Has Labour scored a double own goal over non-dom crackdown?

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The Labour party’s crackdown on so-called non-doms risks being overshadowed by a double whammy of confusion and controversy.

Yesterday, Ed Miliband vowed to put a stop to the “archaic” rules that allow wealthy individuals to limit the amount of tax they pay on earnings outside the UK. He claimed the current system was “indefensible” and that axing it would raise “hundreds of millions” in tax.

However, the party was soon on the back foot after footage emerged of the shadow chancellor apparently contradicting the policy. Speaking in January, Ed Balls appeared to suggest that abolishing the system would “cost Britain money.”

Unsurprisingly, the Conservatives were quick to jump on the situation. Chancellor George Osborne claimed it showed Labour’s plan had “unravelled” and called it an example of the “economic confusion” that the opposition would cause in government.

Mr Balls claimed the Conservatives had deliberately edited his words to mislead the public. He argued that they dropped the part of the interview where he said: “I think we can be tougher and we should be and we will.”

He went on: “That is exactly what we have proposed – ending a situation where people permanently living in the UK year after year can claim non-domicile status to reduce their tax bills and play by different rules to everyone else.”

Meanwhile, it also emerged that a QC who advised Labour on the controversial policy has links to a high-profile tax avoidance scheme. Jolyon Maugham represented Eclipse 35, a film investment venture that sheltered money for hundreds of celebrities.

Investors in the scheme were able to obtain tax relief as a reward for supporting the British film industry. The arrangement was branded a cover story for avoidance by the Court of Appeal, prompting the financial secretary to the Treasury to label its backers “tax dodgers”.

Have your say

What do you think about Labour’s policy? Do you think the party’s stance has been weakened by these revelations? What would you do to tackle tax avoidance? Join in the discussion on Twitter, or leave a comment below.