Labour's non-dom plan divides accountants
Ed Miliband’s plan to scrap non-dom tax status if he becomes 10 Downing Street’s newest tenant, has raised a few eyebrows on AccountingWEB.
Milband said this week that a Labour government would abolish the non-domicile rule that allows some UK residents to limit tax paid on earnings outside the country.
Instead, it said it would give non-doms already living in Britain a two-year transition period to "get their affairs in order". Non-doms will have to pay tax on all their earnings after around two or three years.
Non-dom tax status originated in the 18th Century and has been characterised by its critics as a vestige of Colonial era inequity and a symbol of tax avoidance.
AccountingWEB’s members are not all convinced by Miliband’s plan, however.
Commenting on an earlier article, Old Greying Accountant said they felt scrapping the non-dom status is a slippery slope.
“I don't deny it needs work to stop contrived abuses, but for the true non-dom you have to weigh the benfits they may bring by establishing businesses here against any 'lost' tax on their assets and income held outside the UK,” he wrote.
Duhamel concurred, “It should be revised, particularly for UK domiciled leaving to be non-dom, but as a concept it should stay. I haven't looked at numbers, I suspect that will be key.”
Some members felt Miliband’s motives for wanting the change were wrong. “Like many other arguments of this kind, there are no reliable figures showing the cost/benefit one way or the other,” wrote mwngiol. “So one can only assume that arguments on both sides are being made from a political rather than economic standpoint.”
AccountingWEB contributor Philip Fisher called scrapping the non-dom status a "political hot potato". "One factor that Mr Miliband might have had in mind before dropping his bombshell is that many non-doms do not get to vote in the UK.
"However, they are often very influential and many will recall the uproar when it was announced that Lord Ashcroft, formerly chairman of another political party, was taking advantage of his non-dom status to minimise the tax that he paid to the UK Exchequer."
Member reaction was not all negative. Red Leader asked “if the non-dom law is such a good idea for the UK, why don't other major economies have something similar?"
“It does seem ridiculous that a person born here and who has lived here most of their life can be non-dom because their father was a non-dom.”
Mr. Mischief felt that scrapping the non-dom rule “would get rid of a complex chunk of UK tax law” and that “that can only be a good thing”. “I would go further,” he wrote, “any UK passport holder should have to account for all worldwide gains and income to HMRC.
“Whoever wins the election needs to get extra revenue from the wealthy people who do not pay their fair share due to these loopholes. It's unfair on wealthy people who don't pull off these dodgy games in dubious tax havens.”
What's your take on Labour's plan?