The Sunday Times - "I’m non-dom and outta here"

The Sunday Times 
April 13, 2008 
I’m non-dom and outta here

UK non-domiciles are threatening a mass exodus because of Labour’s Ј30,000 tax. Rosie Millard meets the super-rich and finds a sheeplike mentality driving their decisions I’m sitting in a minicab with a young blond Russian called George Shishkovsky. We are driving around north London, but he is showing me a London environment that I have never really seen before. 

“We are going down one of the most prestigious roads in the area,” Shishkovsky says. “On the right and the left you will find houses where the minimum price is Ј7m, but they go up to Ј20m.” 

He points out one that is on the market for Ј15m. It looks like a gargantuan doll’s house, with Queen Anne-style pilasters and shuttered windows. It is surrounded by an immaculate swathe of emerald lawn and looks onto a street furnished with diplomatic parking signs. There are no corner shops, chemists or children. It’s quiet enough to hear the birds singing. I comment that this road is hardly representative of life in the capital. “It’s posh and safe,” responds Shishkovsky. 

This Hampstead street, and plenty of others in the suburb, he tells me, is perfect “non-dom-land”. He should know since he provides buying opportunities for a host of non-dom clients. His company LondonDom.com offers a relocation service for mainly Russian, Ukrainian and European non-doms - the super-rich who come to Britain to work but whose main residence, or domicile (hence non-dom), continues to be overseas. 

Until this month non-doms enjoyed a significant perk as they were taxed on their UK earnings only. All their other global assets were left in untaxed peace. Clearly a rather attractive arrangement, and a long-standing one at that, it was introduced in 1799 to boost the British economy during the Napoleonic wars. 

The archaic nature of the setup cut no ice with Alistair Darling in last year’s prebudget report, when the chancellor announced a Ј30,000 annual levy to be paid by each non-dom (and his or her family) who has lived in the UK for seven of the previous 10 tax years. 

Even though this sum is clearly a bagatelle for most of them, the non-doms now feel unloved by the Brown administration and many are hastily reassessing their enjoyment of life in the UK. For enjoyable, it definitely was. “People who can afford to live here want the best,” says Shishkovsky, a former radio DJ who got into the non-dom world when he tired of doing celebrity junkets for listeners back home in Moscow. “They have stayed in the best hotels in the world and they want to bring that style into their home. When they arrive they want everything done for them.” 

Now he will even fill in the council tax forms for his clients, if asked. “We will put an entire library of Russian-dubbed DVD films in [a house], if required, have fresh flowers everywhere, have the fires lit, the sheets ironed.” What sort of sheets do non-doms sleep in? “Nine-hundred-thread-count Egyptian cotton only,” says Shishkovsky. 

It’s not only the lighter tax burden compared with, say, New York that makes being a nondom in the UK so attractive for the mega-rich; London is a place where you don’t typically need a bodyguard, where it is safe (and acceptable) to travel on public transport and where – until recently, at least – you could make a bombproof investment simply by buying a house. “It’s a safe and simple way of taking money out of their country,” says Shishkovsky. “For many non-doms, living in London is a way they can invest their money, educate their kids and start a business.” 

All of that is changing, he explains. “Taxation and property prices. That’s what the issues are now,” he says, as we drift around inside a penthouse flat overlooking Regent’s Park that is on offer for Ј4.5m. 

The flat is painted in inoffensive shades of sienna brown and magnolia. There is a lot of chrome and leather and the conveniences include air-conditioning, sliding glass doors, double basins and sexy white pebbles in the fireplace. 

It’s just like a boutique hotel, I comment. “Exactly!” says Shishkovsky. “These people, they like an international modern style. They have a horror of living in a Victorian terrace.” Why? “They hate the idea of hearing their neighbours.” 

Funny types, nondoms. Later that night, in the course of recording a Radio 4 documentary about them, I meet a whole roomful. Swept up to the 17th floor of a glittering new City tower block in the centre of the Square Mile, I go to a meeting of the Indus Entrepreneurs (Tie), a club that arranges talks by inspirational figures such as Aditya Mittal, the industrialist, and Tom Bloxham, the architect. After a speech about how to be a global success, from James Caan of Dragons’ Den fame, the entrepreneurs mill around eating canaps and drinking juice. All appear to be non-doms. Most of the ones I speak to are thoroughly fed up with the chancellor’s changes. 

