Quarmby, a partner who heads Stephenson Harwood’s tax and private wealth division has warned that RTC “goes too far”.
He fears the RTC regime, along with all the other new penalties, both criminal and civil, will make the UK an unfriendly and forbidding place to do business, which could drive wealth out of the country, with a consequential drop in GDP and tax revenues.
Quarmby believes that tax penalties should be fair. Under RTC, where there is a minimum penalty of 100% and a maximum penalty of 200%, even a simple, honest, mistake could result in all the income of a higher rate tax payer disappear by way of penalty.
“These penalties, like any other penalty levied by the state, should be both fair and proportionate otherwise the measures could end up being counterproductive,” he told International Adviser.
“If you punish the wealthy they will just get out of the country. You don’t even see it because it is capital which never came here.
“If the 1% left or stopped creating wealth the other 99% are going to have pick up the 30% of tax revenue which has disappeared.”
Quarmby points to shrinking foreign direct investment in the UK after the vote to leave the EU as one example of the kind of capital flight he fears could become widespread.
