If Labour is serious about tax avoidance then why are they only going after non-doms?

Compared to non-residents, they barely even register on the scale

Mira Bar Hillel
Wednesday 08 April 2015 16:29
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In his speech at Warwick University today, Ed Miliband pledged to abolish non-dom tax status
In his speech at Warwick University today, Ed Miliband pledged to abolish non-dom tax status

The Labour Party is looking to establish its commitment to tax equality by abolishing non-dom status for people living in this country. It's a sure-fire win for Miliband. But it's also laughable when compared to the tax affairs enjoyed by the serious avoiders: non-residents, aka Tax Exiles.

Yes, "non-dom" has a ring to it. It rolls pleasantly off the tongue and is easily spat out in contempt. But in terms of real tax pounds, non-doms are the minnows.

What needs to be tackled urgently are the tax avoidance sharks: those who were born and educated in this country, own and run major lucrative businesses in the UK – but take care to spend no more than 90 days a year in Britain while declaring themselves to be a resident in places like Monaco, the Channel Islands or Switzerland.

Take Sir Philip Green and his wife Tina. Philip pays full tax in the UK on everything he runs and earns. However, Arcadia, which he runs, is owned by his wife, who lives in the tax haven of Monaco. According to campaigners, in 2005 alone this arrangement allowed her to bank £1.2bn – the biggest single paycheck in UK corporate history – without paying any tax on it.

And this is just one example; it's the same for many other members of Britain's super-rich club: corporate billions go round but do not stop at any station marked "UK Tax".

The cost to our economy of these tax avoiders is many times greater than the non-doms we hear so much about. Yet they continue to be celebrated within the higher echelons of society and our media. For example, the architect Lord Norman Foster is not allowed to sit in the House of Lords as he now resides in a Swiss chateau. Yet he keeps the title of Lord, as well as the tax advantages of his "non-res" status.

In the late 1990s my accountant explained to me that I could register for non-domiciled status, because of my Israeli family and my intention (at the time) to be buried there. I had, by then, been living in London for around 25 years, having arrived in 1972 as a non-EU immigrant.

According to my accountant, this meant that all of my income and interest on capital earned oversees would not be liable to be declared to the Inland Revenue. Nor would I be taxed on it - as long as it stayed offshore. Before I knew it, I had become a non-dom with an account in Jersey.

This was especially appropriate in my case, because the amount of interest I was earning offshore – around £1,000 a month – was exactly the amount I was giving each month to my niece in Tel Aviv, who was just starting a family. So the untaxed interest never came into this country at all. I pay all my other taxes, so as well as being legal it seemed perfectly moral as well.

The fun and games ended, however, in 2008 when the non-dom tax holiday wheeze acquired an annual fee of £30,000 - £50,000 (depending on the length of residency in the UK).

As I never earned that much, let alone from foreign sources, I decided to make an honest woman of myself and admit that I am, indeed, British through and through.

I have always found it puzzling that the British public sees non-doms as the worst possible tax scammers. Perhaps this is because the media also loves to hate them, and can’t quite get its head round the fact that they are by far the lesser of two evils. However, this allows governments to get away with pretending to be acting on a big problem, and without upsetting the seriously wealthy tax avoiders, wherever they may be domiciled or resident.

Today's news is obviously welcome, but we need to go further. Nom-doms will have got a well-deserved shock this morning, but it’s the real tax-avoiders who should be worried. And it's my suspicion that they aren't at all.

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