“I’m almost certain to leave the UK within the next couple of years,” says Conor Foley, an Irish non-dom and chief executive of a market trading company who has lived in London for the past five years. 

“These changes are a spectacular own goal on behalf of the Labour government and I think it is a mistake they will regret. You’ll see. Swiss, Americans, Irish – we’ll all move out. There are plenty of other countries we can go to. The goalposts have changed. And if they are changing, I’m changing.” 

Foley resists the charge that he is simply throwing his toys out of his cot: “I don’t think I’m a special case. I pay all my taxes on the money I earn here. But why should I pay any levy on my earnings outside the UK? I’m a huge net contributor to the exchequer.” 

This is, of course, a key argument for the non-doms; a report from Stonehage, the wealth management firm, suggests that nondoms spend more than Ј16 billion per annum in the UK, a figure nearly equivalent to the GDP of Luxembourg. Plus, the income tax they pay per capita, according to Stonehage, represents about eight times as much as the national average. 

Intriguingly, Andrew Rodger, a director of Stonehage, suggests that the government went ahead with its changes before really focusing on this persuasive data. “We worked with the same data the government had, but they reached some figures in earlier papers which Stonehage feels are too conservative,” he says. 

Too late. The non-doms have sensed a change in the air regarding their wealth and they don’t like it. Even non-doms who were born here are rapidly reassessing their relationship with Britain. 

“I was born and educated here but with substantial ties to India,” says Alpesh Patel, head of an asset management company, at the Tie evening. “This looks like the slippery slope. There’s been a little bit of taking us for granted. And there are so many cities in which we can do business.” 

He laughs and waves a canap about: “They have targeted a category of individuals who are exactly the ones who belong somewhere else. They have said, ‘Here’s the air fare’. All right then, cheerio.” In Patel’s view, a fundamental shift of tone will occur thanks to a general nondom exodus: “The Ј30,000 doesn’t matter. The point is that if others say they are moving, I may no longer be in a city with some of the world’s leading entrepreneurs. A hell of a lot of them are moving to Dubai. 

“Then there’s Singapore, which is calling out to be the new London. I’m thinking I’m in the wrong place.” 

Tie’s UK president, Nish Kotecha, an investment banker, suggests that to be a non-dom is similar to belonging to a club of super-talented frequent flyers who enjoy a strangely disconnected relationship with the place where they stash their toothbrush. Born in the UK and educated at the London School of Economics, Kotecha appears to have an utterly businesslike arrangement with his natal home. 

“I consider myself fortunate to have had the opportunity to grow up here, but I don’t consider myself a Londoner,” he says. “Or an English person. I consider myself to be an Indian first. I was born and brought up in this country, but I consider myself to be a global citizen. I can be at home in any country I choose to live in.” 

A 42-year-old married father of two young children, in good health and with a flash City job, Kotecha sees himself as “a net gain” to the UK economy. 

“Eventually,” he says, “we will retire outside this country. During the time we are here, we are bringing a lot of value to the UK. What services do we use that we don’t pay for? I pay taxes on my house, taxes on the land. I drive a car and pay road tax. I have income that I generate in the UK, which I pay tax on. We’ve opted out of sending our kids to a comprehensive school. They were born in a private hospital. We don’t use the health service because we pay for private health cover.” He pauses. “What we are doing is subsidising people who do use public services. Which is fine, if that’s the cost of living here. But how far do you push that cost – to a point where it finally breaks the camel’s back? Too much is too much.” Should he – and those like him – be given special status? “Absolutely.” 

Kotecha, who intends to retire in India, says that if business opportunities arose in the Middle East or Asia he would pack his bags tomorrow: “Because that’s where I can maximise my value.” 

Is life all about “maximising your value”, I wonder. 

His answer is as pure non-dom as a 900-thread-count sheet: “I am an individual with a set of values and skills and I need to ensure that I can maximise the value I can create with those skills. If the UK cannot offer that opportunity then I must consider looking elsewhere.”