Tom Burroughes: Hello, I'm Tom Burroughes, group editor at WealthBriefing, and I'm delighted to be joined today by Christopher Groves. He's the head of the private client business at Withers, the law firm that many of you will have heard of, of course, and he's based in London. Hello to you, Christopher.

Christopher Groves: Hi, Tom. 

Tom: Christopher, before we kick off into the subject of the non-dom system and the ideas of how to reform it, which is what Withers has recently done, can I just briefly ask you about what your own position at the firm is and what you do?

Christopher: I'm head of the private client team here in London. I'm a general private client practitioner, I'm a tax lawyer. I have a mixed practice dealing with some purely UK people, but also a healthy contingent of resident non-doms, the kind of people we're going to be talking about today.

Tom: Right. Well, that gives us a good opportunity to segue straight into the issue of non-doms. Withers recently produced a report setting out reform proposals. We know that there is a very real possibility, if you believe opinion polls, that we could have a change of government in this country within a year. The Labour Party wishes to get rid of the non-dom system. It hasn't, as far as I know, proposed any kind of alternative, although that may well happen. So, just as a sort of a general starter point, can you tell me what you feel is at stake here? Why did the law firm feel it necessary to issue these reform proposals at the present time? 

Christopher: Well, Tom, I think our view was that the non-dom system, as it currently stands, has become too political to be sustainable. What we're talking about is a regime that allows people to plan their lives, and that happens on a long-term basis. We've had now the Labour Party go into the last three or four elections - it's quite difficult to remember how many we've had recently - but the last few elections saying they're going to get rid of the system or replace it, and that level of uncertainty hanging over someone's life I think is ultimately untenable. We're not in the business of making predictions about who's going to win the next election, although all the smart money seems to be one way, but simply the level of uncertainty that is built in because one party, two parties, all but one party wants to get rid of the non-dom remittance basis, then that puts a lot of pressure on the existing system. I think our view is that we've had these arrangements in place as long as we've had income tax, and in recent years we've seen increasing amounts of tinkering. And I think our view is that the whole system is ripe for reform, to step back and understand why we have this basis of taxation, what we're trying to achieve by it, and how it should be targeted. 

Tom: Let's look at a couple of details. Before we do the details, so one thing that has to be taken into account is how any reformed system would fit or dovetail with other elements of policy that would be designed to encourage inward investment and inward flows of capital from high net worth individuals, whether it be for reform to the currently now suspended tier one investor visa scheme, or things of that sort. How do you envisage any reformed non-dom system as being able to sort of link up in a coherent way with other kinds of ideas to encourage that kind of activity?

Christopher: I think that's the key point, Tom, isn't it? The non-dom system has existed in its current form without really being targeted in any particular way other than the way it is for historical reasons. But there are another number of other ways in which we look to attract the people who create wealth, employment, who add to the British economy, to the country, and we need to make sure the non-dom system ties in with that. So the immigration rules are a case in point and we have seen the removal of the tier one visa, the investor visa, that was perceived as a way for people with access to large amounts of capital to come to the UK without necessarily contributing much on the ground. You compare that with the entrepreneur's visas, the working visas and you see a different class of people coming in there who have to make a much clearer contribution. I think that the non-dom system would also benefit from being better aligned with those same kinds of people. We also talk about the UK being a holding company jurisdiction, looking for big corporates to base their headquarters here, and the non-dom system as currently structured is more attractive to people who have wealth already rather than those who are creating it. A regime that attracted workers to the UK, something along the lines of the Danish model may be very powerful in terms of strengthening the UK's economy.

Tom: Two specific points of detail, which I want to ask you about quite quickly. One is the annual flat fee and the raise to that, and also the 15 year point about a sort of cut-off period for the purposes of the remittance basis. Can you just tell me about what your thinking is about both the level at which the remittance basis applies and also how long it applies for? 

Christopher: The annual fee is something that was first talked about by the Tories when they were in last in opposition, and then was taken on by Gordon Brown. I think the world has moved on since it was brought in, and what we see in other jurisdictions is that where you are providing people certainties on their tax base, many people are in fact willing to pay a much higher annual fee than you would pay in the UK. In the UK you would pay nothing for the first seven years. In Italy you pay €150,000 from day one. You'll pay £250,000 pounds to live in Jersey each year. I think by any measure, the annual fee that applies to the remittance basis is too low for the benefit it's giving.

Tom: Final point really here is, and we can take a bit more time with this, what would you hope to be the benefit overall of the reforms that you suggest, assuming that any government were to take them up? Obviously, there's one level, I mean, you've already alluded to the importance of certainty and the fact that we don't have certainty at the present time for the political reasons given, but what are the possible consequences, positive consequences no doubt you would hope would be the result of a reform if your ideas were to be taken up.

Christopher: I think the international lesson is very important here. There are a number of other countries bringing in these kind of regimes - Spain, Italy, Greece - they're all looking to attract people with simplified flat tax regimes. And that's the point of these regimes. Although, the Labour party may talk about getting rid of the regime to increase the tax cake, that can only be a temporary adjustment as people who are in the regime decide not to leave. The real benefit of these regimes is attracting people to the UK who are going to contribute to the economy. And that's what we're seeing internationally. And that's the way we think the remittance basis needs to be focused and characterized as a regime to attract people who will bring more to the country than simply the payment of tax on the standard basis. The wealth creators, the entrepreneurs, the business people who will bring economic activity here, create jobs and create tax revenues in that way.

Tom: What kind of response have you had, by the way, to your ideas, either at the public level or anywhere else? Have you had any feedback from people that you talk to in the policymaking world, what do they say to you?

Christopher: There's been a lot of positive feedback so far. We've been very, very heartened by the feedback we've got. I think though that everyone plays their cards very close to the chest at the moment. I don't think we have any illusions as to our links into government or the opposition parties, but I hope that we can contribute to this debate, because at the moment it's a very one-sided one, a very simple one focused on we should abolish this regime, we should replace it with something, and I think we'd have to contribute to what that something should be.

Tom: Well, I think that that's sort of a mindset which I'm certainly hoping to see a lot more of, not just on this topic but many others, as they affect issues like this going forward. Christopher, thank you very much indeed for your time today and your comments and it goes without saying that the audience at WealthBriefing looks forward to seeing more analysis from Withers and indeed other firms of your type on these and related topics. It's very important that this debate continues in the spirit that you've set out today. Thank you very much indeed, Christopher, and I look forward to speaking to you soon. 

Christopher: Thanks, Tom. Great to speak to you.