).

Which it is - but the courts ought to be able to appreciate that a transaction is a sham designed to avoid tax without merrily concluding that it is perfectly legitimate under the specific terms of legislation.

It constantly amazes me how literal the courts are on tax cases. One might argue that lawyers have a vested interest in everything being semantic rather than corresponding to reality. But that's a whole different argument.

More to the point, surely clients have some element of moral choice? They have to answer the question: 'Should I enter into this completely artificial transaction, or pay my tax to the society that itself allowed me to make my millions/squillions/etc.'

I'm afraid those who aren't schooled in the sophistry of the 'tax isn't a moral issue' brigade will find this episode, and tax cases like it, quite shameful. The shame, needless to say, does not lie with the tax legislators.

February 6, 2008 | Permalink | Comments (1) | TrackBack (0)

I think I'm a bit late to this, but if you didn't know, specialist tax magazine Taxation has launched a tax blog. They blog slightly more frequently than I do (there are four of them) and if you're reading this, I imagine you may also find their blog worth a look.

Some of the posts are, um, interesting, let's say. But I have to say I was jealous of this particular scoop.

February 4, 2008 | Permalink | Comments (0) | TrackBack (0)