A body representing more than 1,000 entrepreneurs and executives from India and Pakistan has warned Alistair Darling, the chancellor, that his proposals for a tax crackdown on non-domiciled UK residents will lead to a much greater exodus from Britain than anticipated.
In a letter in Wednesday's Financial Times, the UK wing of The Indus Entrepreneurs (Tie) says the proposals to levy a pound 30,000 charge on non-domiciled taxpayers after seven years in the UK would undermine Britain's attraction to thousands of investors and entrepreneurs from the subcontinent.
Tie, the world's largest not-for-profit entrepreneurial group, says the proposals put at risk the jobs of thousands of British people employed by businesses owned by "non-doms" from the subcontinent.
The letter suggests several changes to the Treasury's proposals, including lengthening to 10 years the time that can be spent in the UK before having to pay the charge and levying the charge on a family basis, rat-her than on each individual.
It says the changes still planned on capital gains tax would be particularly re-sented by non-doms with substantial wealth held overseas. It also calls on the chancellor to delay implementation of any changes for a year after they are agreed, to let those affected adjust their tax affairs.
"This is crucial if we are to continue to attract talent and substantial inward investment," it says, "and it is important that those who leave and those that remain retain a friendship and affinity towards the UK."
Entrepreneurs of Indian and Pakistani origin have built substantial businesses in the UK since they began arriving in numbers 50 years ago. Not all of them claim non-dom status, but most retain links with their countries of origin.
Indian companies have also been acquiring British businesses as part of growing business links between the UK and India. Tata, the Indian conglomerate, re-cently bought Corus, the company that absorbed British Steel, and is in negotiations to buy Jaguar and Land Rover from Ford.
Prominent Indian business leaders in the UK have told the FT they believe many thousands will leave if the changes go ahead as plan-ned. They are also angry at the short notice that has left them little time to decide what to do.
"We have to make changes by April 5, but we still don't know the details," said one who asked not to be named. "We have a choice where to live, and Britain will lose what we already contribute in consumption taxes, Paye and national insurance."
Another said the charge for most couples would be at least pound 60,000, but that professional advisers were unable to tell their clients what to do. He believed the exchequer would lose much more in revenue from an exodus of Asian entrepreneurs than the modest pound 650m a year the Treasury expects to raise.
There is also anger among many Asian entrepreneurs over the role of the Conservatives in first tabling the idea of a levy on non-doms. "The Tories are getting a lot of stick from supporters in the community," said one.
