So Zac Goldminesmith confesses to being a ‘non-dom’, and tells us this isn’t a problem as he’ll relinquish this status to become UK domiciled in the future. This story is interesting on several levels.
Firstly, there’s a general point about the utter contempt with which Zac treats those he wishes to represent – those whose vote he’ll be asking for next Spring so he can be their guy in Parliament. As far as I know he only said he’d change his tax status when others unearthed the fact he was not UK domiciled. I’ll more than happily stand corrected on this one, but it is astounding that his response is to do something about it in the future with no apology for claiming this tax status in the past – and only do it when he got found out.
Secondly, there are some very specific points around the benefits that UK residency and domicile rules confer on individuals. I know something of this – having gone through UK residency and domicile tax training as part of a previous job. So, I know full well that Zac saying “my annual tax returns are signed off by the Inland Revenue” is missing the point entirely. This isn’t about illegal tax evasion – it’s an issue of what some call ‘tax efficiency’. Using and testing the rules to their limits while ignoring the broader will of the tax system. Hey, that reminds me of a similar situation where a bunch of people said they were acting ‘within the rules’ and thought that was justification for their actions? I’ll have no more thoughts on floating duck houses and get back to the point…
Zac has also said he’s ‘tax resident in the UK’. That may be true. But that doesn’t mean he’s ‘tax domicile in the UK’. The two are different things, because if you’re not UK domiciled you don’t pay tax on overseas earnings kept outside the UK.
Leading nicely onto point number three, and that’s the country pile Zac lives in, and his £7.75m house in Richmond. Sorry, did I say his house? I meant to say the house he lives in, because the owner on the property deed is an offshore Trust in the Cayman Islands. So his suggestions about being UK registered for inheritance tax purposes are interesting on another level, as they won’t include his UK properties of which he’s a beneficiary but not the owner. This underlines the problem with the system – the Tories can mess about with raising inheritance tax thresholds, but it won’t matter a jot for people like Zac as the UK properties this particular UK resident lives in will never be considered as part of his estate for inheritance tax purposes.
There are some people who are non-UK domiciled but are working in the UK for a period of time for whom some of the UK tax system is designed, so as not to unfairly penalise them by, say, taxing them twice over. Parts of the tax system relating to non-doms needs sorting out – for sure – but the elephant in the room that Mr Goldsmith, David Cameron and the Conservative party have missed big time is that you can’t have someone using loopholes in the UK tax system clearly not designed for their benefit as someone ‘born and brought up in the UK’ to seek election as a Member of Parliament and representative of the people – and think there’s no problem squaring both those things off.
This kind of thing increases the corrosion of opinion that British people have about politicians. But that aside, the damage this has done to the Tory brand is, surprisingly, something that Team Cameron has not spotted.
