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The House of Lords Select Committee on economic affairs has published a scathing critique of the way CGT treatment of non-doms and the encouragement of entrepreneurs was handled in the run up to the Finance Bill.

Describing consultation on CGT and residence and domicile as "very poorly handled", the independent report conducted said lessons needed to be learned.

The 71-page report provided a litany of failings on the handling of the Bill and cast doubt over the UK's competitive edge.

On the subject of consultation on CGT and residence and domicile, the report said greater transparency should have been achieved.

It stated: "We see no reason why there could not have been earlier, better and more open consultation; we are particularly disappointed that the progress which we welcomed last year has not been maintained.

"Even if it were necessary to keep back certain aspects – such as the £30,000 charge or the level of the single rate of CGT – we think consultation on many aspects could have taken place on a "what if" basis in announcements."

Going forward, the report urged the Treasury and HMRC to critically consider their consultative processes.

It said: "Officials should analyse why the private sector bodies are so unhappy with what took place and why those bodies thought that what they were saying was not getting through to the ministers. Officials should learn the lessons."

On the subject of competitiveness, the report concluded: "We are very concerned by the weight of evidence from private sector witnesses that the proposals on residence and domicile seem to have a negative impact on the UK's competitiveness. We think it vital that everything which can be done is done to retrieve the position.

Commenting on the report, Lord Vallance, chairman of the Committee, said: "We have heard harsh criticism from the private sector of the way in which the residence and domicile initiative was handled. It was claimed that the shocks which have been given to the tax system by these changes and those to capital gains tax may undermine the stability of the tax regime and the UK competitiveness.

"Our general impression from the evidence we received was that this year the formulation of tax policy has been marked by uncertainty of direction.

"We feel that the Treasury and HMRC must now look carefully at how they have handled these policy changes and must do all they can to make sure that this year’s mistakes are not repeated."

Andrew Collett, certified financial planner for London-based Evolve Financial Planning, said more notice could have been given to the controversial non-dom tax.

He added: "From what I have heard the Labour proposals were piggybacking on what the Conservatives had initially put forward. I do not think that was particularly well thought through."

On the sbject of CGT, he added: "Although a flat-rate is quite prevalent in Europe, I do not think it favours the entrepreneurial aspect of family business and passing ownership down to the next generation."

HMRC declined to comment on the report, but a Treasury spoksperson issued the following response: "The government consulted fully on both the residence and domicile and CGT tax reforms. We are confident these reforms contribute to a fairer, more transparent tax system and will ensure Britain continues to offer one of the most competitive tax environments among major economies."