Labour plans crackdown on 90-day tax exiles

Gordon Brown's government is set to crack down on Britain's super-rich tax exiles, demanding they submit to a "statutory residency test" to prove they have truly cut their ties to Britain. The new rules, says the Guardian, could upset many of the country's wealthiest business figures and celebrities, such as the property-owning Candy brothers who commute from Monaco, EMI boss Guy Hands who lives in Guernsey, and the Barclay brothers, who own the Daily Telegraph but live on the tiny Channel Island of Sark.

The Guardian says the Treasury has held talks with top wealth advisers and accountants with a view to introducing legislation - if Labour is returned to power – that would likely overturn the current 90-day rule and demand that people cut their links with Britain much more severely if they want to be treated as tax exiles.

The 90-day rule says British passport-holders can avoid paying tax here if they are domiciled elsewhere - as long as they spend no more than 89 days a year in the UK.

The rule – under which all sorts of high-profile tax exiles, including Rolling Stone Mick Jagger (above) and Formula One driver Lewis Hamilton, carefully run their comings-and-goings - has already taken a battering this week with the Court of Appeal ruling in the case of Robert Gaines-Cooper.

The court agreed with HM Revenue that Gaines-Cooper, a Seychelles-based multi-millionaire, is liable to pay £30m in back taxes because, although he had abided by the 90-day rule, the UK remains "the centre of gravity of his life and interest" and he has failed to make a "distinct break". His wife and son live on his estate in Henley. His will was drawn up in Britain and his son has gone to school here.

The ruling has sent thousands of tax exiles scurrying to the telephone, anxious to know whether they will suddenly face investigation and a large tax demand.

Mike Warburton, tax director at Grant Thornton, said: "If you want to be a tax exile we thought it was about 90 days. But now the first hurdle is: Is your house here? Is your family here? Are you a member of a club here? You have to demonstrate you have truly left the country."

A government clampdown would the most far-reaching of Labour's schemes to tap the wealthy for revenue. The highest rate of UK tax will rise to 50 per cent this April; Alistair Darling introduced a one-time 50 per cent tax on City bonuses and there are moves afoot to adopt a US-style system where non-domiciled foreigners are obligated to disclose worldwide income and assets - not just UK assets and wealth brought into the country. ·