Law Society says implementation of non-doms proposals could harm the legal sector

13 March 2008

The Law Society is calling for the implementation of the non domiciled resident tax proposals to be deferred so that effective consultation can take place and allow the full scope of the legislation to become clear.

Whilst welcoming the changes, the Law Society highlights the fact that the Finance Bill will not be published until just before the start date for these measures.

It also points out that many employees of law firms and many law firm clients are non-domiciled. This over-hasty measure could impact the attractiveness of England and Wales as a place to do business and harm the leading global position of our legal sector.

The brief time frame before the new measures come into force will mean the profession will have little time to advise clients on the detail and valuable staff members could head overseas.

Andrew Holroyd, President of the Law Society, says:
“Whilst the government appears to have listened to comments we and others have made and has made some welcome changes to aspects of the proposals, the damage may already have been done.”

“Not only will law firms risk losing important talent from their ranks, many of their clients will be seeking urgent guidance on what has so far been a very vague set of proposals.”

“The real disappointment is that the government did not consult first and are now imposing on non doms, many of whom are linked to the legal profession, a regime which is as yet still not that clear but is better than it was. The beneficial changes will be lost however because of the way the process has been conducted.”

“A desire to legislate effectively has not been a feature of these measures. The government is sensibly giving more time to other matters for consultation, whereas this is a matter where they need to take more time to consider the full impact of the proposed measures, particularly as there may be wider consequences for the UK economy."

“It is reassuring that the government has made clear its intention not to make further changes to the non-doms regime for several years once these proposals have been implemented.”

The Law Society points out that many changes expected to take effect in this year’s Finance Bill, such as on the issue of income shifting and the new regime for offshore funds, have been deferred for further consultation with implementation coming in a year’s time at the earliest. However, the non-dom issue has received less consultation and less time.