Just as well no-one called on the People’s Republic of Mortimer to write Vince Cable’s domicile announcement:
George Osborne’s proposal this week is unfortunately far too optimistic in its revenue assumptions and is impractical. A poll tax on non-doms would be prohibitive for the large number of non-domiciles of modest means, but would be a flea bite for the fat cats.*
Is that it, Vincent? What is this, Hug a Cretin Week? In spite of my telepathically communicated instructions he then didn’t go on to say:
Actually, I just have to depart from the usual Lib Dem script of calm and enlightened rationality for a moment, because this really is the most cretinous, poorly thought out, gobby, illogical, unfair, clumsy arse-wipe of a policy I have seen in all my years in politics and I include some of UKIP’s output in that. I mean, for god’s sake, here you have a system of such Byzantine complexity that even most qualified tax advisers have trouble with it and the stupid oily little man wants to slap a flat-rate £25,000 levy on top of it like a bloody parking ticket on a windscreen, and this in return for tacitly promising not to probe too closely into the offshore accounts of multi-millionaires? It’s so laughably simplistic, obscenely unprogressive and legally suspect it beggars belief. As targeted solutions go it’s about as effective as building a bouncy castle extension to Hampton Court Palace. And even if you do – somehow – successfully persuade the Revenue that this madness is worth their hours and shoot out an extra x hundred thousand tax returns at a cost of god knows what to a lot of low-paid people who don’t speak very good English and ensure they tick the correct box so they opt themselves out of this preposturous Johnny Foreigner Levy, what then? Oh, well, they’ve only changed their status in international law, haven’t they! They’ve only thrown into doubt their inheritance posiiton so that there’s a real legal possibility that if they go back to their home country and die in thirty years time the UK could have a claim on their estate. And it’s even questionable whether ticking a box could have the effect of making you UK-domiciled in law to start with! So if you gibbering froth-mouthed lunatics did get the chance, heaven forfend, to go through with this, you would change the meaning of domicile beyond recognition, and you might just as well have binned the whole thing and started again, and pardon me but I thought that was exactly what would be so crippling to the city and presage economic disaster and cause tumbleweeds to roll past Canary Wharf etc etc? And I may have referred to poll tax earlier, but this proposal is – and you can take this as official because I have some excellent trained medievalists on my team – considerably less sophisticated than the poll taxes of 1377 and 1381, and we all know what they led to! Don’t we? Oh, never mind. God, I don’t know why we bother sometimes…
[Mr Cable begins to weep tears of frustration, and has to be led out.]
But soft, I hear you cry out in the awkward silence that follows, what think you of the policy substance of the announcement, Mortimer? Well, s’pretty good. For a start it has the enormous merit of actually following on coherently from the general import of previous party policy, which puts it ahead of the Tories’ desperate 3am crowdpleaser straightaway. It also eschews flashy brinkmanship for practical reality in that it gives people a breathing space to react. The Polish brickie and the Filipino nurse might only have been planning to stay five years in any case and so are unaffected, the Cypriot property developer has time to tie up his affairs, sell the lot and hie him off to a kinder tax climate. Unfortunate for him perhaps, but nobody ever said tax was fair. Sorry, Mr Property Developer. I’m crying on the inside. And above all, it bears the signs of having been formulated by someone who has a nodding acquaintance with how the system works. A lot of the non-doms I used to do tax returns for had lived in the UK for thirty years. They had married UK domiciles, bought a home or three, set up businesses and sent their children to UK universities. But the law and the Revenue still considered them to be domiciled elsewhere, in the main because the Revenue just doesn’t have the resources to drag the MD of every Irish building firm in London through the courts to obtain a ruling of UK domicile. And you don’t have to be more than normally, humanly greedy to shrug your shoulders and use that to your advantage. (For all my latent borderline socialism, I get irritated when people talk about “loopholes” in the law, as if you have to be a cackling purveyor of evil to take advantage of how the law defines you. There is no such thing as a loophole, there is only legal and illegal, and if one thinks the law should be changed to make something illegal then that is altogether a different matter.) But you would have to be more than normally, humanly unreasonable to kick up much of a fuss if you stood to be affected by this proposal, because it’s sheer common sense that if you’ve lived here for ten years… well, then you live here, right?
I have only one caveat, in fact, and that is that what saves the Polish brickie will also save the Italian banker. In both cases, the UK stint is very likely to be of less than ten years’ duration. Fat cats’ careers, especially if they involve the financial services industry, typically have the same sort of time constraints on them as those of athletes. So it’s not in practice going to tap the real high earnings or put more than a notional brake on the tax-free super-rich (albeit that a notional brake is a step in the right direction). I was a wimpy woolly small-L liberal when I started working in tax, and I left a ravening left-winger. I could tell you stories about domicile status that would make you sick to the soul, and I personally think the whole concept should go on the bonfire and I’ll dance on the ashes. But since that would be just as unsophisticated as the Tory proposal and importune quite a lot of Polish brickies to boot, I have concocted a side-order sized cunning plan, a policy-ette, if you will.
One of the most shocking practices I ever saw was the non-dom overpayment claim. (I’m going to get a little bit technical on your ass now, but stay with me because this will keep you high on righteous indignation for the whole afternoon and with no need to spend good money on the Sunday Times.) The non-doms in question were employed by London-based banking houses and had high salaries and posh flats. But they also spent a lot of time out of the country for both work and family reasons, and the upshot was that they were officially “non-resident” and also defined as carrying out most of their duties overseas. And as a result of these two positions, a huge chunk of what had been deducted from their payslips in PAYE over the year got paid back at the end of it. By which I mean – and you might want to make sure there’s some sort of large vessel handy before reading on – people who earned up to £100k received cheques for about £20k from Her Maj’s Revenoo each and every January. Now it’s folly to meddle with residency, because that has as many knock-on effects as fiddling with domicile. But if you were to simply scrap the notion of “overseas duties” and its link to tax liability, solely in the context of non-domiciled employees, you get rid of this problem. Non-doms, however genuinely unaffiliated to the UK they may otherwise be, take jobs with UK firms for a reason, as the Tories are quick to point out. At its most basic, the purpose of tax is to maintain law, order and general good egginess in the society that allows those firms to exist. So whatever else these people squirrel away to the Channel Islands, they’ve made a choice about where they want to work, and should cough up their basic 10-22-40 on earnings and like it. Yes, one more little “except for” rule adds another layer of complexity and that’s not what our tax policy is about, but frankly a silk purse made decently well from a sow’s ear is our lot in life unless and until we have the guts to, er, kill the whole pig, or however you care to construe.
And for future reference, I am available for bah mitzvahs, corporate occasions and sweary rants. Not christenings though, can’t bear them, they’re just weird.
* This quote is true but the others aren’t. In accordance with her invariable practice, the author accepts no responsibility for any jelly that is caused to set in a rude and amusing shape as a result of this blog.