Rein in the tax hounds or watch foreign investors flee

Amid the drumbeat of U-turns coming out of Downing Street, one in particular is being viewed with scepticism.

- CHRIS BLACKHURST

This is the decision by Rachel Reeves to sound the retreat on non-doms wealthy foreigners who enjoy tax advantages by residing in the UK.

When the chancellor first proposed clobbering them there was an outcry – not from the left, who naturally applauded vigorously, but from the non-doms themselves, who are not the sort to go quietly into the night, and, more pertinently, from those who saw it as a signal that Britain was not so open to international investment as was claimed.

They realised that this privileged group brought with them money and employment – something that our new ambassador to Washington appreciated when he said that Labour was “intensely relaxed about people getting filthy rich”.

What Peter Mandelson stated then no longer applied under the Reeves philosophy of targeting the better off, no matter how small the relative sums raised, to shore up the public finances. Every little helps, as she would shrug and say.

The question now is, has she really changed? Yes, Reeves has made a concession, but is it a feint. And once the non-doms have been dissuaded and others seduced into returning or coming, her HMRC attack dogs will be let loose. It could be a case of the Treasury mandarins upstairs saying one thing and the tax inspectors in the basement thinking quite another. Above them all is Reeves herself.