Examination of Witnesses (Questions 137-139)
Mr Michael Snyder, Mr Alex Henderson and Mr Ian Menzies-Conacher
7 MAY 2008
Q137 Chairman: Welcome to our witnesses
from the City of London and the Bankers' Association. Thank you
very much for giving up your time. Thank you very much too for
your very helpful written submissions which we have ready carefully.
We will go into questions and we will concentrate, if you like,
on residence and domicile, which I think was what you were writing
about for the most part. If we have time, we might move on to
one or two other things like capital gains tax. Was there anything
you wanted to say by way of introduction or would you like us
to go straight into questions?
Mr Snyder: I think it is best to go straight
into the things you wish to talk about.
Q138 Chairman: Tax policy on residence
and domicile has been under review to a greater or lesser extent
for many years. The present review was started, I think, in 2002.
Why do you think concrete proposals emerged in the Pre-Budget
Review in 2007 rather than at any other time? Do you welcome at
least that the uncertainty of the review has been removed? Do
you have a view on the policy reasons given for the proposals?
I quote from the Treasury: "It is only fair that people who
have chosen to make the UK their home (and who enjoy favourable
tax treatment over the long term, and even pass this on to their
children) should make a reasonable tax contribution to the modern
public services which support our society."
Mr Snyder: I think we have to really understand
why it started. This arose out of a series of articles in The
Daily Mail some 12 years ago relating to Greek shipowners
who were living in big houses in Hampstead and paying tax on about
10,000 a year. That was where the public perception of this issue
started. Why it arose in the Pre-Budget Report I suspect everyone
in the room knows as well as I do. Having had a tacit understanding
that this would stay under review for a goodly time, if not decades,
in terms of not rocking the boat, making it politically unacceptable
to say one is doing nothing but at the same time not wishing to
affect the competitiveness, not just of the City but of business
in the UK in an increasingly globally competitive world; and to
therefore be forced into a situation of doing something for accidental,
political reasons across the political spectrum, I am glad to
be able to say, was very unhelpful. I think we ended up in a position
which was not very good from a perception point of view in particular.
The second part of your question was about putting uncertainty
aside. I am probably in a relatively small minority within the
City saying yes, it would, because having had the public furore
and media frenzy over the non-dom and residence issues this further
fuels the fire of misperceptions about the proposed regime and
undermines the competitiveness of the City. I think the answer
is that we do need to have certainty and closure now. It would
be good if it could be closure with the right provisions in it
as opposed to some of the wrong ones, in our opinion. Nevertheless,
I think closure is now essential because the longer this goes
on the worse the perception from overseas of the UK as a competitive
place to operate a business will be.
Q139 Chairman: Do you think the policy
argument makes sense?
Mr Snyder: I am afraid I do not really see the
policy argument. I can see it in the sense that it is unfair if
some people do not pay tax like others who live here but if the
reality is that they will not then be here the Exchequer is no
better off—indeed, a lot worse of because of the indirect
tax, the critical mass of businesses that we need to operate the
international, financial markets here in London and indeed the
foreign direct investment goes, so we are all worse off as a result.
What appears to be fair—everyone can, I suspect, see it
is fair—on the one hand is very unfair to the British taxpayer
because they will end up having to pay more in the longer run.
Secondly, there is a misperception about non-doms that are resident
here, which is that they are paying tax on everything they earn
here, everything that arises in terms of direct investment here.
It is only those assets that are either held through overseas
vehicles or held overseas that are not remitted to the UK on which
they are not paying tax. Arguably, that is not the question that
is being put to the general public. There is an impression given
that they are not paying any tax at all, which is wholly unfounded.
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