In the 1985 film, Monty Brewster has to spend $30m in 30 days (to get his hands on an even bigger sum). Now accountant Ernst & Young is urging wealthy non-doms to take a leaf out of his book by splashing their cash on yachts, jets and new sports cars before April 5 – the day that the new non-dom tax rules kick in.
The idea is to avoid one of the sub-clauses of the Treasury’s new rules, which says that any purchases of items worth more than £1,000 made with untaxed foreign income will now be taxed at a whopping 40%. However, if you can buy the boat/ jet/ car and get it back in time for midnight on April 5, you won’t have to pay any tax at all. So you can actually tell yourself that new 50-footer is an economy as it cruises into Southampton harbour.
The new rules won’t apply to all expensive purchases – personal effects like clothes and watches are exempt, as is art that will go on public display. However, you might have a job persuading the Revenue that the spanking new Lamborghini outside your house is actually a work of art for public consumption. And since it’s not often an accountant gives you ten days to blow a pile of cash in such frivolous fashion, perhaps it would be a mistake to pass up the opportunity.
On the other hand, we imagine that the majority of non-doms have better things to do in the next ten days – like try and get their finances in order. And if you’re rich enough to impulse buy a new yacht on ten days’ notice, you’re probably not that bothered about paying a bit more tax on it in order to stay in the UK.
Still, we can’t help feeling when we see this kind of thing that the main beneficiary from the new non-dom tax rules won’t be the Exchequer. It’ll be the accountants, who are already lining up to offer these people offshore bond wrappers and other arcane savings products to minimise their bills. After all, when you’re looking at a five-figure tax bill, it’s worth your while to pay someone good. Assuming you can still afford it.