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HMRC rejects non-dom levy ‘threat’ claim

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The number of registered ‘non-doms’ in the UK has decreased since 2008/09, but the general trend is upward and non-tax factors may explain the recent fall, HMRC has told Tax Journal after tax lawyers claimed that tax policy was turning wealthy individuals away from the UK.

Pinsent Masons, the international law firm, said in a press release that the number of UK taxpayers registered with HMRC as non-domiciled fell by 17% in three years after the remittance basis charge was introduced in 2008. But the government has already pointed out that HMRC holds no any estimate of the number of people who are non-domiciled but do not notify HMRC of their status.

An HMRC spokesman said today: ‘Individuals are only required to indicate their domicile status where it has a bearing on their UK tax liability; there are a significant number of non-doms who do not indicate their domicile status on their tax return, for example those who chose not to be taxed on the remittance basis.’

He added: ‘In order to get a truer picture it is important to look at figures over the long term. The figures for the non-dom population in the UK have been steadily growing over the recent years, from 83,000 in 1997/98 to 116,000 in 2010/11.

‘Although the number of non-doms in the UK has decreased since 2008/09 this does not affect this general trend. There are also likely to be other factors which would explain the drop since 2008/09, most notably the wider financial situation.’

In a House of Lords written answer last November Lord Sassoon, commercial secretary to the Treasury, said: ‘HMRC only holds information on those individuals who are required to declare their domicile status because it is relevant to their tax affairs. HMRC do not hold any estimates for the number of individuals who are entitled to claim to be non-domiciled but choose not to do so.’

Lord Sassoon said the £30,000 charge was paid by 5,410 people in 2008/09, giving an exchequer yield of £162m. In 2009/10, 5,100 people paid the charge, with a yield of £153m.

The £30,000 levy applies to non-doms who claim the remittance basis and have been UK resident in at least seven of the nine preceding tax years. From April 2012, the levy for non-doms who claim remittance basis and have been UK resident in at least 12 of the preceding 14 tax years is £50,000. Those who do not make the claim pay UK tax on their worldwide income and gains instead.

HMRC disclosed that there were 140,000 registered non-doms in 2007/08; 123,000 in 2008/09; 118,000 in 2009/10; and 116,000 in 2010/11.

Jason Collins, head of tax at Pinsent Masons, said the UK’s tax code was seen as becoming ‘increasingly hostile’ to high-net-worth individuals, especially those from overseas.

‘The threat of the levy is driving high net worths away,’ he claimed. There were ‘plenty of other countries competing to welcome them to their shores’.