Specialist blasts crackdown on tax avoidance
The director of London-based chartered tax adviser Mark Davies & Associates, said the consultation document and subsequent legislation that followed chancellor George Osborne’s budget objective to clamp down on tax avoidance by non-domiciled people could damage the UK economy’s recovery.
In a 12-page response to the consultation, he questioned Mr Osborne’s assertion that “opting to invest for a capital return carrying a lower tax burden was a morally repugnant act”.
Pointing to a lack of fairness in the current tax system, Mr Davies said “the distinction between income and capital is a largely artificial construct”, adding that recent efforts to target non-domiciled people who purchased companies that own properties, rather than actually buying the buildings, were no more a source of abuse than investing for capital growth over income.
He said media scrutiny and misinformation on stamp duty land tax avoidance had set the issue in stark relief, adding: “The unfortunate consequence of priming this debate about tax avoidance with emotive language is that the debate has become misdirected.
“Considering that the tax lost through evasion, by HM Revenue & Customs own estimates, far outweighs the tax which is not due as a result of avoidance, it is truly staggering that avoidance is the topic of the day.
“The result is the UK may be perceived by the outside world as a jurisdiction hostile to wealth and wealth creation or, at the very least, a jurisdiction that changes its tax law regularly, making long-term inward investment uncertain.”
David Howell, chief executive of Guardian Wealth Management, said: “We don’t know if this consultation will become law, and we don’t know what the future will hold regarding the economy, so the government shouldn’t be too punitive. We need to continue to attract these non-domiciled and their investment to the country.
“We refer our expatriate clients to specialist tax advisers, and tend to use the current legislation rather than push the boundaries with schemes like K2, which can be risky.”