Nimesh Shah, partner at UK accountancy firm Blick Rothenberg, said that although there was a “compelling argument” to “refresh and modernise” the current non-doms system, the timing was inappropriate.
“The [UK] government should delay the current proposals so that the policy can be adjusted once it is clear what form Brexit will take,” he said.
Non-dom changes
Announced by the-then chancellor George Osborne in the 2015 budget, the new rules mean that non-UK domiciles who have resided in the country for more than 15 of the past 20 tax years will now automatically be deemed UK-domiciled.
In August, the UK Treasury also published a second consultation paper which set out plans to extend its inheritance tax (IHT) rules to cover properties held by non-domiciled residents in an offshore entity.
“To rush through the final changes before they take effect in six months is concerning."
The extension will see IHT charges apply to both individuals who are domiciled outside the UK and to trusts with settlors or beneficiaries who are non-domiciled.
‘Cumbersome’ consultation
Shah said the consultation process has “actually been quite cumbersome”, explaining that much of the detail around the implementing the rules “remains unknown”.
He called on the government to make the “brave but sensible decision” and allow more time for the rules to be considered to ensure their long-term viability.
“This would allow the rules to be carefully considered and measured against a very different economic situation to 18 months prior (when the announcements were first made), and crucially, assess the impact of the UK’s departure from the European Union and adjust the proposals accordingly.
“To rush through the final changes before they take effect in six months is concerning.
“With this backdrop and the likely short-term uncertainty following Brexit, the Government has the opportunity to delay the changes, at least until 5 April 2018,” said Shah.
Delay unlikely
However, Helen Relf of international tax advisory firm RSM, said although the government has provided an “impossibly short timeframe” to implement the non-dom changes it’s unlikely that will be delayed despite the uncertainty around Brexit.
“Despite rumours that Brexit could delay the proposals, recent consultations make it clear that the government is committed to keeping the original timeframe.
“This is pressing ahead despite limited information to allow individuals to make informed decisions. The legislation is not expected for release until 5 December 2016 and we could see further amendments, particularly on the reform of offshore trusts,” she said.
