CBI blasts 'rushed and confused' non-dom tax

The Confederation of British Industry urged Chancellor Alistair Darling to postpone the plan by at least a year and demanded a major rethink of his policy for non-domiciles.

Director general Richard Lambert said: "Ill-conceived government proposals to impose swingeing tax changes on non-doms are damaging the UK and should be scrapped and started again."

In a presentation to the Government drawn from analysis of the Treasury's own figures, the CBI said the plan would never deliver anywhere near the Government's predicted £800 million next year.

Rather, it would drive wealthy businessmen away from British shores to set up in foreign countries with more accommodating tax regimes.

Mr Lambert said: "At a time of growing economic uncertainty it is vital we do all we can to keep wealth generators and their businesses in the country, not make them feel unwelcome and drive them out."

He added: "The draft proposals have been bedevilled by problems and despite attempts to clarify some aspects there are still a plethora of outstanding issues which need to be resolved before any changes become law."

Under plans due to come into force in April, anyone who has claimed nondom status for seven of the last 10 years will have to pay an annual fee of £30,000.

Mr Lambert said: "Non-doms have been an important part of the UK's economic success and prosperity for many years, and successive administrations have provided a warm welcome. Partly as a result of their presence, London is the world's leading financial and business centre.

"The rushed and confused approach to this legislation, which appears to be driven by political and fiscal needs rather than policy principle, has been greatly damaging. Confidence in the UK as a country which does not spring nasty surprises has been undermined."

The CBI's main objections include:

The £30,000 fee should be applicable to families, not individuals, to keep the system simple and not double-tax couples.

The Treasury should work with tax authorities in the US to make sure the charge can be used by Americans against their tax returns in the US.

The Treasury should explicitly state there will be no retrospective application of the tax - one of the biggest concerns for non-doms.

The taxman should make "crystal clear" which assets held in offshore trusts will be taxed and which will not.